EMPLOYMENT AGREEMENT
THIS AGREEMENT dated for reference the 7th day of August, 2003.
BETWEEN:
XXXXXX INTERNATIONAL INC., a Massachusetts business trust organized
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under the laws of the State of Washington with an office at Suite 282
- 00000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx, XXX 00000
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
AND:
XXXXX X. XXXXXXXX, Businessman
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(hereinafter referred to as the "Executive")
OF THE SECOND PART
WHEREAS:
A. The Corporation is engaged in the business of pulp and paper production and
related activities and, among other things, operates a kraft pulp mill in
Germany, referred to as the "Xxxxxxxxx Mill", that produces softwood kraft
pulp and two paper xxxxx in Heidenau and Fahrbruke, Germany, and owns an
interest in and is implementing a "greenfield" project, referred to as the
"Stendal Project", to construct a softwood kraft pulp mill near Stendal
Germany;
B. The Corporation recognizes that the Executive has acquired special skills
and experience in the pulp and paper industry and desires to employ the
Executive as the Chief Financial Officer, Executive Vice-President and
Secretary of the Corporation as of the Effective Date; and
C. Both the Corporation and the Executive wish formally to agree to the terms
and conditions of the Executive's employment with the Corporation and the
terms and conditions that will, in certain circumstances hereinafter set
forth, govern in the event of a termination of the employment of the
Executive by the Corporation.
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NOW THEREFORE in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby covenant and agree as follows:
ARTICLE I
RECITALS
1.1 Recitals. The parties hereby represent and warrant that the above recitals
are true and correct.
ARTICLE II
INTERPRETATION
2.1 Headings. The headings of the Articles, Sections and subsections herein are
inserted for convenience of reference only and shall not affect the meaning
or construction hereof.
2.2 Definitions. For the purposes of this Agreement, the following terms shall
have the following meanings, respectively:
(a) "Accrued Benefits" has the meaning ascribed to such term in subsection
4.1(b)(iv) hereof;
(b) "Agreement" means this Employment Agreement and all schedules and
amendments hereto;
(c) "Annual Bonus" has the meaning ascribed to such term in Section 3.6(a)
hereof;
(d) "Base Salary" has the meaning ascribed to such term in Section 3.6(a)
hereof;
(e) "Board" means the board of Trustees of the Corporation;
(f) "Change of Control" means the occurrence of any of the following
events:
(i) The receipt by the Corporation of a Schedule 13D or other
statement filed under Section 13(d) of the Exchange Act
indicating that any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act): (a) has become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing more than 20% of the Common Shares; or (b) has sole
and/or shared voting, or dispositive, power over more than 20% of
the Common Shares; or
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(ii) A change in the composition of the Board occurring within a
two-year period prior to such change, as a result of which fewer
than a majority of the Trustees are Incumbent Trustees.
"Incumbent Trustees" shall mean Trustees who are either: (a)
Trustees of the Corporation as of the Effective Date; or (b)
elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Trustees who had
been Trustees two (2) years prior to such change and who were
still in office at the time of such election or nomination; or
(iii) The solicitation of a dissident proxy, or any proxy not approved
by the Incumbent Trustees, the purpose of which is to change the
composition of the Board with the result, or potential result,
that fewer than a majority of the Trustees will be Incumbent
Trustees; or
(iv) The consummation of a merger, amalgamation or consolidation of
the Corporation with or into another entity or any other
corporate reorganization, if more than 50% of the combined voting
power of the continuing or surviving entity's securities
outstanding immediately after such merger, amalgamation,
consolidation or reorganization are owned by persons who were not
stockholders of the Corporation immediately prior to such merger,
amalgamation, consolidation or reorganization; or
(v) The commencement by an entity, person or group (other than the
Corporation or a wholly owned subsidiary of the Corporation) of a
tender offer, an exchange offer or any other offer or bid for
more than 20% of the Common Shares; or
(vi) The consummation of a sale, transfer or disposition by the
Corporation of all or substantially all of the assets of the
Corporation; or
(vii) The commencement of any proceeding by or against the Corporation
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding-up, reorganization, arrangement, adjustment,
protection, relief or composition of the Corporation or its
debts, under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or for the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial
part of its property; or
(viii) The approval by the shareholders of the Corporation of a plan
of complete liquidation or dissolution of the Corporation.
