EXECUTIVE
SEVERANCE AGREEMENT
This Severance Agreement is made as of the 30th day of June, 2000
BETWEEN:
XXXXXXXX CHALLENGE CANADA LIMITED, a company incorporated under the
laws of the Province of British Columbia
(the "Company")
OF THE FIRST PART,
AND:
XXXXX XXXXXXXX
(the "Executive")
OF THE SECOND PART.
WHEREAS:
A. The Executive is a senior executive of the Company and has made and is
expected to continue to make significant contributions to the Company and
its shareholders, including in particular, in connection with any proposed
sale or disposition of the shares or assets of the Company which may be
undertaken by the Company or its majority shareholder, Xxxxxxxx Challenge
Limited ("FCL"); and
B. The Company desires to assure itself of both the present and future
continuity of management, to induce the Executive to remain with the
Company in connection with any Proposed Transaction (as defined below) and
to provide severance benefits for the Executive to be available only on and
after completion of a Proposed Transaction.
NOW THEREFORE in consideration of the mutual covenants and agreements contained
in this Agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by each of the parties), the
Company and the Executive agree as follows:
1. INTERPRETATION
1.1. DEFINITIONS. In this Agreement, the following terms will have the
following meanings unless the context otherwise requires:
(a) "Base Salary" means the annualized monthly base salary of the
Executive at the date of completion of a Proposed Transaction;
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(b) "Business Day" means any day other than a Saturday, Sunday or a day
observed as a holiday in Vancouver, British Columbia;
(c) "Board" means the board of directors of the Company;
(d) "Cause" means the occurrence of any of the following:
(i) continued failure by the Executive to substantially perform his
duties with the Company (other than any such failure resulting
from his Disability) after a demand for substantial performance
improvement has been delivered in writing to the Executive by the
Company which specifically identifies the manner in which it is
believed that the Executive has not substantially performed his
duties and after allowing the Executive an opportunity to improve
his performance; or
(ii) engaging by the Executive in misconduct which is materially
injurious (financially or otherwise) to the reputation or
business of the Company;
(e) "Common shares" means the Class A Common shares without par value in
the capital of the Company;
(f) "Constructive Dismissal" means a unilateral change by the Company,
without the Executive's consent, of a fundamental term or condition of
the Executive's employment including:
(i) a significant reduction in the Executive's responsibilities and
duties;
(ii) a decrease of more than 5% in the total compensation package
provided to the Executive; and
(iii) a transfer on a permanent basis of the Executive to an office or
location other than within the Greater Vancouver Regional
District;
(g) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with
the Company;
(h) "Dispute" has the meaning ascribed thereto in section 7;
(i) "Effective Date" means the date of termination of employment of the
Executive specified in a notice given by the Company or the date of
Constructive Dismissal;
(j) "Executive Benefits" has the meaning ascribed thereto in subsection
4.1(b) or subsection 5.1(b) as applicable;
(k) "Normal Retirement Date" means the date, if any, as of which the
Executive would be required to retire, determined in accordance with
the Company's practices and policies relating to retirement generally,
which practices and policies apply to its senior executives and are in
effect immediately prior to the completion
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of a Proposed Transaction or at the Effective Date, whichever is more
favourable to the Executive and, in absence of any such practices and
policies, means the date as of which the Executive attains the age of
65;
(l) "Person" means any individual, partnership, joint venture, company,
corporation, unincorporated association or any other entity;
(m) "Phantom Stock Plans" mean the Company's Phantom Stock Option Plans as
constituted at the Effective Date;
(n) "Proposed Transaction" means any of the following:
(i) the acquisition, directly or indirectly, by a Person (other than
FCL) or group of Related Persons (not including FCL) of Common
shares that (when taken together with any Common shares already
owned, directly or indirectly, by such Person or group of Related
Persons) constitute 100% of the outstanding Common shares;
(ii) the acquisition by a Person (other than FCL) or a group of
Related Persons (not including FCL) of all or substantially all
of the assets of the Company resulting in a realization by the
holders of Common shares of all or a significant part of their
investment in the Common shares;
(iii) a series of transactions involving the acquisition of Common
shares and/or assets of the Company (other than by FCL) which
results in a realization by the Shareholders of all or a
significant part of their investment in the Common shares;
(iv) the sale or disposition (other than a sale or disposition by way
of a secondary public offering) by FCL, directly or indirectly,
of all or part of the outstanding Common shares owned directly or
indirectly by FCL, such that any other Person or group of Related
Persons becomes the owner, directly or indirectly, of 40% or more
of the outstanding Common shares; or
(v) the acquisition, directly or indirectly, by the Company or one or
more of its subsidiaries of Common shares or other securities as
a result of which FCL no longer owns, directly or indirectly, or
exercises control or direction over, any Common shares,
and for these purposes, the term "acquisition" includes a transaction
or series of transactions by way of purchase, amalgamation, merger,
reorganization, arrangement, recapitalization, liquidation or other
business combination.
