EXHIBIT 10.1
CEO EXECUTIVE SERVICES AGREEMENT
AMONG:
NATURALLY ADVANCED TECHNOLOGIES INC.
AND:
XXXXXXXXXX ACCELERATORS, LLC.
NATURALLY ADVANCED TECHNOLOGIES INC.
Suite 402 - 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0
__________
CEO EXECUTIVE SERVICES AGREEMENT
THIS CEO EXECUTIVE SERVICES AGREEMENT is made and dated for
reference effective as at August 24, 2008 (the "EFFECTIVE DATE") as fully
executed on this 14th day of October, 2008.
BETWEEN:
NATURALLY ADVANCED TECHNOLOGIES INC., a company incorporated
under the laws of the Province of British Columbia, Canada,
and having an executive office and an address for notice and
delivery located at Suite 402 - 1008 Xxxxx Street, Vancouver,
British Columbia, Canada, V6B 2X1
(the "COMPANY");
OF THE FIRST PART
AND :
XXXXXXXXXX ACCELERATORS, LLC., a company incorporated under
the laws of the State of Oregon, U.S.A., and having an address
for notice and delivery located at 0000 XX 00xx, Xxxxx 000X,
Xxxxxxxx, Xxxxxx, X.X.X., 00000
(the "EXECUTIVE'S COMPANY");
OF THE SECOND PART
(the Executive's Company and the Company being hereinafter
singularly also referred to as a "Party" and collectively
referred to as the "PARTIES" as the context so requires).
WHEREAS:
A. The Company is a reporting company incorporated under the laws of the
Province of British Columbia, Canada, whose common shares are presently
listed for trading on both the United States Over-the-counter Bulletin
Board market and the TSX Venture Exchange;
B. Xxx Xxxxxx, the present Chief Executive Officer and a Director of the
Company (the "EXECUTIVE"), and the Executive's Company, which is owned and
controlled by the Executive (the Executive and the Executive's Company,
being, collectively, the "EXECUTIVE GROUP" herein), have experience in and
specialize in providing reporting and non-reporting companies with valuable
corporate management services;
C. The Company and its various subsidiaries are involved in the
product-focused business of specializing in the market and sale of
sustainable, environmentally friendly apparel and fabrics as well as the
development of proprietary technology for the production of xxxx fibers and
fabrics (collectively, the "BUSINESS"); and, as a consequence thereof, the
Company is hereby desirous of continuing to retain the Executive as the
Chief Executive Officer of the Company, together with the Executive's
Company as a consultant to the Company and to any or all of the Company's
subsidiaries, as the case may be, and the Executive Group is hereby
desirous of accepting such positions in order to provide such corporate
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management related services to the Company and its various subsidiaries as
may be necessary for the ongoing maintenance and development of the
Company's and its various subsidiaries' respective Business interests
during the continuance of this agreement (collectively, the "GENERAL
SERVICES");
D. The Company and the Executive's Company entered into a CEO Executive
Services Agreement effective August 24, 2007 (the "2007 CEO Agreement") and
the initial term of the 2007 CEO Agreement expired on August 24, 2008 and,
in accordance with Article 3 of the 2007 CEO Agreement, both the
Executive's Company and the Company now wish to renew the terms of the
agreement between the Parties in writing;
E. Since the introduction of the Parties hereto the Parties hereby acknowledge
and agree that there have been various discussions, negotiations,
understandings and agreements between them relating to the terms and
conditions of the General Services and, correspondingly, that it is their
intention by the terms and conditions of this agreement (the "AGREEMENT")
to hereby replace, in their entirety, all such prior discussions,
negotiations, understandings and agreements with respect to the General
Services; and
F. The Parties hereto have agreed to enter into this Agreement which replaces,
in its entirety, all such prior discussions, negotiations, understandings
and agreements, and, furthermore, which necessarily clarifies their
respective duties and obligations with respect to the within General
Services to be provided hereunder, all in accordance with the terms and
conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration
of the mutual covenants and provisos herein CONTAINED, THE PARTIES HERETO AGREE
AS FOLLOWS:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following
words and phrases shall have the following meanings:
(a) "AGREEMENT" means this CEO Executive Services Agreement as from time
to time supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof, together with any
Schedules attached hereto;
(b) "BOARD OF DIRECTORS" means the Board of Directors of the Company as
duly constituted from time to time;
(c) "BUSINESS" has the meaning ascribed to it in recital "C." hereinabove.
