RESTRICTED SHARE AGREEMENT
THIS AGREEMENT is made effective as of the fifth day of October 2001,
between Delano Technology Corporation, an Ontario corporation (the "Company"),
and Xxxxx Xxxxxx (the "Grantee").
WHEREAS, the Company desires to induce the Grantee to accept employment
with the Company and one or more of its subsidiaries as Chief Executive Officer;
WHEREAS, the Grantee has represented to the Company that he will not
accept employment with the Company without the grant of common shares
contemplated by this Agreement and that, accordingly, the grant of common shares
contemplated by this Agreement is an essential inducement to his employment with
the Company;
WHEREAS, as of the date hereof, the Company and the Grantee are entering
into an Employment Agreement in connection with the Grantee's employment with
the Company and one or more of its subsidiaries (the "Employment Agreement");
and
WHEREAS, this Restricted Share Agreement, together with the Employment
Agreement, is intended by the Company and the Grantee to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the Securities Act.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF RESTRICTED SHARES. The Company hereby grants to the
Grantee 4,230,000 common shares on the terms and subject to the conditions set
forth herein (the "Restricted Shares"). The Restricted Shares granted hereunder
shall be registered in the Grantee's name, but the certificates evidencing such
Restricted Shares shall be retained by the Company during the period prior to
the vesting of such shares as set forth in Section 3 hereof (the "Restriction
Period"). The Grantee shall execute a stock power, in blank, with respect to
such Restricted Shares and deliver the same to the Company. The Company will
retain custody of all dividends and distributions made or declared on the
Restricted Shares until such time, if ever, as such Restricted Shares vest and
the Restriction Period with respect thereto lapses. Such retained dividends or
distributions shall not bear interest. If any such dividend or distribution is
taxable to the Grantee, the Company shall release to the Grantee a portion of
such retained dividend or distribution sufficient to pay the taxes payable
thereon (at the highest marginal rate to which Grantee is subject) at the time
such taxes become payable. The Grantee shall not be entitled to vote any
Restricted Share until the Restriction Period with respect thereto lapses.
2. NON-TRANSFERABILITY. During the Restriction Period, the Grantee
may not sell, transfer, pledge or otherwise encumber or dispose of Restricted
Shares which have not then vested. Any attempted sale, transfer, assignment or
other disposition of Restricted Shares shall be null and void and of no effect.
3. LAPSE OF RESTRICTIONS; FORFEITURE.
(a) Except as otherwise provided in this Section 3, the
Restricted Shares granted hereunder shall vest, and the Restriction Period shall
lapse as follows:
On the date hereof 705,000 shares
On the 1st day of each month hereafter, 117,500 additional
shares commencing November 1, 2001
Except as otherwise provided in this Section 3, at the end of 30 months from the
date hereof, the Restricted Shares shall be fully vested and the Restriction
Period imposed thereon shall have fully lapsed.
(b) If the Grantee dies or becomes Disabled (as defined in the
Employment Agreement), the Restriction Period shall lapse with respect to all
previously unvested Restricted Shares on the date of death or Disability. Upon
an event of Business Combination (as defined in Exhibit A hereto), the
Restriction Period shall lapse with respect to all previously unvested
Restricted Shares as of the consummation of the event which results in the
Business Combination.
(c) If the Grantee voluntarily terminates his employment with
the Company or the Company terminates his employment for Cause (as defined in
the Employment Agreement), the Restricted Shares, to the extent not vested prior
to such termination, shall be immediately forfeited to the Company and the
Grantee shall have no further rights with respect to such unvested shares. If
the Grantee terminates his employment with the Company for Good Reason (as
defined in the Employment Agreement) or the Company terminates the Grantee's
employment without Cause, the Restriction Period shall lapse with respect to all
Restricted Shares immediately upon termination of employment.