(o) "Protection Period" means the period commencing on the date of the
completion of a Proposed Transaction and ending on the second
anniversary of that date;
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(p) "Related Person" means in relation to any Person participating in a
Proposed Transaction, any Affiliate (as defined in the COMPANY ACT
(British Columbia)) of that Person and any other Person which,
pursuant to any agreement, commitment or understanding, acts jointly
or in concert with that Person in connection with the completion of a
Proposed Transaction;
(q) "Retirement" means the retirement of the Executive from employment by
the Company on or after the Normal Retirement Date;
(r) "SAR" means any right granted pursuant to and in accordance with the
terms of any of the Phantom Stock Plans;
(s) "Selling Price Per Share" means the purchase price or value of the
consideration paid for each Common share of the Company purchased or
otherwise acquired pursuant to a Proposed Transaction and which, in
the case of a Proposed Transaction involving the sale of all or
substantially all of the assets of the Company, will be equal to the
aggregate purchase price (after deduction of debt retired by the
Company or assumed by the purchaser in connection with the Proposed
Transaction and transaction costs) for all of such assets in the
Proposed Transaction divided by the number of outstanding Common
shares of the Company on the date of completion of the Proposed
Transaction;
(t) "Short Term Incentive Plan" means the Company's Short Term Incentive
Plan as constituted and administered at the Effective Date;
(u) "Stock Option" means any right to subscribe for Common shares issued
pursuant to the Stock Option Plan;
(v) "Stock Option Plan" means the Company's 1995 Stock Option Plan as
constituted and administered at the Effective Date;
(w) "Term" means the period commencing as of the date hereof and ending on
June 30, 2001 or such later date as the Company may from time to time
by notice to the Executive specify;
(x) "Termination Date" means the earliest of:
(i) the date immediately following the expiry of 24 months from the
Effective Date;
(ii) the date of commencement of alternate employment by the Executive
as contemplated by section 4.2;
(iii) the date of the termination of the Executive's employment with
the Company by reason of his death or for Cause;
(y) "Termination Leave" means the period commencing on the Effective Date
and ending on the Termination Date.
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1.2. DATE OF COMPLETION. For the purposes of this Agreement, the term "date of
completion" where used in connection with a Proposed Transaction means the
date on which the actual transfer of the Common shares or assets of the
Company comprising the Proposed Transaction takes effect.
1.3. GENDER AND NUMBER. Unless otherwise expressly provided for in this
Agreement or unless the context otherwise requires, words importing the
singular include the plural and VICE VERSA and words importing gender
include all genders.
2. OPERATION OF AGREEMENT.
2.1. Subject to subsection 2.2, this Agreement will be effective and binding on
the parties hereto immediately upon its execution but, anything in this
Agreement to the contrary notwithstanding, this Agreement will not be
operative unless and until the completion of a Proposed Transaction occurs.
Upon and concurrently with the completion of a Proposed Transaction at any
time during the Term, without further action on the part of any party, this
Agreement shall become immediately operative. For the avoidance of doubt,
this Agreement will not be applicable in respect of the termination of the
Executive's employment with the Company for any reason whatsoever at any
time prior to the commencement of the Protection Period, in which case the
Executive's then existing terms of employment and legal rights in
connection with any such termination will apply.
2.2. Section 3 of this Agreement will not apply to any termination by the
Company of the Executive's employment in connection with the completion of
any Proposed Transaction if:
(a) the Executive has accepted employment with the purchaser (the
"Purchaser"); and
(b) the Purchaser has agreed to be bound by and has assumed all of the
obligations of the Company under this Agreement.