(d) "BUSINESS DAY" means any day during which Canadian Chartered Banks are
open for business in the City of Vancouver, Province of British
Columbia, Canada;
(e) "COMPANIES" means the Company and each of its subsidiaries;
(f) "COMPANY" means Naturally Advanced Technologies Inc., a company
incorporated under the laws of the Province of British Columbia,
Canada, or any successor company, however formed, whether as a result
of merger, amalgamation or other action;
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(g) "COMPANY'S NON-RENEWAL NOTICE" has the meaning ascribed to it in
section "3.2" hereinbelow;
(h) "DATE OF GRANT" has the meaning ascribed to it in section "4.3"
hereinbelow;
(i) "DELIVERABLES" has the meaning ascribed to it in section "4.3"
hereinbelow;
(j) "EFFECTIVE DATE" has the meaning ascribed to on the face page of this
Agreement;
(k) "EFFECTIVE TERMINATION DATE" has the meaning ascribed to it in each of
sections "3.3", "3.4", "3.5", "3.6" and "5.6" hereinbelow;
(l) "EXCHANGE ACT" has the meaning ascribed to it in section "4.3"
hereinbelow;
(m) "EXECUTIVE" means Xxx Xxxxxx;
(n) "EXECUTIVE GROUP" means the Executive and the Executive's Company;
(o) "EXECUTIVE GROUP MATERIALS" has the meaning ascribed to it in section
"5.7" hereinbelow;
(p) "EXECUTIVE'S COMPANY" means Xxxxxxxxxx Accelerators, LLC., a company
incorporated under the laws of the State of Oregon, U.S.A.,, or any
successor company, however formed, whether as a result of merger,
amalgamation or other action;
(q) "EXERCISE TERM" has the meaning ascribed to it in section "4.3"
hereinbelow;
(r) "EXPENSES" has the meaning ascribed to it in section "4.2"
hereinbelow;
(s) "FEE" has the meaning ascribed to it in section "4.1" hereinbelow;
(t) "FORM S-8 REGISTRATION STATEMENT" has the meaning ascribed to it in
section "4.3" hereinbelow;
(u) "GENERAL SERVICES" has the meaning ascribed to it in section "2.1"
hereinbelow;
(v) "INDEMNIFIED PARTY" has the meaning ascribed to it in section "6.1"
hereinbelow;
(w) "INITIAL VESTING DATE" has the meaning ascribed to it in section "4.3"
hereinbelow;
(x) "NOTICE OF TERMINATION" has the meaning ascribed to it in each of
sections "3.3", "3.4", "3.5" and "5.6" hereinbelow;
(y) "OPTION" has the meaning ascribed to it in section "4.3" hereinbelow;
(z) "OPTION PLAN" has the meaning ascribed to it in section "4.3"
hereinbelow;
(aa) "OPTION SHARES" has the meaning ascribed to it in section "4.3"
hereinbelow;
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(ab) "PARTIES" or "PARTY" means, individually and collectively, the
Company, and/or the Executive and the Executive's Company hereto, as
the context so requires, together with each of their respective
successors and permitted assigns as the context so requires;
(ac) "PROPERTY" has the meaning ascribed to it in section "5.7"
hereinbelow;
(ad) "REGISTRATION STATEMENT" has the meaning ascribed to it in section
"4.3" hereinbelow;
(ae) "REGULATORY APPROVAL" means the acceptance for filing, if required, of
the transactions contemplated by this Agreement by the Regulatory
Authorities;
(af) "REGULATORY AUTHORITIES" and "REGULATORY AUTHORITY" means, either
singularly or collectively as the context so requires, such regulatory
agencies who have jurisdiction over the affairs of either of the
Companies and/or the Executive Group and including, without
limitation, all regulatory authorities from whom any such
authorization, approval or other action is required to be obtained or
to be made in connection with the transactions contemplated by this
Agreement;
(ag) "SEC" has the meaning ascribed to it in section "4.3" hereinbelow;
(ah) "SECURITIES ACT" has the meaning ascribed to it in section "4.3"
hereinbelow; and
(ai) "SUBSIDIARY" means any company or companies of which more than 50% of
the outstanding shares carrying votes at all times (provided that the
ownership of such shares confers the right at all times to elect at
least a majority of the directors of such company or companies) are
for the time being owned by or held for that company and/or any other
company in like relation to that company and includes any company in
like relation to the subsidiary.
1.2 INTERPRETATION. For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the words "HEREIN", "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, section or other subdivision of this Agreement;
(b) any reference to an entity shall include and shall be deemed to be a
reference to any entity that is a permitted successor to such entity;
and
(c) words in the singular include the plural and words in the masculine
gender include the feminine and neuter genders, and VICE VERSA.
ARTICLE 2
GENERAL SERVICES AND DUTIES OF THE EXECUTIVE GROUP
2.1 GENERAL SERVICES. During the continuance of this Agreement the Company
hereby agrees to retain the Executive as the Chief Executive Officer of the
Company, together with the Executive's Company as a consultant to the
Company and to any or all of the Company's subsidiaries, as the case may
be, and as may be determined by the Board of Directors in its sole and
absolute discretion from time to time, and the Executive Group hereby
agrees to be subject to the direction and supervision of, and to have the
authority as is delegated to the Executive Group by, the Board of Directors
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consistent with such positions, and the Executive Group also agrees to
accept such positions in order to provide such corporate management related
services as the Board of Directors shall, from time to time, reasonably
assign to the Executive Group and as may be necessary for the ongoing
maintenance and development of the Companies' various Business interests
during the continuance of this Agreement (collectively, the "GENERAL
Services"); it being expressly acknowledged and agreed by the Parties
hereto that the Executive Group shall commit and provide to the Company the
General Services for which the Company, as more particularly set forth
hereinbelow, hereby agrees to pay and provide to the order and direction of
the Executive Group each of the proposed compensation amounts as set forth
in Articles "4" hereinbelow.
In this regard it is hereby acknowledged and agreed that the Executive
Group shall be entitled to communicate with and shall rely upon the immediate
advice, direction and instructions of the Board of Directors, or upon the advice
or instructions of such director or officer of the Company as the Board of
Directors shall, from time to time, in order to initiate, coordinate and
implement the General Services as contemplated herein subject, at all times, to
the final direction and supervision of the Board of Directors.
2.2 ADDITIONAL DUTIES RESPECTING THE GENERAL SERVICES. Without in any manner
limiting the generality of the General Services to be provided as set forth
in section "2.1" hereinabove, it is hereby also acknowledged and agreed
that Executive Group will, during the continuance of this Agreement,
provide for the performance of said General Services faithfully,
diligently, to the best of the Executive Group's abilities and in the best
interests of the Companies and, furthermore, that the Executive Group's
time will be prioritized at all times for the Companies in that regard.
2.3 ADHERENCE TO RULES AND POLICIES OF THE COMPANIES. The Executive Group
hereby acknowledges and agrees to abide by the reasonable rules,
regulations, instructions, personnel practices and policies of the Company
and any changes therein which may be adopted from time to time by the same
as such rules, regulations, instructions, personnel practices and policies
may be reasonably applied to the Executive as the Chief Executive Officer
of the Company and to the Executive's Company as a consultant to the
Companies.
ARTICLE 3
EFFECTIVENESS, INITIAL TERM, RENEWAL AND TERMINATION
3.1 EFFECTIVENESS AND INITIAL TERM OF THE AGREEMENT. This Agreement becomes
effective on the Effective Date hereinabove, however, is subject, at all
times, to the Company's prior receipt, if required, of Regulatory Approval
from each of the Regulatory Authorities to the terms and conditions of and
the transactions contemplated by this Agreement. The initial term of this
Agreement is for a period commencing on the Effective Date hereof and
ending at the close of business (Vancouver, British Columbia, Canada, time)
on the date which is one year from the Effective Date hereof (the "INITIAL
TERM").