In the case of the occurrence of any of the events set forth in
subsection 2.2.(f)(vii), a Change of Control shall be deemed to occur
immediately prior to the occurrence of any such events. An event shall
not constitute a Change of Control if its sole purpose is to change
the jurisdiction of the Corporation's
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organization or to create a holding company, partnership or trust that
will be owned in substantially the same proportions by the persons who
held the Corporation's securities immediately before such event.
Additionally, a Change of Control will not be deemed to have occurred,
with respect to the Executive, if the Executive is part of a
purchasing group that consummates the Change of Control event;
(g) "Common Shares" means the issued and outstanding shares of beneficial
interest of the Corporation;
(h) "Compensation Committee" means the independent committee of the Board
consisting of two or more Trustees, not employed by the Corporation
and each of whom is a Disinterested Trustee (as defined in the Stock
Option Plan), which committee is responsible for making any and all
decisions to award stock options under the Stock Option Plan to
officers of the Corporation, and in the event the Corporation does not
have a Compensation Committee all references herein to Compensation
Committee shall be deemed to refer to the Board as a whole;
(i) "Date of Termination" means the date of termination of the Executive's
employment with the Corporation;
(j) "Disability" shall mean the Executive's failure to substantially
perform his material duties for the Corporation on a full-time basis
for twelve (12) consecutive months as a result of physical or mental
incapacity;
(k) "Disability Termination" has the meaning ascribed thereto in Section
4.1 hereof;
(l) "Effective Date" means August 15, 2003;
(m) "Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as the same may be
amended, modified or restated and any successor or replacement
thereto;
(n) "Good Reason" means, without the written consent of the Executive, the
occurrence of any of the following events:
(i) Any material reduction or diminution (except temporarily during
any period of physical or mental incapacity or disability of the
Executive) in the Executive's titles, status or positions, any
material reduction or diminution in the Executive's authority,
duties or responsibilities with the Corporation (including any
position or duties as a Trustee of the Corporation and the
failure to re-elect the Executive as a Trustee and to the Board),
it being acknowledged that, in the event any entity becomes the
owner, directly, indirectly, beneficially or otherwise of more
than 50% of the Common Shares, it shall be Good Reason if the
Executive is not the Chief Financial Officer of such entity;
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(ii) A breach by the Corporation of any material provision of this
Agreement, including, but not limited to, a breach of the
obligations of the Corporation under Sections 3.6, 5.1 and 6.8
(other than a reduction in the Executive's Base Salary that does
not exceed an aggregate of ten percent (10%) of the Executive's
then current Base Salary and which reduction applies, in equal
percentages, to all senior officers of the Corporation) or any
failure to timely pay any part of the Executive's compensation
hereunder, including, without limitation, the Executive's Base
Salary, Annual Bonus and any other bonuses payable to him or to
materially provide, in the aggregate, the level of benefits
contemplated herein;
(iii) The failure of the Corporation to obtain and deliver to the
Executive a written agreement, in the form satisfactory to the
Executive acting reasonably, to be entered into with any
successor, assignee or transferee of the Corporation to assume
and agree to perform this Agreement in accordance with Section
6.10 hereof, other than in the case of a Permitted Assignment;
(iv) Any failure by or of the Corporation to continue in effect any
benefit, bonus, profit sharing, incentive, remuneration,
compensation, stock ownership, stock purchase, stock option, life
insurance, disability, pension or retirement plans in which the
Executive is participating or entitled to participate, or the
Corporation takes, or fails to take, any action that materially
adversely affects the Executive's participation in, or reduces
his rights or benefits, under or pursuant to such plans, or the
Corporation fails to increase or improve such rights or benefits
on a basis consistent with practices in effect prior to such
failure, or with practices implemented subsequent to a Change of
Control, with respect to senior officers of the Corporation;
(v) Any failure by the Corporation to provide the Executive with the
number of paid vacation days to which he is entitled, as set
forth herein, or the Corporation failing to increase such paid
vacation days on a basis consistent with practices in effect
prior to such failure, or with practices implemented subsequent
to a Change of Control, with respect to the senior officers of
the Corporation; and
(vi) The Corporation taking any action to deprive the Executive of any
material fringe benefit enjoyed by him immediately prior to such
deprivation or the Corporation failing to increase or improve
such material fringe benefits on a basis consistent with
practices in effect prior to such deprivation, or with practices
implemented subsequent to a Change of Control, with respect to
senior officers of the Corporation;
(o) "Incumbent Trustees" has the meaning ascribed thereto in Section
2.2(f)(ii);
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(p) "Incentive Plan" means the 2002 Employee Incentive Bonus Plan of the
Corporation, as the same may be amended, modified or restated and any
replacement or successor thereto;
(q) "Just Cause" means the occurrence of any of the following events:
(i) Serious misconduct, dishonesty or disloyalty of the Executive
directly related to the performance of his duties for the
Corporation which results from a willful act or omission or from
gross negligence and which is materially injurious to the
operations, financial condition or business reputation of the
Corporation;
(ii) Willful and continued failure by the Executive to substantially
perform his duties under this Agreement (other than any such
failure resulting from his incapacity due to physical or mental
disability or impairment);
(iii) Any other material breach of this Agreement by the Executive; or
(iv) Any event or circumstance that would constitute cause for
termination of employment at law.