For greater certainty, if the Executive remains employed by the Purchaser
for the duration of the Protection Period, all rights of the Executive
under this Agreement as against the Purchaser will cease immediately
following the last day of that Period.
3. TERMINATION AFTER COMPLETION OF A PROPOSED TRANSACTION
3.1. In the event during the Protection Period of either (i) the receipt by the
Executive of notice of termination of his employment by the Company (other
than by reason of his Disability or Retirement or for Cause) or (ii) the
Executive's Constructive Dismissal, the Executive may, within seven days
after receipt of notice of termination or the Executive's Constructive
Dismissal, whichever is applicable, elect by written notice to the Company
to accept Termination Leave in accordance with section 4 of this Agreement
or receive a Lump Sum Settlement in accordance with section 5 of this
Agreement.
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3.2. If no election is made by the Executive within the period specified in
section 3.1, the Executive shall be deemed to have elected to accept
Termination Leave in accordance with section 4.
4. TERMINATION LEAVE ELECTION
4.1. Subject to subsection 4.2, during the Termination Leave the Executive will
remain an employee of the Company and will be entitled to a leave of
absence from work on the following terms:
(a) the Company will on the last Business Day of each month during the
Termination Leave pay to the Executive an amount equal to one-twelfth
(1/12) of the Base Salary, less all deductions provided for in
Schedule A or as required of the Company by law;
(b) all benefits and perquisites to which the Executive was entitled
immediately prior to the Effective Date will terminate on that Date,
except that the Company will provide to, continue or maintain for the
Executive, as applicable, the benefits and perquisites described in
Schedule A (the "Executive Benefits");
(c) the Executive will continue to participate in the Short Term Incentive
Plan on the following terms:
(i) subject to paragraph (ii) of this subsection, payments to the
Executive of any bonus awards under the Short Term Incentive Plan
will continue to be made to the Executive in accordance with the
Plan's terms;
(ii) bonus awards payable to the Executive under the Short Term
Incentive Plan will be based solely on the corporate financial
performance portion of the awards payable under the Plan and the
Executive will not be entitled to receive any awards which may be
payable under the Plan based on achievement of individual
objectives;
(iii) in the event that at any time during the Termination Leave a
determination of bonus awards cannot be made under the Short Term
Incentive Plan as a result of a material change in the Company's
business, any merger or other corporate reorganization involving
the Company or the disposition of all or some of its assets, the
Company will pay a bonus award to the Executive based on an
amount equal to 75% of the Executive's target bonus amount for
the fiscal year of the Company in which the Effective Date
occurred, which amount will be paid to the Executive in
accordance with the terms of the Plan and this Agreement; and
(iv) any payment to the Executive under the Short Term Incentive Plan
for the fiscal year in which the Termination Date occurs will be
pro-rated to the Termination Date;
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(d) to the extent that the Executive has at the Effective Date any rights
in respect of the Company for obligations of the Company in respect of
stock options issued on or prior to the Effective Date by FCL in
respect of shares of FCL, all such rights will, notwithstanding
anything to the contrary in this Agreement, continue in full force and
effect and be determined in accordance with the terms of such stock
options, but all other obligations, if any, of the Company to the
Executive in respect of stock options in respect of shares of FCL
shall terminate on the Effective Date; and
(e) all obligations, if any, of the Company to the Executive in respect of
the granting of any SAR or Stock Option shall terminate on the
Effective Date.
4.2. If, after the Effective Date, the Executive commences alternate employment
(of which the Executive shall promptly notify the Company) which is
comparable as to aggregate annual compensation and authority, duties and
responsibilities to the position held by the Executive immediately prior to
the Effective Date, the obligations of the Company pursuant to section 4.1
will upon the commencement of such alternate employment immediately be
altered as follows:
(a) all rights of the Executive to receive monthly payments pursuant to
subsection 4.1(a) will cease and the Company will forthwith pay to the
Executive a cash lump sum comprised of an amount equal to one half of
the amount which the Executive would have been entitled to receive
pursuant to subsection 4.1(a) for each month (or portion thereof)
remaining in the Termination Leave had it continued for a period of 24
months from the Effective Date;
(b) the Executive's entitlement to participate in any of the Executive
Benefits will cease effective from the date of commencement of that
employment (unless otherwise expressly stated in Schedule A); and
(c) the Executive's entitlement to participate in the Short Term Incentive
Plan will cease, subject to any payment to which the Executive would
have been entitled if the Termination Date were the date of
termination of his employment by the Company (without Cause) as
contemplated by the Plan.