3.2 RENEWAL BY THE COMPANY AFTER THE INITIAL TERM. Subject at all times to
sections "3.3", "3.4", "3.5" and "5.6" hereinbelow, this Agreement shall
renew automatically if not specifically terminated in accordance with the
following provisions. The Company agrees to notify the Executive's Company
in writing at least 30 calendar days prior to the end of the Initial Term
of its intent not to renew this Agreement (the "COMPANY'S NON-RENEWAL
NOTICE"). Should the Company fail to provide a Company's Non-Renewal Notice
this Agreement shall automatically renew on a month-to-month term renewal
basis after the Initial Term until otherwise specifically renewed in
writing by each of the Parties hereto for the next one-month term of
renewal or, otherwise, terminated upon delivery by the Company of a
corresponding and follow-up 30 calendar day Company's Non-Renewal Notice in
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connection with and within 30 calendar days prior to the end of any such
one-month term renewal period. Any such renewal on a one-month basis shall
be on the same terms and conditions contained herein unless modified and
agreed to in writing by the Parties in advance.
3.3 TERMINATION WITHOUT CAUSE BY THE EXECUTIVE'S COMPANY. Notwithstanding any
other provision of this Agreement, this Agreement may be terminated by the
Executive's Company at any time after the Effective Date and during the
Initial Term and during the continuance of this Agreement upon the
Executive's Company's to the Company of prior written notice of its
intention to do so (the "NOTICE OF TERMINATION" herein) at least 30
calendar days prior to the effective date of any such termination (the end
of such 30-day period from such Notice of Termination being the "EFFECTIVE
TERMINATION DATE" herein). In any such event the Executive Group's ongoing
obligation to provide the General Services will continue only until the
Effective Termination Date and, subject to the following, the Company's
ongoing obligation to provide and to pay to the Executive Group all of the
amounts otherwise payable to the Executive Group under Article "4"
hereinbelow will continue only until the Effective Termination Date.
3.4 TERMINATION WITHOUT CAUSE BY THE COMPANY. Notwithstanding any other
provision of this Agreement, this Agreement may be terminated by the
Company at any time after the Effective Date and during the Initial Term
and during the continuance of this Agreement upon the Company's delivery to
the Executive's Company of prior written notice of its intention to do so
(the "NOTICE OF TERMINATION" herein) at least 30 calendar days prior to the
effective date of any such termination (the end of such 30-day period from
such Notice of Termination being the "EFFECTIVE TERMINATION DATE" herein).
In any such event the Executive Group's ongoing obligation to provide the
General Services will immediately cease upon the date of the Notice of
Termination, however, the Company shall continue to be obligated to provide
and to pay to the Executive Group all of the amounts otherwise payable to
the Executive Group under Article "4" hereinbelow until the Effective
Termination Date and including, without limitation, the Executive Group's
then right to exercise any vested portion of the Option (as hereinafter
determined) outstanding until the end of the exercise term of the Option as
set forth under Article "4" hereinbelow.
3.5 TERMINATION FOR CAUSE BY ANY PARTY. Notwithstanding any other provision of
this Agreement, this Agreement may be terminated by any of the Parties
hereto at any time upon written notice to the other Party of such Party's
intention to do so (the "NOTICE OF TERMINATION" herein) at least 10
calendar days prior to the effective date of any such termination (the end
of such ten-day period from such Notice of Termination being the "EFFECTIVE
TERMINATION DATE" herein), and damages sought, if:
(a) the other Party fails to cure a material breach of any provision of
this Agreement within 10 calendar days from its receipt of written
notice from said Party (unless such material breach cannot be
reasonably cured within said 10 calendar days and the other Party is
actively pursuing to cure said material breach);
(b) the other Party is willfully non-compliant in the performance of its
respective duties under this Agreement within ten calendar days from
its receipt of written notice from said Party (unless such willful
non-compliance cannot be reasonably corrected within said 10 calendar
days and the other Party is actively pursuing to cure said willful
non-compliance);
(c) the other Party commits fraud or serious neglect or misconduct in the
discharge of its respective duties hereunder or under the law; or
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(d) the other Party becomes adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy,
and where any such involuntary petition is not dismissed within 10
calendar days.
In any such event the Executive Group's ongoing obligation to provide the
General Services will continue only until the Effective Termination Date and,
subject to the following, the Company's ongoing obligation to provide and to pay
to the Executive Group all of the amounts otherwise payable to the Executive
under Article "4" hereinbelow will continue only until the Effective Termination
Date.
3.6 DISABILITY OR DEATH. Notwithstanding any other provision of this Agreement,
this Agreement may be terminated at any time by any Party within 10
calendar days after the death or disability of the Executive, as a without
fault termination (the resulting effective date of any such termination
being herein also the "EFFECTIVE TERMINATION DATE"). For the purposes of
this Agreement the term "DISABILITY" shall mean the Executive shall have
been unable to provide the General Services contemplated under this
Agreement for a period of 30 calendar days, whether or not consecutive,
during any 360 calendar day period, due to a physical or mental disability.
A determination of disability shall be made by a physician satisfactory to
both the Executive and the Company; provided that if the Executive and the
Company do not agree on a physician, the Executive and the Company shall
each select a physician and these two together shall select a third
physician whose determination as to disability shall be binding on all
Parties. In the event that the Executive's position is terminated by death
or because of disability pursuant to this Agreement, the Company shall pay
to the estate of the Executive or to the Executive Group, as the case may
be, all amounts to which the Executive Group would otherwise be entitled
under Article "4" hereinbelow until the Effective Termination Date.