4. DELIVERY OF SHARE CERTIFICATES. Promptly following the execution and
delivery hereof, certificate(s) evidencing 705,000 of the Restricted Shares
shall be delivered to the Grantee. Upon the vesting of any of the other
Restricted Shares granted hereunder, the certificates evidencing such Restricted
Shares shall be delivered promptly to the Grantee. In the case of the Grantee's
death, such certificates will be delivered to the beneficiary designated in
writing by the Grantee pursuant to a form of designation provided by the Company
or to the Grantee's executors or personal representatives, as the case may be.
5. REGISTRATION. The Company will promptly prepare, file and use
reasonable best efforts to cause to be effective with the Securities and
Exchange Commission on Form S-8 a registration statement that will enable
Grantee to publicly resell the Restricted Shares granted hereunder. The Company
shall maintain such registration statement in effect until all such shares have
been resold. If, for any reason, Form S-8 is not available with respect to the
Restricted Shares, the Company will promptly prepare and file and use reasonable
best efforts to cause to be effective with the
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Securities and Exchange Commission on Form F-3 (or other comparable form) a
re-sale registration statement relating to the Restricted Shares.
6. BINDING EFFECT. This Agreement shall be binding upon and inure the
benefit of the heirs, executors, administrators and successors of the parties
hereto.
7. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the Province of Ontario without reference to rules
relating to conflicts of law.
8. HEADINGS. Headings are for the convenience of the parties and are not
deemed to be a part of this Agreement.
9. NO EMPLOYMENT GUARANTEE. Nothing in this Agreement shall be construed
to confer upon the Grantee any right to continued employment with the Company
(it being understood that the Employment Agreement governs the Grantee's
employment relationship with the Company). --
10. WITHHOLDING TAXES. If the Company has any withholding tax obligation
with respect to the grant of Restricted Shares contemplated hereby, upon the
Company's request, the Grantee shall immediately pay to the Company in cash the
amount of such withholding tax.
11. LEGENDS. The certificates for the Restricted Shares granted hereunder
shall bear such legends relating to the provisions of this Agreement and
applicable securities law as the Company reasonably determines. Any such legend
relating to the provisions of this Agreement shall be removed at the time of
transfer of the applicable certificate(s) to the Grantee. Any such legend
relating to applicable securities law shall be removed in accordance with
applicable law and customary practice.
12. PLAN. This Agreement, together with the Employment Agreement, is
intended by the Company and the Grantee to constitute a written compensation
contract for purposes of the definition of "Employment Benefit Plan" in Rule 405
under the Securities Act.
13. 83(b) ELECTION. In the event an 83(b) election is made in connection
with the grant of Restricted Shares hereunder, the Company shall promptly
deliver to Grantee appropriate documentation reflecting a fair market value of
$0.11 per share, consisting of publicly available information on the Company's
trading prices as of the date hereof, it being understood by the parties that
the closing price on this date was $0.11.
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EXECUTED effective as of the day and year first written above.
DELANO TECHNOLOGY CORPORATION
By:/s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chairman
GRANTEE:
/s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx
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EXHIBIT A
Business Combination. For purposes of this Agreement, an event of
"Business Combination" shall be deemed to have occurred if: (i) there shall have
been consummated any merger or other business combination of the Company in
which the voting shareholders of the Company, prior to such merger or other
business combination, end up with less than 66.67% of the voting shares of the
new or combined entity as the case may be following the consummation of such
merger or other business combination, a sale or transfer of all or substantially
all of the Company's consolidated assets or a combination of the foregoing
transactions (a "Transaction") other than a Transaction involving only the
Company and one or more of its Subsidiaries; or (ii) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof,
including any "group" as defined in Section 13(d)(3) thereof (a "Person"), but
excluding the Company, any majority owned subsidiary of the Company (a
"Subsidiary") and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee)), becomes the beneficial owner of securities of the Company having at
least 33% of the total voting power represented by all then outstanding voting
securities of the Company, or has the power or ability to elect or cause the
election of directors then consisting of a majority of the Board of Directors of
the Company.