For purposes of this Agreement, no act, or failure to act, by the
Executive shall be "willful" unless it is done, or omitted to be done,
in bad faith and without a reasonable belief that the act or omission
was in the best interests of the Corporation;
(r) "Market Price" means on any date, the average market price of the
Common Shares calculated as the simple average of the closing price of
the Common Shares as quoted through NASDAQ on each of the 10 business
days preceding such date on which a closing price was quoted;
(s) "NASDAQ" means the National Association of Stock Dealers Automated
Quotation System;
(t) "Permitted Assignment" means an assignment by the Corporation of the
rights and obligations of the Corporation contained in this Agreement
to a wholly-owned subsidiary of the Corporation resident in Canada,
provided that the Corporation is not, as a result of such assignment,
relieved of its liabilities, obligations and duties under this
Agreement;
(u) "Prime Rate" means the rate of interest expressed as a rate per annum
that the Royal Bank of Canada, at its main branch in Vancouver,
British Columbia, establishes and announces from time to time as the
reference rate of interest that it will charge for Canadian dollar
demand loans to its customers in Canada and which it refers to as its
"prime rate";
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(v) "Prorated Bonus" has the meaning ascribed to such term in subsection
4.1(c) hereof;
(w) "Stock Option Plan" means the Amended and Restated 1992 Non-Qualified
Stock Option Plan of the Corporation, as the same may be amended,
modified or restated and any replacement or successor thereto; and
(x) "Trustees" means the trustees of the Corporation, and "Trustee" means
any one of them.
ARTICLE III
TERMS AND CONDITIONS OF EMPLOYMENT
3.1 Employment. The Corporation does hereby employ the Executive as its Chief
Financial Officer, Executive Vice-President and Secretary, and the
Executive hereby accepts such employment by the Corporation, as of the
Effective Date, all upon and subject to the terms and conditions of this
Agreement. The Executive agrees to serve, at no additional remuneration, in
such other executive capacities and to assume such responsibilities and
perform such duties consonant with his position as an executive of the
Corporation as the Chief Executive Officer ("CEO") of the Corporation may
require and assign to him from time to time, including with subsidiaries of
the Corporation.
3.2 Duties and Functions. The Executive shall be responsible to and shall
report to the CEO. The CEO may vary the conditions, duties and services
provided by the Executive from time to time according to the operational
and other needs of the business of the Corporation, provided that his
duties will reasonably reflect the responsibilities conferred by this
Agreement. The Corporation expects the Executive to produce timely and good
quality work, acting in a competent, truthworthy and loyal manner. The
Executive agrees to carryout, using his reasonable best efforts and in a
manner that will promote the interests of the business of the Corporation,
such duties and functions as the CEO may request from time to time,
including, but not limited to, the duties and functions set forth in
Schedule "A" hereto.
3.3 Orders of Board. The Executive shall always act in accordance with any
reasonable decision of and obey and carry out all lawful and reasonable
orders given to him by the CEO and/or the Board.
3.4 Time and Energy. Unless prevented by ill health, or physical or mental
disability or impairment, the Executive shall, during the term hereof,
devote sufficient business time, care and attention to the business of the
Corporation in order to properly discharge his duties hereunder.
3.5 Faithful Service. The Executive shall well and faithfully serve the
Corporation and use his reasonable efforts to promote the interests thereof
and shall not use for his own
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purposes, or for any purposes other than those of the Corporation, any
non-public information he may acquire with respect to the business, affairs
and operations of the Corporation.