4.3. The employment of the Executive with the Company will terminate on the
Termination Date.
5. LUMP SUM SETTLEMENT ELECTION
5.1. On the Effective Date, the Executive will cease to be an employee of the
Company on the following terms:
(a) within fourteen days after the Effective Date, the Company will pay to
the Executive, in addition to salary due to the Executive for the
period ending on the Effective Date, the sum of:
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(i) an amount representing all of the Executive's accrued regular and
extended vacation entitlement, if applicable, to the Effective
Date; and
(ii) an amount equal to 80% of the amount calculated by multiplying
two times the Base Salary;
(b) all benefits and perquisites to which the Executive was entitled
immediately prior to the Effective Date will terminate on the
Effective Date, except that the Company will provide to, continue or
maintain for the Executive, as applicable, the benefits and
perquisites described in Schedule B (the "Executive Benefits"); and
(c) the Executive's entitlement to participate in the Short Term Incentive
Plan will cease on the Effective Date, and in lieu of any cash award
for the fiscal year in which the Effective Date occurs, the Company
will pay a bonus award to the Executive based on an amount equal to
75% of the Executive's target bonus amount for the fiscal year of the
Company in which the Effective Date occurred, which amount will be
pro-rated to the Effective Date and paid to the Executive in
accordance with the terms of the Short Term Incentive Plan;
(d) to the extent that the Executive has at the Effective Date any rights
in respect of the Company for obligations of the Company in respect of
stock options issued on or prior to the Effective Date by FCL in
respect of shares of FCL, all such rights will, notwithstanding
anything to the contrary in this Agreement, continue in full force and
effect and be determined in accordance with the terms of such stock
options, but all other obligations, if any, of the Company to the
Executive in respect of stock options in respect of shares of FCL
shall terminate on the Effective Date; and
(e) all obligations, if any, of the Company to the Executive in respect of
the granting of any SAR or Stock Option shall terminate on the
Effective Date.
5.2. For greater certainty, the employment of the Executive with the Company
will terminate on the Effective Date.
6. DUTY TO MITIGATE
6.1. The Executive will not be subject to any duty or obligation to seek
alternate employment or other sources of income or benefits, or to mitigate
his damages, or to any similar duty or obligation, following or as a result
of any termination of his employment by the Company either expressly by
notice without Cause or by Constructive Dismissal and, except as
specifically provided in section 4.2, no payments or other obligations of
the Company under this Agreement will be subject to any rights of set-off,
duty to mitigate or other reduction, and all such payments and obligations
will be paid and performed in full notwithstanding any alternate employment
or other sources of income or benefits obtained or received or receivable
by the Executive.
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7. DISPUTE RESOLUTION REGARDING CONSTRUCTIVE DISMISSAL AND OTHER BENEFITS
7.1. If any dispute or question (a "Dispute") arises between the Company and the
Executive concerning the determination as to whether a Constructive
Dismissal of the Executive has occurred (including with respect to the date
of such dismissal), the entitlement of the Executive to any Executive
Benefits under this Agreement or whether the Executive has been terminated
for Cause, the Company and the Executive will attempt in good faith to
resolve the Dispute. If the Company and the Executive have not agreed to a
settlement of the Dispute within 30 days from the date on which the Dispute
first became known to both parties, then the Company and the Executive
agree that the Dispute will be submitted to arbitration in Vancouver,
British Columbia, before a sole arbitrator agreed to by both parties. The
parties agree that the Rules of the British Columbia International
Commercial Arbitration Centre for the conduct of domestic commercial
arbitrations do not apply. However, the arbitrator may be guided by Rules
1, 3, 6, 8, 9, 13, 15, 16, 19-36, and 39-45, in establishing the rules for
the arbitration. In the event that the parties are unable to agree on the
appointment of a sole arbitrator in accordance with this section 7 within
45 days from the date on which the Dispute first became known to both
parties, a sole arbitrator for this purpose will be determined for the
parties in accordance with section 17 of the Commercial Arbitration Act,
R.S.B.C. 1996, c.55.