3.7 EFFECT OF TERMINATION. Terms of this Agreement relating to accounting,
payments, confidentiality, accountability for damages or claims and all
other matters reasonably extending beyond the terms of this Agreement and
to the benefit of the Parties hereto or for the protection of the various
Business interests of the Companies shall survive the termination of this
Agreement, and any matter of interpretation thereto shall be given a wide
latitude in this regard. In addition, and without limiting the foregoing,
each of sections "3.2", "3.3", "3.4", "3.5", "3.6" hereinabove and section
"5.6" hereinbelow shall survive the termination of this Agreement.
ARTICLE 4
COMPENSATION OF THE EXECUTIVE GROUP
4.1 FEE. It is hereby acknowledged and agreed that the Executive Group shall
render the General Services as defined hereinabove during the Initial Term
and during the continuance of this Agreement and shall thus be compensated
during the continuance of this Agreement to the termination of the same by
way of the payment by the Company to the Executive Group, or to the further
order or direction of the Executive Group as the Executive Group may
determine, in the Executive Group's sole and absolute discretion, and
advise the Company of prior to such payment, of the gross monthly fee of
U.S. $12,500.00 (the "FEE"); (with the acknowledgement that an additional
fee of U.S. $2,500.00 per month has been paid, and continues to be payable,
by the Company to the Executive Group, or its affiliate or associate, under
a pre-existing services arrangement with the same); with all such Fees
being be due and payable by the Company to the Executive's Company, or to
the further order or direction of the Executive Group as the Executive
Group may determine, in the Executive Group's sole and absolute discretion,
and advise the Company of prior to any such Fee payment, bi-monthly and on
or about the fifteenth and thirtieth day of each month of the then monthly
period of General Services during the continuance of this Agreement.
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4.2 REIMBURSEMENT OF EXPENSES. It is hereby acknowledged and agreed that the
Executive Group shall also be reimbursed for all direct, reasonable
expenses actually and properly incurred by the Executive Group for the
benefit of the Company (collectively, the "EXPENSES"); and which Expenses,
it is hereby acknowledged and agreed, shall be payable by the Company to
the order, direction and account of the Executive Group as the Executive
Group may designate in writing, from time to time, in the Executive Group's
sole and absolute discretion, as soon as conveniently possible after the
prior delivery by the Executive Group to the Company of written
substantiation on account of each such reimbursable Expense.
4.3 VESTING OPTION PREDICATED ON CERTAIN DELIVERABLES. Subject to the following
pre-delivery and vesting provisions, and as soon as reasonably practicable
after the prior and ongoing attainment by the Company, with the direct
assistance of the Executive Group, of certain pre-determined corporate
development milestones by the Company (collectively, the "DELIVERABLES"); a
complete listing of such Deliverables having been agreed upon by the
Parties hereto in advance and in writing with the execution of this
Agreement (in each case herein being a "DATE OF GRANT"), it is hereby
acknowledged and agreed that the Executive Group will be granted, subject
to the rules and policies of the Regulatory Authorities and applicable
securities legislation, the terms and conditions of the Company's 2008
fixed share option plan (the "OPTION PLAN") and subject to the final
determination of the Company's Compensation Committee, acting reasonably,
the right and option (the "OPTION") to purchase an aggregate of up to
500,000 common shares of the Company (each an "OPTION SHARE") immediately
upon the Date of Grant in each such instance; which is again to occur as
soon as reasonably practicable after the attainment by the Company of the
stated Deliverables; at an exercise price of US$1.45 per Option Share and
for a period of up to three years from the Date of Grant in each such
instance on the following vesting terms and conditions:
(a) 300,000 Option Shares, or a portion thereof, to be granted at the sole
discretion of the Company's Compensation Committee based on a
subjective evaluation of the Executive's performance in relation to
the broad objectives previously agreed to by the Parties and subject
to the provisions and vesting schedule set out in the Option Plan; and
(b) if the Company's stock price reaches a sustained level (which the
Parties previously agreed to be three months) of US$3.00 per share, at
the discretion of the Company's Compensation Committee, the above
mentioned subjective evaluation set out in subsection 4.3(a) may be
overridden and 300,000 options shall be granted automatically and
another 200,000 options may be granted as a bonus for a total of
500,000 options, all such Options will still be subject to the
provisions and vesting schedule set out in the Option Plan,
In this regard, and subject also to the following, it is hereby
acknowledged and agreed that the exercise of any of the Option shall be subject,
at all times, to such resale provisions as may then be contained in the
Company's Option Plan and as may be finally determined by the Board of
Directors, acting reasonably. Notwithstanding the foregoing, in accordance with
Section 3.10 of the Option Plan, it is hereby also acknowledged and agreed that,
in the event that this Agreement is terminated in accordance with either of
sections "3.2", "3.3", "3.4" or "5.6" herein, the Executive Group will have 30
days from the Effective Termination Date to exercise such vested portion of the
within and remaining Option which shall have then not been exercised on the
Effective Termination Date.