3.6 Compensation. During the term of this Agreement, and any extension thereof,
the Corporation shall pay and provide the Executive the following:
(a) Signing Bonus and Annual Cash Compensation. In consideration of the
Executive accepting employment with the Corporation upon and subject
to the terms and conditions of this Agreement and the Executive
foregoing other employment opportunities, the Corporation shall, upon
execution of this Agreement, pay the Executive a one-time signing
bonus of $75,000. As compensation for his services to the Corporation,
the Executive shall receive a base salary (the "Base Salary") and in
addition to the Base Salary shall be eligible to receive in respect of
each calendar year (or portion thereof) additional variable cash
compensation, in an amount determined in accordance with any bonus,
profit sharing or short term incentive compensation program which may
be established by the Board either for the Executive or for senior
officers of the Corporation (the "Annual Bonus"). As of the Effective
Date, the Executive's annualized Base Salary shall be $320,000. During
the term of this Agreement the Board shall review the Executive's Base
Salary and Annual Bonus then in effect at least annually to ensure
that such amounts are competitive with awards granted to similarly
situated executives of publicly held companies comparable to the
Corporation and shall increase such amounts as the Board may approve.
The Board shall not reduce the Executive's Base Salary except as set
forth herein. The Board may reduce the Executive's Base Salary
provided such reduction in the Executive's Base Salary does not exceed
an aggregate total of ten percent (10%) of the Executive's Base Salary
in effect as of the Effective Date and which reduction applies, in
equal percentages, to all senior officers of the Corporation. The
Executive's Base Salary and Annual Bonus shall be payable in
accordance with the Corporation's normal payroll practices, as
applicable, and shall be subject to deductions in respect of statutory
remittances, including, without limitation, deductions for income tax,
pension plan premiums and employment insurance premiums. No increase
in the Executive's Base Salary and Annual Bonus shall be used to
offset or otherwise reduce any obligations of the Corporation to the
Executive hereunder or otherwise.
(b) Incentive Plan. The Executive shall be entitled to participate in the
Incentive Plan in accordance with the terms thereof as in effect from
time to time. The Corporation agrees, in each fiscal year, to grant to
the Executive units under the Incentive Plan in such amount annually
as determined by the Board based on the Executive's Base Salary and
Annual Bonus in such year, before deduction for income tax, pension
plan premiums, employment insurance premiums and other statutory
remittances.
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(c) Employee Benefits. The Executive shall, to the extent eligible, be
entitled to participate at a level commensurate with his position in
all of the Corporation's employee benefit, welfare and retirement
plans and programs, as well as equity plans, employee incentive plans
and bonus plans, provided by the Corporation to its senior officers in
accordance with the terms thereof as in effect from time to time.
(d) Automobile. The Executive shall be entitled to the lease and use of an
automobile pursuant to the Corporation's policy on automobiles for
executives as may be in effect from time to time.
(e) Perquisites. The Corporation shall provide the Executive, at the
Corporation's cost, with all perquisites which other senior officers
of the Corporation are entitled to receive and such other perquisites
which are suitable to the character of the Executive's position with
the Corporation and adequate for the performance of his duties
hereunder. To the extent legally permissible under applicable laws,
the Corporation shall not treat such amounts as income to the
Executive.
(f) Business and Entertainment Expenses. Upon submission of appropriate
documentation in accordance with its policies in effect from time to
time, the Corporation shall pay or reimburse the Executive for all
business expenses which the Executive incurs in the performance of his
duties under this Agreement, including, but not limited to, travel,
entertainment, professional dues and subscriptions, and all dues,
fees, and expenses associated with membership in various professional,
business, and civic associations and societies in which the Executive
participates in accordance with the Corporation's policies in effect
from time to time.
3.7 Term. Subject to the terms of Article IV hereof, this Agreement shall
remain in effect for a period of thirty-six (36) months from the Effective
Date. In the event that the Corporation does not deliver written notice to
the Executive, not later than 12 months prior to the expiration of the
original term, that the Corporation does not wish to renew this Agreement,
the term hereof shall renew automatically for an additional period of
twelve (12) months from the expiration of the original term. Thereafter, it
shall automatically renew for successive periods of 12 months unless the
Corporation provides written notice to the Executive that it does not wish
to renew the term of this Agreement at least 360 days prior to the expiry
of the applicable term hereof.
3.8 Amounts Payable considered Debt. All amounts payable by the Corporation
under this Agreement shall constitute a debt owing by the Corporation to
the Executive.