7.2. The Company and the Executive agree that a Dispute will not be made the
subject matter of an action in any court by either the Company or the
Executive unless the Dispute has first been submitted to arbitration and
finally determined by a sole arbitrator in accordance with this section 7,
and that any such action will only be for the purposes of enforcing the
decision of the arbitrator and the costs incidental to the action. In any
such action the decision of the sole arbitrator will be conclusively deemed
to determine the rights and liabilities between the Company and the
Executive in respect of the matter which is the subject of the Dispute.
7.3. In the event that the Executive receives an award in any Dispute which
exceeds the offer for settlement of such Dispute by the Company immediately
preceding an arbitration pursuant to this section 7, the Company agrees to
pay to the Executive any and all costs and expenses (including reasonable
legal fees) incurred by the Executive in connection with the Dispute
concurrently with the payment of any award made pursuant to such
arbitration.
8. SARS AND STOCK OPTIONS
8.1. If the Executive holds any SARs or Stock Options at the date of completion
of a Proposed Transaction which results in a payment to holders of Common
shares of cash or securities, the Company and the Executive agree that:
(a) this Agreement will constitute a notice pursuant to the applicable
provision of each of the Phantom Stock Plans such that, on the date of
completion of the Proposed Transaction, the Company will pay to the
Executive an amount equal to the result obtained by multiplying the
excess, if any, of the Selling Price Per Share over the Exercise Price
(as defined in the respective SAR) by the number of the
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Common shares in respect of which each SAR remains unexercised
(whether or not such SAR would then be exercisable);
(b) upon payment of all amounts pursuant to subsection 8.1(a), all rights
of the Executive pursuant to the SARs, any share appreciation rights
agreement entered into between the Company and the Executive and the
Phantom Stock Plans will terminate; and
(c) the provisions of sections 7.5, 7.6 and 7.7 of the Stock Option Plan
shall apply with respect to a Proposed Transaction; provided that for
purposes of subsection 7.5.2 thereof the Market Price (as defined in
the Stock Option Plan) on the date of completion of the Proposed
Transaction shall be deemed to be equal to the Selling Price Per
Share.
9. ACCEPTANCE OF TERMS
The terms set out in this Agreement are in lieu of (and not in addition to)
and in full satisfaction of any and all other claims or entitlements which
the Executive has or may have upon the termination of his employment by the
Company (other than by reason of his Disability or Retirement or for Cause)
including by Constructive Dismissal. The entering into of this Agreement by
the Company will effect a full and complete release of the Company from any
and all claims which the Executive may then have for whatever reason or
cause in connection with the Executive's employment and in respect of such
termination (except for any claims arising in connection with the
performance by the Company of its obligations under this Agreement) and, as
a pre-condition to receiving any payments or benefits pursuant to this
Agreement, the Executive specifically agrees to execute and deliver to the
Company a release document to that effect in the form set out in Schedule C
and resignation as an officer of the Company and as an officer or director
of any affiliate of the Company in which the Executive is an officer or
director.
10. WITHHOLDING OF TAXES
The Company may withhold from any amounts payable to the Executive under
this Agreement all federal, provincial, state, city or other taxes as the
Company is required to withhold pursuant to any law or government
regulation or ruling, and such other amounts as the Executive has
authorized or may authorize the Company to deduct or withhold.
11. NOTICES
Any notice required or permitted to be given under this Agreement will be
in writing and will be properly given if delivered by hand or mailed by
prepaid registered mail addressed as follows:
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(a) in the case of the Company, to:
Xxxxxxxx Challenge Canada Limited
9th Floor, 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: President
(b) in the case of the Executive, to the Executive at the last address of
the Executive on the records of the Company
or to such other address as the parties may from time to time specify by
notice given in accordance with the Agreement. Any notice given will be
conclusively deemed to have been given or made on the day of delivery, if
delivered, or if mailed by registered mail, on the date shown on the postal
return receipt as the date upon which the envelope containing such notice
was actually received by the addressee.
12. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the payment to the Executive of severance benefits in connection
with any Proposed Transaction and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral.
There are no covenants, conditions, agreements, representations, warranties
or other terms or provisions, express or implied, collateral, statutory or
otherwise, relating to the payment to the Executive of severance benefits
in connection with any Proposed Transaction except as provided in this
Agreement.
13. SEVERABILITY
If any term or other provision contained in this Agreement is determined to
be invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party hereto. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties hereto as
closely as possible in an acceptable manner to the end that transactions
contemplated by this Agreement are fulfilled.