In this regard, and in accordance with the terms and conditions of each
final form of Option agreement(s), the Parties hereby also acknowledge and agree
that:
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(A) FILINGS IN ACCORDANCE WITH TSX VENTURE EXCHANGE POLICY 4.4: upon
the granting of the Options the Parties agree to complete all
filings required by Policy 4.4 of the TSX Venture Exchange no
later than the end of the month in which the options are granted;
(B) REGISTRATION OF OPTION SHARES UNDER THE OPTIONS: the Company
expects to file with the United States Securities and Exchange
Commission (the "SEC") a registration statement on Form S-8 (the
"FORM S-8 REGISTRATION STATEMENT") within 120 calendar days of
initial Date of Grant and covering the issuance of all Option
Shares of the Company underlying the then vested and issued
Option, and such Form S-8 Registration Statement shall comply
with all requirements of the United States SECURITIES ACT OF
1933, as amended (the "SECURITIES ACT"). In this regard the
Company shall use its best efforts to ensure that the Form S-8
Registration Statement remains effective as long as such vested
and issued Option is outstanding, and the Executive Group fully
understands and acknowledges that these Option Shares will be
issued in reliance upon the exemption afforded under the Form S-8
Registration Statement which is available only if the Executive
Group acquires such Option Shares for investment and not with a
view to distribution. The Executive Group hereby acknowledged
that it is familiar with the phrase "acquired for investment and
not with a view to distribution" as it relates to the Securities
Act and the special meaning given to such term in various
releases of the SEC;
(C) SECTION 16 COMPLIANCE: only if applicable, the Company shall
ensure that all grants of the Option are made to ensure
compliance with all applicable provisions of the exemption
afforded under Rule 16b-3 promulgated under the United States
SECURITIES AND EXCHANGE ACT OF 1934, as amended (the "EXCHANGE
ACT"). Without limiting the foregoing, the Company shall have an
independent committee of the Board of Directors approve each
grant of the Option to the Executive Group and, if required, by
the applicable Regulatory Authorities and the shareholders of the
Company. The Company shall file, on behalf of the Executive
Group, all reports required to filed with the SEC pursuant to the
requirements of Section 16(a) under the Exchange Act and
applicable rules and regulations;
(D) DISPOSITION OF ANY OPTION SHARES: the Executive Group further
acknowledges and understands that, without in anyway limiting the
acknowledgements and understandings as set forth hereinabove, the
Executive Group agrees that the Executive Group shall in no event
make any disposition of all or any portion of the Option Shares
which the Executive Group may acquire hereunder unless and until:
(i) there is then in effect a "REGISTRATION STATEMENT" under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with said Registration
Statement; or
(ii) (a) the Executive Group shall have notified the Company of
the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances
surrounding the proposed disposition, (B) the Executive
Group shall have furnished the Company with an opinion of
the Executive Group's own counsel to the effect that such
disposition will not require registration of any such Option
Shares under the Securities Act and (C) such opinion of the
Executive Group's counsel shall have been concurred in by
counsel for the Company and the Company shall have advised
the Executive Group of such concurrence; and
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(E) PAYMENT FOR ANY OPTION SHARES: it is hereby further acknowledged
and agreed that, during the continuance of this Agreement, the
Executive Group shall be entitled to exercise any portion of the
vested Option granted hereunder and pay for the same by way of
the prior agreement of the Executive Group, in the Executive
Group's sole and absolute discretion, and with the prior
knowledge of the Company, to settle any indebtedness which may be
due and owing by the Company under this Agreement in payment for
the exercise price of any Option Shares acquired thereunder. In
this regard, and subject to further discussion as between the
Company and the Executive Group, together with the prior approval
of the Board of Directors and the establishment by the Company of
an Option Plan predicated upon the same, it is envisioned that,
when the Company is in a position to afford the same, the Company
may adopt certain additional "cashless exercise" provisions
respecting the granting and exercise of incentive stock options
during the continuance of this Agreement.
4.4 PAYMENT OF COMPENSATION AS A NON-TAXABLE CONSULTANT. It is hereby
acknowledged and agreed that the Executive Group will be classified as a
non-taxable consultant of the Company for all purposes. In this regard, and
for all matters relating to this Agreement therefore, the Executive Group
will be a consultant of the Company under the meaning or application of any
and all applicable federal and state unemployment, insurance and workers'
compensation laws, and otherwise.
ARTICLE 5
ADDITIONAL OBLIGATIONS OF THE EXECUTIVE GROUP
5.1 REPORTING. At such time or times as may be required by the Board of
Directors, acting reasonably, the Executive Group will provide the Board of
Directors with such information concerning the results of the Executive
Group's General Services and activities hereunder for the previous month as
the Board of Directors reasonably require.
5.2 NON-COMPETITION. During the continuance of this Agreement, and for a period
of twelve months following the termination of this Agreement in accordance
with either of sections "3.2", "3.3", "3.4", "3.5", "3.6" or "5.6"
hereunder, the Executive Group shall not enter into any agreement with any
third party whose primary business is the manufacture and distribution of
natural or organic fibers to provide services similar to those provided by
the Executive Group to the Company under this Agreement.
5.3 CONFIDENTIALITY. The Executive Group will not, except as authorized or
required by the Executive Group's duties hereunder, reveal or divulge to
any person or entity any information concerning the organization, business,
finances, transactions or other affairs of the Companies which may come to
the Executive Group's knowledge during the continuance of this Agreement,
and the Executive Group will keep in complete secrecy all confidential
information entrusted to the Executive Group and will not use or attempt to
use any such information in any manner which may injure or cause loss
either directly or indirectly to the Business interests. This restriction
will continue to apply after the termination of this Agreement without
limit in point of time but will cease to apply to information or knowledge
which may come into the public domain.
5.4 COMPLIANCE WITH APPLICABLE LAWS. The Executive Group will comply with all
Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to the Executive Group's duties hereunder and, in addition,
hereby represents and warrants that any information which the Executive
Group may provide to any person or company hereunder will, to the best of
the Executive Group's knowledge, information and belief, be accurate and
complete in all material respects and not misleading, and will not omit to
state any fact or information which would be material to such person or
company.
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5.5 OPINIONS, REPORTS AND ADVICE OF THE EXECUTIVE GROUP. The Executive Group
acknowledges and agrees that all written and oral opinions, reports, advice
and materials provided by the Executive Group to the Companies in
connection with the Executive Group's engagement hereunder are intended
solely for the Company's benefit and for the Company's uses only, and that
any such written and oral opinions, reports, advice and information are,
except as specifically provided in section "5.7" hereinbelow, the exclusive
property of the Company. In this regard the Executive Group covenants and
agrees that the Companies may utilize any such opinion, report, advice and
materials for any other purpose whatsoever and, furthermore, may reproduce,
disseminate, quote from and refer to, in whole or in part, at any time and
in any manner, any such opinion, report, advice and materials in the
Company's sole and absolute discretion. The Executive Group further
covenants and agrees that no public references to the Executive Group or
disclosure of the Executive Group's role in respect of the Companies may be
made by the Executive Group without the prior written consent of the Board
of Directors in each specific instance and, furthermore, that any such
written opinions, reports, advice or materials shall, unless otherwise
required by the Board of Directors, be provided by the Executive Group to
the Companies in a form and with such substance as would be acceptable for
filing with and approval by any Regulatory Authority having jurisdiction
over the affairs of the Companies from time to time.