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ARTICLE IV
OBLIGATIONS OF THE CORPORATION UPON TERMINATION
4.1 Death or Disability. The Corporation may terminate the Executive's
employment in the event the Executive has been unable to perform his
material duties hereunder because of Disability by giving the Executive
notice of such termination while such Disability continues (a "Disability
Termination"). The Executive's employment shall automatically terminate on
the Executive's death. In the event the Executive's employment with the
Corporation terminates during the term of this Agreement by reason of the
Executive's death or as a result of a Disability Termination, then upon and
immediately effective the Date of Termination:
(a) the Executive shall be fully and immediately vested in the unvested
options or equity awards granted by the Corporation to the Executive,
that are unvested on the Date of Termination so that such options and
equity awards are fully and immediately exercisable by the Executive;
(b) the Corporation shall promptly pay and provide the Executive (or in
the event of the Executive's death, the Executive's estate):
(i) any unpaid Base Salary and any outstanding and accrued regular
and special vacation pay through the Date of Termination;
(ii) any unpaid Annual Bonus and other bonuses accrued with respect to
the fiscal year ending on or preceding the Date of Termination;
(iii) reimbursement for any unreimbursed expenses incurred through to
the Date of Termination;
(iv) all other payments, benefits or fringe benefits to which the
Executive may be entitled subject to and in accordance with the
terms of any applicable compensation arrangement or benefit,
equity or fringe benefit plan or program or grant, and amounts
which may become due under this Agreement (the payments referred
to herein in subsections 4.1(b)(i) to 4.1(b)(iv) shall,
collectively, be referred to as "Accrued Benefits"); and
(v) any unpaid amounts payable under the Incentive Plan with respect
to the fiscal year ending on or preceding the Date of
Termination; and
(c) the Corporation shall pay to the Executive (or in the event of the
Executive's death, the Executive's estate) at the time other senior
executives are paid under any cash bonus or long term incentive plan,
a pro rata Annual Bonus equal to the amount the Executive would have
received if his employment continued (without any discretionary
cutback) multiplied by a fraction where the numerator is the number of
days in each respective bonus period prior to the Executive's
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termination and the denominator is the number of days in the bonus
period (the "Prorated Bonus").
4.2 Termination for Just Cause. The Corporation may terminate the Executive's
employment for Just Cause. In the event that the Executive's employment
with the Corporation is terminated during the term of this Agreement by the
Corporation for Just Cause, the Executive shall not be entitled to any
additional payments or benefits hereunder (including, without limitation,
any payments under the Incentive Plan), other than the Accrued Benefits
(including, but not limited to, any then vested options or equity grants
granted by the Corporation to the Executive) and the Prorated Bonus which
the Corporation shall pay or provide to the Executive immediately upon the
Date of Termination.
4.3 Voluntary Termination for Good Reason; Involuntary Termination Other Than
for Just Cause. The Executive may terminate his employment with the
Corporation for Good Reason at any time within one hundred eighty (180)
days after the occurrence of the Good Reason event by written notice to the
Corporation. If the Executive's employment with the Corporation is
voluntarily terminated by the Executive for "Good Reason" or is
involuntarily terminated by the Corporation other than for "Just Cause",
then the Corporation shall pay or provide the Executive with the following:
(a) any Accrued Benefits;
(b) any unpaid amounts payable under the Incentive Plan with respect to
the fiscal year ending on or preceding the Date of Termination;
(c) subject to (d) below, a severance amount equal to the sum of: (A) the
Executive's then Base Salary payable in respect of the then remaining
term of this Agreement; and (B) the Executive's Annual Bonuses payable
in respect of the calendar years (or portions thereof) then remaining
in the term of this Agreement, which bonuses will be calculated based
on the higher of (x) the Executive's then current Annual Bonus, (y)
the highest variable pay and incentive bonus received by the Executive
from the Corporation for the three (3) fiscal years last ending prior
to such termination and (z) the amount equal to 50% of the Executive's
then current Base Salary, which severance amount is payable in
substantially equal installments over twelve (12) months in accordance
with the Corporation's standard payroll practice; provided, however,
that in the event of a Change of Control following such termination,
the unpaid portion of such severance amount, if any, shall be paid to
the Executive in full in a single lump sum cash payment immediately
following such Change of Control;
(d) if such termination occurs in contemplation of, at the time of, or
within eighteen (18) months after a Change of Control, the Executive
shall instead be entitled to a lump sum cash payment immediately
following such termination equal to three (3) times the sum of: (A)
the Executive's then Base Salary; and (B) the higher of (x) the
Executive's then current Annual Bonus, (y) the highest variable pay
and
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annual incentive bonus received by the Executive for the three (3)
fiscal years last ending prior to such termination and (z) the amount
equal to 50% of the Executive's then current Base Salary; and
(e) the Executive shall be fully and immediately vested in the unvested
options or equity awards granted by the Corporation to the Executive
so that such options and equity awards are fully and immediately
exercisable by the Executive.