14. EXECUTION OF DOCUMENTS
Each of the Company and the Executive agrees to execute all such documents
and to do all such acts and things as the other party may reasonably
request and as may be lawful and within its powers to do or to cause to be
done in order to carry out and/or implement the provisions or intent of
this Agreement.
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15. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein.
16. AMENDMENT AND WAIVERS
No amendment or waiver of any provision of this Agreement will be binding
on any party unless consented to in writing by that party. No waiver of any
provision of this Agreement will constitute a waiver of any other provision
nor will any waiver constitute a continuing waiver unless otherwise
provided.
17. SUCCESSORS AND ASSIGNS
This Agreement will enure to the benefit of and be binding upon the
Executive and his heirs, executors, administrators and other legal personal
representatives and upon the Company and its successors and assigns. This
Agreement is personal to the Executive and may not be assigned by him.
18. ACKNOWLEDGEMENT
The Executive hereby acknowledges that he has been afforded a reasonable
opportunity to obtain independent legal advice regarding the matters
contained in and contemplated by this Agreement prior to the Executive
executing this Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.
XXXXXXXX CHALLENGE CANADA LIMITED
by: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
President
/s/ Xxxxx Xxxxxxxx
-------------------------------
XXXXX XXXXXXXX
SCHEDULE A
TREATMENT OF BENEFITS AND PERQUISITES ON
ELECTION OF TERMINATION LEAVE
1. The following benefits will be provided, continued or maintained until the
Termination Date:
(a) Provincial Medical Services Plan (MSP): coverage for Executive and
dependants
(b) Extended Health Benefits (EHB): coverage for Executive and dependants
(c) Dental Benefits: coverage for Executive and dependants
(d) Life Insurance: the current level of coverage (up to 3x of annual
salary) will continue until the Termination Date. The Executive will
have 31 days from the Termination Date to convert this coverage to an
individual life insurance policy, to a maximum of $200,000.
(e) Employee Share Purchase Plan: monthly contributions by way of payroll
deduction by the Executive and matching Company contributions will
continue to the earlier of the Termination Date, the Executive's
election to cease contributions, or the termination of the Plan. The
provisions of the Plan relating to termination of employment shall
apply at the Termination Date, but the Executive shall be entitled to
exercise his rights under the share withdrawal provision of the Plan
prior to that time.
(f) Group RRSP: participation (outside of the SELECTIONS program) by way
of payroll deduction by the Executive will continue until the
Termination Date.
(g) Other Payroll Deductions: payroll deductions, such as:
o auto plan
o computer loan
o personal lines insurance
o leased vehicle driver option
o Canada Savings Bonds
will continue to be deducted from the Executive's payments during the
Termination Leave, with the full amount due and payable on the Termination
Date. Eligibility to
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renew any of the above deductions will terminate as of the commencement of
the Termination Leave.
2. The following benefits will cease at the commencement of the Termination
Leave as shown below:
(a) Life Insurance: any optional coverage for the Executive, his spouse or
his children, will cease at the commencement of the Termination Leave.
The Executive will have 31 days from the last day worked to convert
all or part of his Executive and/or spousal coverages to individual
life insurance policies, to a maximum of $200,000 each.
(b) Accidental Death and Dismemberment Benefits:
(i) All 24 hour company paid accidental death and dismemberment
insurance benefits, will cease at the commencement of the
Termination Leave.
(ii) All Executive, spousal and child optional accidental death and
dismemberment benefits will cease at the commencement of the
Termination Leave; the Executive may elect to convert all or part
of his Executive and/or spousal coverages to individual coverage,
within 31 days after the commencement of the Termination Leave.
(c) Disability Benefits: short term and long term disability coverage will
cease at the commencement of the Termination Leave.
(d) Charitable donations and social club fees will cease to be deducted at
the commencement of the Termination Leave.
(e) Vacation: the accrual of regular and, if applicable, extended vacation
entitlement will cease on the commencement of the Termination Leave.
All accrued regular and extended vacation entitlement, including
pro-rated regular and, if applicable, extended entitlement to the
Termination Date, will be paid to the Executive at the commencement of
the Termination Leave.