5.6 EXECUTIVE GROUP'S BUSINESS CONDUCT. The Executive Group warrants that the
Executive Group shall conduct the business and other activities in a manner
which is lawful and reputable and which brings good repute to the
Companies, the Business interests and the Executive Group. In particular,
and in this regard, the Executive Group specifically warrants to provide
the General Services in a sound and professional manner such that the same
meets superior standards of performance quality within the standards of the
industry or as set by the specifications of the Company. In the event that
the Company has a reasonable concern that the business as conducted by the
Executive Group is being conducted in a way contrary to law or is
reasonably likely to bring disrepute to the Business interests or to the
Companies' or the Executive Group's reputation, the Company may require
that the Executive Group make such alterations in the Executive Group's
business conduct or structure, whether of management or Board
representation or employee or sub-licensee representation, as the Board of
Directors may reasonably require, in its sole and absolute discretion,
failing which the Company, in its sole and absolute discretion, may
terminate this Agreement upon prior written notice to the Executive Group
to do so (the "NOTICE OF TERMINATION" herein) at least 10 calendar days
prior to the effective date of any such termination (the end of such 10-day
period from such Notice of Termination being the "EFFECTIVE TERMINATION
DATE" herein). In any such event the Executive Group's ongoing obligation
to provide the General Services will continue only until the Effective
Termination Date and, subject to the following, the Company's ongoing
obligation to provide and to pay to the Executive Group all of the amounts
otherwise payable to the Executive under Article "4" hereinabove will
continue until the Effective Termination Date. In the event of any debate
or dispute as to the reasonableness of the Board of Directors' request or
requirements, the judgment of the Board of Directors shall be deemed
correct until such time as the matter has been determined by arbitration in
accordance with Article "8" hereinbelow.
5.7 RIGHT OF OWNERSHIP TO THE BUSINESS AND RELATED PROPERTY. The Executive
Group hereby acknowledges and agrees that any and all Business interests,
together with any products or improvements derived therefrom and any trade
marks or trade names used in connection with the same (collectively, the
"PROPERTY"), are wholly owned and controlled by the Company.
Correspondingly, neither this Agreement, nor the General Services or the
operation of the Business contemplated by this Agreement, confers or shall
be deemed to confer upon the Executive Group any interest whatsoever in and
to any of the Property. In this regard the Executive Group hereby further
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covenants and agrees not to, during or after the Initial Term and the
continuance of this Agreement, contest the title to any of the Property
interests, in any way dispute or impugn the validity of the Property
interests or take any action to the detriment of the Company's interests
therein. The Executive Group acknowledges that, by reason of the unique
nature of the Property interests, and by reason of the Executive Group's
knowledge of and association with the Property interests during the Initial
Term and during the continuance of this Agreement, the aforesaid covenant,
both during the Initial Term of this Agreement and thereafter, is
reasonable and commensurate for the protection of the legitimate Business
interests of the Companies. As a final note, the Executive Group hereby
further covenants and agrees to immediately notify the Company of any
infringement of or challenge to the any of the Property interests as soon
as the Executive Group becomes aware of the infringement or challenge.
Notwithstanding the Company's ownership of the Property, the Parties
acknowledge and agree that the Property may contain certain proprietary
Executive Group materials or elements which shall remain the property of
the Executive Group (collectively, the "EXECUTIVE GROUP MATERIALS").
Executive Group Materials are generally used or provided to the clients of
the Executive Group in the normal course of delivering its consulting
services and include, but are not limited to, processes, techniques and
know how, and all intellectual property rights contained herein. The
Executive Group grants to the Company a non-exclusive, non-transferable
license to use the Executive Group Materials embodied within the Property.
The Executive Group hereby assigns to the Company, exclusive of the
Executive Group Materials, its right, title and interest throughout the world in
and to all work performed, writings, formulas, designs, models, drawings,
photographs, design inventions, and other inventions, made, conceived, or
reduced to practice or authored by the Executive Group or by the Executive
Group's employees, either solely or jointly with others, during the performance
of this Agreement, or which are made, conceived, or reduced to practice, or
authored with the use of information or materials of the Companies either
received or used by the Executive Group during the performance of this Agreement
or any extension or renewal thereof. The Executive Group shall promptly disclose
to the Company all works, writings, formulas, designs, models, photographs,
drawings, design inventions and other inventions made, conceived or reduced to
practice, or authored by the Executive Group or the Executive Group's employees
as set forth above. The Executive Group shall sign, execute and acknowledge, or
cause to be signed, executed and acknowledged, at the Company's cost and
expense, applicable patent, trademark or copyright protection throughout the
world upon all such works, writings, formulas, designs, models, drawings,
photographs, design inventions and other inventions; title to which the Company
acquires in accordance with the provisions of this section, subject to the
Executive Group's sole and exclusive rights in the Executive Group Materials.
The Executive Group has acquired or shall acquire from each of the Executive
Group's employees, if any, the necessary rights to all such works, writings,
formulas, designs, models, drawings, photographs, design inventions and other
inventions made by such employees within the scope of their employment by the
Executive Group in performing the General Services under this Agreement. The
Executive Group shall seek to obtain the reasonable cooperation of each such
employee to secure to the Company's or its nominee's the rights to such works,
writings, formulas, designs, models, drawings, photographs, design inventions
and other inventions as the Company may acquire in accordance with the
provisions of this section.
ARTICLE 6
INDEMNIFICATION AND LEGAL PROCEEDINGS
6.1 INDEMNIFICATION. The Parties hereto hereby each agree to indemnify and save
harmless the other Party hereto and including, where applicable, their
respective subsidiaries and affiliates and each of their respective
directors, officers, employees, consultants, associates, counsel and agents
(each such party being an "INDEMNIFIED PARTY") harmless from and against
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any and all losses, claims, actions, suits, proceedings, damages,
liabilities or expenses of whatever nature or kind and including, without
limitation, any investigation expenses incurred by any Indemnified Party,
to which an Indemnified Party may become subject by reason of the terms and
conditions of this Agreement.