For greater certainty, if such termination occurs in contemplation of, at
the time of, or within eighteen (18) months after a Change of Control, the
Executive shall be entitled to the payments set out in Subsection 4.3(d)
hereof and will not be entitled to any payments or other amounts under
Subsection 4.3(c) hereof and any amounts paid by the Corporation to the
Executive pursuant to Subsection 4.3(c) shall be setoff from and credited
as payments made by the Corporation to the Executive pursuant to Subsection
4.3(d) hereof.
4.4 Without Good Reason. The Executive may terminate his employment at any time
without Good Reason by written notice to the Corporation. In the event that
the Executive's employment with the Corporation is terminated during the
term of this Agreement by the Executive without Good Reason, the Executive
shall not be entitled to any additional payments or benefits hereunder
(including, without limitation, any payments under the Incentive Plan),
other than Accrued Benefits (including, but not limited to, any then vested
options or equity grants granted by the Corporation to the Executive) and
the Prorated Bonus which the Corporation shall pay or provide to the
Executive immediately upon the Date of Termination.
4.5 Mitigation and Offset. In the event of the termination of the Executive's
employment under this Agreement;
(a) The Executive shall be under no obligation to seek other employment or
otherwise mitigate the value of any compensation or benefits
contemplated by this Agreement, nor shall any such compensation or
benefits be reduced in any respect in the event that the Executive
shall secure, or shall not reasonably pursue, alternative employment
or earnings or benefits that the Executive may receive from any other
source; and
(b) Except as otherwise set forth herein, the amounts payable by the
Corporation hereunder shall not be subject to setoff, offset,
counterclaim, recoupment, defence or other right which the Corporation
may have against the Executive or others.
4.6 Change of Control Vesting Acceleration. In the event of a "Change of
Control", immediately effective the date of such Change of Control, the
Executive shall be fully and immediately vested in the unvested options or
equity awards granted by the Corporation to the Executive, that are
unvested on the Date of Termination so that such options and equity awards
are fully and immediately exercisable by the Executive.
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ARTICLE V
INDEMNIFICATION
5.1 Indemnification. The Corporation hereby covenants and agrees that if the
Executive is made a party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative of any nature whatsoever (a "Proceeding"), by reason of, or
as a result of, the fact that he is or was an officer, employee, trustee or
agent of the Corporation or is or was serving at the request of the
Corporation as a trustee, director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not
the basis of such Proceeding is the Executive's alleged action in an
official capacity while serving as an officer, employee, trustee or agent
of the Corporation, the Executive shall be indemnified and held harmless by
the Corporation to the fullest extent legally permitted or authorized by
the Corporation's constating documents or, if greater, by applicable
federal, state or provincial legislation, against all costs, expenses,
liability and losses of any nature whatsoever (including, without
limitation, attorney's fees, judgments, fines, interest, taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or
suffered by the Executive in connection therewith (collectively, the
"Indemnification Amounts"), and such indemnification shall continue as to
the Executive even if he has ceased to be a officer, director, employee,
trustee or agent of the Corporation or other entity and shall inure to the
benefit of the Executive's heirs, executors and administrators.
5.2 Standard of Conduct. Neither the failure of the Corporation or the Board to
have made a determination prior to the commencement of any proceeding
concerning payment of amounts claimed by the Executive under Section 5.1
hereof that indemnification of the Executive is proper because he has met
the applicable standard of conduct, nor a determination by the Corporation
or the Board that the Executive has not met such applicable standard of
conduct, shall create a presumption that the Executive has not met the
applicable standard of conduct.
ARTICLE VI
GENERAL
6.1 No Prohibition on Employment. The Executive shall not be prohibited in any
manner whatsoever from obtaining employment with or otherwise forming or
participating in a business competitive to the business of the Corporation
after termination of employment with the Corporation.
6.2 Resignation of Positions. The Executive agrees that after termination of
his employment with the Corporation he will tender his resignation from any
position he may hold as an officer, director or trustee of the Corporation
or any of its affiliated or associated companies if so requested by the
Board.