3. Perquisites will continue during the Termination Leave, in accordance with
the following:
(a) Leased Automobile: the Company will continue to lease the automobile,
presently leased by the Company and designated for the Executive's
use, until the Termination Date and bear all reasonable costs
associated with its maintenance, including insurance, but excluding
fuel.
The Executive is entitled to elect to purchase the automobile at any time
during the Termination Leave, for the then current residual option price of
the automobile. The Executive will bear all sales and other tax costs and
any other costs and taxes which may be associated with such transfer.
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(b) Financial Counselling: to the extent the Executive is eligible for
this perquisite at the time of commencement of the Termination Leave,
the current level of financial counselling will continue until the
Termination Date.
(c) Company Loans (Housing): the Executive must continue to repay any
loans at the rate not less than what is currently being deducted from
his salary payments, but in any event shall repay the loan in full by
the Termination Date.
(d) Club Memberships: to the extent the Executive has been granted a club
membership at the time of commencement of the Termination Leave, the
Company will continue to pay for the employee's membership until the
Termination Date. Upon the Termination Date corporate (as opposed to
personal) club memberships will remain with the Company.
4. Post-Retirement Medical and Dental Benefits will apply as follows:
If the Executive is age 51 or older as of the Effective Date, he will be
eligible on the latter of the first of the month following the Termination
Date or the first of the month following his 55th birth date, to apply for
medical, extended health and dental benefits on the basis of treatment
equivalent to that being received by an employee of the Company who retired
on the Effective Date.
5. Pension Benefits:
(a) The Executive will continue to participate in the registered pension
plan and unfunded supplemental plan in which the Executive is enrolled
on the date of commencement of the Termination Leave (the "Pension
Plans") on the following terms:
(i) for the purposes of any contribution (notional or actual)
provision of the Pension Plans, the amounts paid to the Executive
pursuant to section 4.1(a) of the Agreement shall be treated in
the same manner that payments of salary to the Executive were
recognized prior to the date of commencement of the Executive's
Termination Leave, and the amounts paid to the Executive pursuant
to section 4.1(c) of the Agreement shall be treated in the same
manner that payments under the Company's incentive compensation
programs were recognized prior to the date of commencement of the
Executive's Termination Leave;
(ii) if on the Termination Date the Executive has not satisfied a
vesting condition under the Pension Plans, the Executive will be
deemed to have satisfied this condition;
(iii) upon the completion of the Executive's Termination Leave, the
Executive shall become entitled to benefits under the Pension
Plans on the basis that the Executive terminated employment with
the Company on that date.
4
(b) If the circumstances described in section 4.2 of the Agreement arise,
the Executive shall immediately stop accumulating further benefits
under the Pension Plans, and, without limitation, any payment the
Executive becomes entitled to pursuant to section 4.2(a) of the
Agreement shall not be recognized under any contribution (actual or
notional) provision of the Pension Plans.
SCHEDULE B
TREATMENT OF BENEFITS AND PERQUISITES ON
ELECTION OF LUMP SUM SETTLEMENT
All benefits, privileges and perquisites the Executive might formerly have
received as a result of employment with the Company will cease as of the
Effective Date except as expressly set out below:
1. Provincial Medical Services Plan (MSP): coverage for Executive and
dependants will cease at the end of the month in which the Effective Date
occurs.
2. Life Insurance: the current level of coverage (up to 3 times annual salary)
will continue until the Effective Date, and the Executive will have 31 days
from the Effective Date to convert this coverage to an individual life
insurance policy, to a maximum of $200,000.
3. Optional Life Insurance: any executive, spousal, or child optional life
insurance coverage the Executive had by reason of employment with the
Company will cease on the Effective Date. The Executive may convert all or
part of any optional executive and/or spousal insurance, up to a maximum of
$200,000 each, within 31 days of this date, to individual life insurance
policies at prevailing individual, as opposed to group insurance rates and
without medical examination.
4. Accidental Death and Dismemberment Insurance ("AD&D"):
(a) coverage under AD&D will cease on the Effective Date; and
(b) any executive, spousal, or child optional AD&D coverage the Executive
had by reason of employment will cease on the Effective Date; the
Executive may elect to convert all or part of any optional executive
and/or spousal insurance, up to a maximum of $200,000 each, within 31
days after the Effective Date.