6.2 NO INDEMNIFICATION. This indemnity will not apply in respect of an
Indemnified Party in the event and to the extent that a Court of competent
jurisdiction in a final judgment shall determine that the Indemnified Party
was grossly negligent or guilty of willful misconduct.
6.3 CLAIM OF INDEMNIFICATION. The Parties hereto agree to waive any right they
might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any
other person before claiming this indemnity.
6.4 NOTICE OF CLAIM. In case any action is brought against an Indemnified Party
in respect of which indemnity may be sought against either of the Parties
hereto, the Indemnified Party will give both Parties hereto prompt written
notice of any such action of which the Indemnified Party has knowledge and
the relevant Party will undertake the investigation and defense thereof on
behalf of the Indemnified Party, including the prompt employment of counsel
acceptable to the Indemnified Party affected and the relevant Party and the
payment of all expenses. Failure by the Indemnified Party to so notify
shall not relieve the relevant Party of such relevant Party's obligation of
indemnification hereunder unless (and only to the extent that) such failure
results in a forfeiture by the relevant Party of substantive rights or
defenses.
6.5 SETTLEMENT. No admission of liability and no settlement of any action shall
be made without the consent of each of the Parties hereto and the consent
of the Indemnified Party affected, such consent not to be unreasonable
withheld.
6.6 LEGAL PROCEEDINGS. Notwithstanding that the relevant Party will undertake
the investigation and defense of any action, an Indemnified Party will have
the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless:
(a) such counsel has been authorized by the relevant Party;
(b) the relevant Party has not assumed the defense of the action within a
reasonable period of time after receiving notice of the action;
(c) the named parties to any such action include that any Party hereto and
the Indemnified Party shall have been advised by counsel that there
may be a conflict of interest between any Party hereto and the
Indemnified Party; or
(d) there are one or more legal defenses available to the Indemnified
Party which are different from or in addition to those available to
any Party hereto.
6.7 CONTRIBUTION. If for any reason other than the gross negligence or bad
faith of the Indemnified Party being the primary cause of the loss claim,
damage, liability, cost or expense, the foregoing indemnification is
unavailable to the Indemnified Party or insufficient to hold them harmless,
the relevant Party shall contribute to the amount paid or payable by the
Indemnified Party as a result of any and all such losses, claim, damages or
liabilities in such proportion as is appropriate to reflect not only the
relative benefits received by the relevant Party on the one hand and the
Indemnified Party on the other, but also the relative fault of relevant
Party and the Indemnified Party and other equitable considerations which
may be relevant. Notwithstanding the foregoing, the relevant Party shall in
any event contribute to the amount paid or payable by the Indemnified
Party, as a result of the loss, claim, damage, liability, cost or expense
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(other than a loss, claim, damage, liability, cost or expenses, the primary
cause of which is the gross negligence or bad faith of the Indemnified
Party), any excess of such amount over the amount of the fees actually
received by the Indemnified Party hereunder.
ARTICLE 7
FORCE MAJEURE
7.1 EVENTS. If either Party hereto is at any time either during this Agreement
or thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, walk-outs, labour shortages, power
shortages, fires, wars, acts of God, earthquakes, storms, floods,
explosions, accidents, protests or demonstrations by environmental
lobbyists or native rights groups, delays in transportation, breakdown of
machinery, inability to obtain necessary materials in the open market,
unavailability of equipment, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons beyond the
control of that Party, then the time limited for the performance by that
Party of its respective obligations hereunder shall be extended by a period
of time equal in length to the period of each such prevention or delay.
7.2 NOTICE. A Party shall within three calendar days give notice to the other
Parties of each event of FORCE MAJEURE under section "7.1" hereinabove, and
upon cessation of such event shall furnish the other Parties with notice of
that event together with particulars of the number of days by which the
obligations of that Party hereunder have been extended by virtue of such
event of FORCE MAJEURE and all preceding events of FORCE MAJEURE.
ARTICLE 8
ARBITRATION
8.1 MATTERS FOR ARBITRATION. Except for matters of indemnity or in the case of
urgency to prevent material harm to a substantive right or asset, the
Parties agree that all questions or matters in dispute with respect to this
Agreement shall be submitted to arbitration pursuant to the terms hereof.
This provision shall not prejudice a Party from seeking a Court order or
assistance to garnish or secure sums or to seek summary remedy for such
matters as counsel may consider amenable to summary proceedings.
8.2 NOTICE. It shall be a condition precedent to the right of any Party to
submit any matter to arbitration pursuant to the provisions hereof that any
Party intending to refer any matter to arbitration shall have given not
less than five business days' prior written notice of its intention to do
so to the other Parties together with particulars of the matter in dispute.
On the expiration of such five business days the Party who gave such notice
may proceed to refer the dispute to arbitration as provided for in section
"8.3" hereinbelow.
8.3 APPOINTMENTS. The Party desiring arbitration shall appoint one arbitrator,
and shall notify the other Parties of such appointment, and the other
Parties shall, within five business days after receiving such notice,
appoint an arbitrator, and the two arbitrators so named, before proceeding
to act, shall, within five business days of the appointment of the last
appointed arbitrator, unanimously agree on the appointment of a third
arbitrator, to act with them and be chairperson of the arbitration herein
provided for. If the other Parties shall fail to appoint an arbitrator
within five business days after receiving notice of the appointment of the
first arbitrator, and if the two arbitrators appointed by the Parties shall
be unable to agree on the appointment of the chairperson, the chairperson
shall be appointed in accordance with the scope of the rules of the
Arbitration Service of Portland; whose rules and regulations shall govern
the applicable arbitration. The chairperson, or in the case where only one
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arbitrator is appointed, the single arbitrator, shall fix a time and place
in Portland, Oregon, U.S.A., for the purpose of hearing the evidence and
representations of the Parties, and the chairperson shall preside over the
arbitration and determine all questions of procedure not provided for by
the Arbitration Act or this section. After hearing any evidence and
representations that the Parties may submit, the single arbitrator, or the
arbitrators, as the case may be, shall make an award and reduce the same to
writing, and deliver one copy thereof to each of the Parties. The expense
of the arbitration shall be paid as specified in the award.