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6.3 Rights and Obligations Survive. The respective rights and obligations of
the parties hereunder shall survive any termination of the Executive's
employment to the extent necessary to preserve such rights and obligations.
For greater certainty, notwithstanding anything to the contrary in this
Agreement, the parties hereto acknowledge and agree that Sections 4.1, 4.2,
4.3, 4.5, 4.6, 5.1, 6.3, 6.5, 6.7, 6.8, 6.13, 6.14 and 6.16 shall survive
the termination of the Executive's employment with the Corporation and
remain in full force and effect.
6.4 Beneficiaries. The Executive shall be entitled, to the extent permitted
under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following the Executive's death by giving the Corporation written notice
thereof. In the event of the Executive's death or a judicial determination
of his incompetence, reference in this Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
6.5 Independent Legal Advice. The Executive hereby represents and warrants to
the Corporation and acknowledges and agrees that he had the opportunity to
seek, was not prevented nor discouraged by the Corporation from seeking and
did obtain, independent legal advice prior to the execution and delivery of
this Agreement.
6.6 Fair and Reasonable Provisions. The Corporation and Executive acknowledge
and agree that the provisions of this Agreement regarding further payments
of the Executive's Base Salary, Annual Bonus and other bonuses, and the
exercisability and vesting of the options or equity grants granted by the
Corporation to the Executive, constitute fair and reasonable provisions for
the consequences of such termination, do not constitute a penalty, and such
payments and benefits shall not be limited or reduced by amounts the
Executive might earn or be able to earn from any other employment or
ventures during the remainder of the agreed term of this Agreement.
6.7 Lump Sum Payment. Except as otherwise specifically provided in this
Agreement, the Corporation shall pay the Executive any lump sum payment due
to him under this Agreement within ten (10) business days of the Date of
Termination. Any payments due to the Executive under this Agreement that
are not paid within such time shall accrue interest, compounded quarterly,
on the total unpaid amount payable under this Agreement, such interest to
be calculated at a rate equal to 2% in excess of the Prime Rate then in
effect from time to time during the period of such non-payment.
6.8 Liability Insurance. The Corporation shall use its reasonable best efforts
to obtain and continue coverage of the Executive under trustees and
officers liability insurance both during and, while potential liability
exists, after the Executive's employment with the Corporation in the same
amount and to the same extent, if any, as the Corporation covers its other
trustees and/or officers.
6.9 No Derogation of Rights. Nothing herein derogates from any rights the
Executive may have under applicable law.
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6.10 Assignability. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs (in
the case of the Executive) and assigns. No rights or obligations of the
Corporation under this Agreement may be assigned or transferred by the
Corporation except: (i) in the case of a "Permitted Assignment"; and (ii)
such rights or obligations may be assigned or transferred pursuant to a
merger, amalgamation, reorganization, continuance or consolidation in which
the Corporation is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Corporation, provided that
the assignee or transferee is the successor to all or substantially all of
the assets of the Corporation and such assignee or transferee assumes the
liabilities, obligations and duties of the Corporation, as contained in
this Agreement, either contractually or as a matter of law. No rights or
obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than: (a) his rights to compensation and
benefits, in whole or in part, which may be transferred by the Executive to
(i) a corporation owned or controlled by the Executive or members of the
Executive's family, and (ii) a trust, the beneficiaries of which are the
Executive or members of the Executive's family; (b) to a corporation
through which the Executive shall provide the services required of him
hereunder; and (c) as provided in Section 6.4 hereof.
6.11 Authorization. The Corporation represents and warrants that it is fully
authorized and empowered to enter into this Agreement and perform its
obligations hereunder, which performance will not violate any agreement
between the Corporation and any other person, firm or organization nor
breach any provisions of its constating documents or governing legislation.
6.12 Amendment or Waiver. No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and an
authorized officer of the Corporation. No waiver by either party hereto of
any breach by the other party hereto of any condition or provision
contained in this Agreement to be performed by such other party shall be
deemed a waiver of a similar or dissimilar condition or provision at the
same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Corporation, as the
case may be.
6.13 Interpretation of Incentive Plan, Stock Option Plan and Option Agreements.
In the event of a conflict between, or inconsistency with, any, or any
part, of the terms or provisions of this Agreement and the terms or
provisions of the Incentive Plan, the Stock Option Plan or any option
agreements entered into pursuant to the Stock Option Plan, as the case may
be, the terms and provisions of this Agreement shall be deemed to govern,
supersede, and take precedence over such inconsistent or conflicting terms
and provisions contained in the Incentive Plan, the Stock Option Plan and
the option agreements entered into pursuant to the Stock Option Plan, as
the case may be.