5. Health Spending Account: contributions by the Executive will cease on the
Effective Date. The Executive may submit claims against the balance accrued
to the Effective Date, until the end of the calendar year in which the
Effective Date occurs.
6. Disability Benefits: short term and long term disability coverage will
cease at the Effective Date.
7. Vacation: all accrued regular and extended vacation entitlement, including
pro-rated regular and, if applicable, extended entitlement to the Effective
Date, will be paid to the Executive at the Effective Date.
8. Share Purchase Plan: participation and/or contributions through payroll
deduction will cease on the Effective Date. All amounts in the Executive's
account must be withdrawn within 30 days of the Effective Date.
2
9. Group RRSP: participation and/or contributions by way of payroll deduction
by the Executive will cease at the Effective Date. Treatment of the
Executive's fund balances will be as per the terms of the Plan.
10. Leased Automobile: the Executive is entitled to elect to purchase the
automobile leased by the Company, and designated for his use, at the
Effective Date for the then current residual option price of the
automobile. The Executive will bear all sales and other tax costs and any
other costs and taxes which may be associated with any such transfer.
11. Club Memberships:
(a) the payment by the Company of any personal club memberships held by
the Executive will cease on the Effective Date; and
(b) the payment of any corporate club membership dues in respect of the
Executive will cease on the Effective Date, and the membership will
remain with the Company.
12. Company Loans, i.e. housing, auto insurance, leased vehicle driver option,
computer purchase, etc.: the balance outstanding on any and all company
loans granted to the Executive will become due and payable in full on the
Effective Date.
13. Canada Savings Bonds: if the Executive was purchasing Canada Savings Bonds
through payroll deductions, he may elect to receive a refund for the amount
already paid, or purchase the bond in full within 5 days after the
Effective Date.
14. Charitable donations and social club fees: deductions will cease at the
Effective Date.
15. Pension: the Executive shall at the Effective Date immediately stop
accumulating further benefits under the registered pension plan and
unfunded supplemental plan in which the Executive is enrolled at the
Effective Date (the "Pension Plans") and, without limitation, all payments
the Executive becomes entitled to pursuant to section 5.1 of the Agreement
shall not be recognized under any contribution (actual or notional)
provision of the Pension Plans. If on the Effective Date the Executive has
not satisfied a vesting condition under the Pension Plans, the Executive
will be deemed to have satisfied that condition.
16. Post Retirement Medical and Dental Benefits: if the Executive is age 51 or
older as of the Effective Date, he will become eligible on the later of the
first of the month following the Effective Date or the first of the month
following his 55th birth date, to apply for medical, extended health and
dental benefits on the basis of treatment equivalent to that being received
by an employee of the Company who retired on the Effective Date.
SCHEDULE C
RELEASE
IN CONSIDERATION for the payment to me of $1.00 by XXXXXXXX CHALLENGE CANADA
LIMITED (the "Company") and for the entry by the Company into the Executive
Severance Agreement (the "Agreement") dated as of the 30th day of June, 2000
between the Company and me (the receipt and sufficiency of which are hereby
acknowledged), I, Xxxxx Xxxxxxxx, HEREBY RELEASE AND FOREVER DISCHARGE the
Company, its related and affiliated companies and subsidiaries (collectively
"Norske Xxxx"), and its officers, directors, and employees, from any and all
actions, causes of action, claims and demands, which in any way relate to my
employment and the termination of my employment with Norske Xxxx, including any
claim arising from the provisions of the EMPLOYMENT STANDARDS ACT, HUMAN RIGHTS
ACT or other applicable legislation. I FURTHER AGREE that the consideration I
have received includes full payment for any claim I may have under such
legislation.
The terms of this release set out the entire agreement between myself and Norske
Xxxx and are intended to be contractual and are not a mere recital.
I declare that I fully understand the terms of this settlement, I have been
advised to seek independent professional advice before executing this document
and that I voluntarily accept the consideration, for the purpose of making a
full and final compromise and settlement of all claims.
I further understand and agree that the terms of this settlement will remain
confidential and will not be disclosed by me to third parties, except to my
professional advisors and to my family, and as may be required by law.
Dated this ______ day of __________, 20__, at ________________, in the Province
of British Columbia.
WITNESSED BY:
___________________________ ___________________________
Witness - Signature XXXXX XXXXXXXX
___________________________
Witness - Address
___________________________
Witness - Occupation