8.4 AWARD. The Parties agree that the award of a majority of the arbitrators,
or in the case of a single arbitrator, of such arbitrator, shall be final
and binding upon each of them.
ARTICLE 9
GENERAL PROVISIONS
9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to date
between the Parties hereto and supersedes every previous agreement,
expectation, negotiation, representation or understanding, whether oral or
written, express or implied, statutory or otherwise, between the Parties
with respect to the subject matter of this Agreement.
9.2 NO ASSIGNMENT. This Agreement may not be assigned by any Party hereto
except with the prior written consent of the other Parties.
9.3 NOTICE. Each notice, demand or other communication required or permitted to
be given under this Agreement shall be in writing and shall be sent by
prepaid registered mail deposited in a recognized post office and addressed
to the Party entitled to receive the same, or delivered to such Party, at
the address for such Party specified on the front page of this Agreement.
The date of receipt of such notice, demand or other communication shall be
the date of delivery thereof if delivered, or, if given by registered mail
as aforesaid, shall be deemed conclusively to be the third business day
after the same shall have been so mailed, except in the case of
interruption of postal services for any reason whatsoever, in which case
the date of receipt shall be the date on which the notice, demand or other
communication is actually received by the addressee. Any Party may at any
time and from time to time notify the other Parties in writing of a change
of address and the new address to which notice shall be given to it
thereafter until further change.
9.4 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.
9.5 ENUREMENT. This Agreement will enure to the benefit of and will be binding
upon the Parties hereto and their respective heirs, executors,
administrators and assigns.
9.6 CURRENCY. Unless otherwise stipulated, all payments required to be made
pursuant to the provisions of this Agreement and all money amount
references contained herein are in lawful currency of the United States of
America.
9.7 FURTHER ASSURANCES. The Parties will from time to time after the execution
of this Agreement make, do, execute or cause or permit to be made, done or
executed, all such further and other acts, deeds, things, devices and
assurances in law whatsoever as may be required to carry out the true
intention and to give full force and effect to this Agreement.
9.8 REPRESENTATION AND COSTS. It is hereby acknowledged by each of the Parties
hereto that Lang Xxxxxxxx LLP, Lawyers - Patent & Trade Xxxx Agents, acts
solely for the Company, and, correspondingly, that the Executive Group has
been required by each of Lang Xxxxxxxx LLP and the Company to obtain
independent legal advice with respect to its review and execution of this
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Agreement. In addition, it is hereby further acknowledged and agreed by the
Parties hereto that Lang Xxxxxxxx LLP, and certain or all of its principal
owners or associates, from time to time, may have both an economic or
shareholding interest in and to Company and/or a fiduciary duty to the same
arising from either a directorship, officership or similar relationship
arising out of the request of the Company for certain of such persons to
act in a similar capacity while acting for the Company as counsel.
Correspondingly, and even where, as a result of this Agreement, the consent
of each Party hereto to the role and capacity of Lang Xxxxxxxx LLP, and its
principal owners and associates, as the case may be, is deemed to have been
received, where any conflict or perceived conflict may arise, or be seen to
arise, as a result of any such capacity or representation, each Party
hereto acknowledges and agrees to, once more, obtain independent legal
advice in respect of any such conflict or perceived conflict and,
consequent thereon, Lang Xxxxxxxx LLP, together with any such principal
owners or associates, as the case may be, shall be at liberty at any time
to resign any such position if it or any Party hereto is in any way
affected or uncomfortable with any such capacity or representation. Each
Party to this Agreement will also bear and pay its own costs, legal and
otherwise, in connection with its respective preparation, review and
execution of this Agreement and, in particular, that the costs involved in
the preparation of this Agreement, and all documentation necessarily
incidental thereto, by Lang Xxxxxxxx LLP, shall be at the cost of the
Company.
9.9 APPLICABLE LAW. This Agreement shall be governed by the laws of the State
of Oregon, U.S.A., and applicable United States federal law.
9.10 SEVERABILITY AND CONSTRUCTION. Each Article, section, paragraph, term and
provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is
determined to be invalid, contrary to or in conflict with any applicable
present or future law, rule or regulation in a final unappealable ruling
issued by any court, agency or tribunal with valid jurisdiction in a
proceeding to which any Party hereto is a party, that ruling shall not
impair the operation of, or have any other effect upon, such other portions
of this Agreement as may remain otherwise intelligible (all of which shall
remain binding on the Parties and continue to be given full force and
effect as of the date upon which the ruling becomes final).
9.11 CAPTIONS. The captions, section numbers and Article numbers appearing in
this Agreement are inserted for convenience of reference only and shall in
no way define, limit, construe or describe the scope or intent of this
Agreement nor in any way affect this Agreement.
9.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as many
counterparts as may be necessary, and via facsimile if necessary, each of
which so signed being deemed to be an original and such counterparts
together constituting one and the same instrument and, notwithstanding the
date of execution, being deemed to bear the Effective Date as set forth on
the front page of this Agreement.
9.13 NO PARTNERSHIP OR AGENCY. The Parties have not created a partnership and
nothing contained in this Agreement shall in any manner whatsoever
constitute any Party the partner, agent or legal representative of the
other Parties, nor create any fiduciary relationship between them for any
purpose whatsoever.
9.14 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by either
Party in respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this section;
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(b) be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this section in any other or subsequent instance.
IN WITNESS WHEREOF each of the Company and the Executive's Company has duly
executed this Agreement as of the Effective Date first provided hereinabove.
The COMMON SEAL of )
NATURALLY ADVANCED )
TECHNOLOGIES INC., )
the Company herein, )
was hereunto affixed in the presence of: ) (C/S)
)
)
)
________________________________________ )
Authorized Signatory )
The COMMON SEAL of )
XXXXXXXXXX ACCELERATORS, LLC )
the Executive's Company herein, )
was hereunto affixed in the presence of: ) (C/S)
)
)
)
________________________________________ )
Authorized Signatory )
__________