6.14 Governing Law and Venue. This Agreement shall be construed and interpreted
in accordance with the laws of the Province of British Columbia, and the
federal laws of Canada applicable therein. Each of the parties hereby
irrevocably attorns to the non-exclusive jurisdiction of the Supreme Court
of British Columbia, situate in Vancouver, British Columbia, with respect
to any matters arising out of this Agreement.
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6.15 Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered or mailed by
prepaid registered mail addressed as follows:
(a) in the case of the Corporation:
Xxxxxx International Inc.
Suite 00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx, XXX 00000
(b) in the case of the Executive:
to the last address of the Executive in the records of the Corporation
and its subsidiaries or to such other address as the parties may from
time to time specify by notice given in accordance herewith.
Any notice so given shall be conclusively deemed to have been given or
made on the day of delivery, if delivered, or if mailed as aforesaid,
upon the date shown on the postal return receipt as the date upon
which the envelope containing such notice was actually received by the
addressee.
6.16 Severability. If any provision contained herein is determined to be void or
unenforceable for any reason, in whole or in part, it shall not be deemed
to affect or impair the validity of any other provision contained herein
and the remaining provisions shall remain in full force and effect to the
fullest extent permissible by law.
6.17 Entire Agreement. Other than the Officer's Indemnity Agreement between the
Executive and the Corporation of even date herewith (the "Indemnity
Agreement"), this Agreement contains the entire understanding and agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto. For greater certainty, notwithstanding anything to the contrary in
this Agreement, the parties hereto acknowledge and agree that nothing
contained herein is intended to modify, abridge, limit or affect any of the
rights or obligations of the parties hereto contained in the Indemnity
Agreement.
6.18 Currency. Unless otherwise specified herein all references to dollar or
dollars are references to Canadian dollars.
6.19 Further Assurances. Each of the Executive and the Corporation will do,
execute and deliver, or will cause to be done, executed and delivered, all
such further acts, documents and things as the Executive or the Corporation
may require for the purposes of giving effect to this Agreement.
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6.20 Counterparts/Facsimile Execution. This Agreement may be executed in several
parts in the same form, and by facsimile, and such parts as so executed
shall together constitute one original document, and such parts, if more
than one, shall be read together and construed as if all the signing
parties had executed one copy of the said Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above written.
XXXXXX INTERNATIONAL INC.
By: /s/ Xxxxx Xxx
----------------------------------------
Name: Xxxxx Xxx
--------------------------------------
Title: President
--------------------------------------
SIGNED, SEALED and DELIVERED )
by XXXXX X. XXXXXXXX )
in the presence of: )
/s/ M.Y. Ho ) /s/ Xxxxx Xxxxxxxx
---------------------------------- ) --------------------------
Witness ) XXXXX X. XXXXXXXX
1620 - 000 Xxxxxxx Xxxxxx )
---------------------------------- )
Address )
Vancouver, B.C. )
---------------------------------- )
---------------------------------- )
---------------------------------- )
Occupation
A-1
SCHEDULE A
EXECUTIVE'S DUTIES
1. Supervision and management of all accounting and financial reporting
functions of the Corporation;
2. Supervision and management of all treasury, receivable and payable
functions of the Corporation;
3. Supervision and management of all banking arrangements of the Corporation;
4. Supervision and management of all other internal financial functions and
controls of the Corporation;
5. Supervision and management of all employees in the financial and accounting
departments of the Corporation;
6. Supervision and management of investor relations and corporate information
dissemination of the Corporation;
7. Supervision and management of all corporate secretarial functions of the
Corporation, including, without limitation, preparation of, or providing
assistance in the preparation of, all materials in connection with meetings
of the Board, preparation of, or providing assistance in the preparation
of, all materials in connection with meetings of holders of the Common
Shares, and maintaining the corporate minute books of the Corporation.
8. Preparation of all budgets and business plans, and reporting on the same;
9. Participation in the development of policies and programs, and reporting on
the same; and
10. Performance of such other functions and duties normally performed by a
chief financial officer and/or executive vice-president of publicly held
companies comparable to the Corporation, and such other duties and
functions consistent with the Executive's position which the CEO shall,
from time to time, reasonably direct.
