EXHIBIT 10.77
EMPLOYMENT AGREEMENT
This Employment Agreement dated for reference December 18, 2001.
BETWEEN:
QLT INC., having an address of 887 Great Northern Way, Vancouver,
British Columbia, V5T 4T5,
("QLT" or the "COMPANY")
AND:
PAUL J. HASTINGS, having an address of 61 Hartford, San Francisco,
California, U.S.A, 94114,
("MR. HASTINGS")
WHEREAS:
A. QLT is a world leader in the development and commercialization of
proprietary pharmaceutical products for use in photodynamic therapy, a
field of medicine utilizing light-activated drugs in the treatment of
disease and has other active development programs ongoing in areas outside
of photodynamic therapy;
B. QLT wishes to offer to Mr. Hastings, and Mr. Hastings wishes to accept,
employment with QLT as President and Chief Executive Officer of QLT;
C. QLT and Mr. Hastings wish to enter into this Agreement to set out the terms
and conditions of Mr. Hastings' employment with QLT; and
D. The employment of Mr. Hastings by QLT is subject to Mr. Hastings obtaining
and maintaining the permission of Canada Immigration to work in Canada in
this position. QLT will reimburse Mr. Hastings for the costs associated
with obtaining employment and permanent resident status in Canada.
NOW THEREFORE in consideration of $10.00, the promises made by each party
to the other as set out in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which the parties acknowledge and
agree, QLT and Mr. Hastings agree as follows:
1. POSITION AND DUTIES
1.1 POSITION - Effective the 17th day of February, 2002 (the "COMMENCEMENT
DATE"), QLT will employ Mr. Hastings in the position of President and Chief
Executive Officer, and Mr. Hastings agrees to accept employment with QLT in
this position, subject to the terms and conditions of this Agreement.
1.2 DUTIES, REPORTING AND EFFORTS - In the performance of his duties as
President and Chief Executive Officer, Mr. Hastings will:
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(a) OVERALL RESPONSIBILITIES - Have the responsibilities commensurate with
the position of President and Chief Executive Officer, including those
set out in SCHEDULE A to this Agreement and with the goal of achieving
QLT's overall long-term strategic objectives.
(b) REPORT - Report, as and when required, to the Board of Directors of
QLT (the "BOARD").
(c) BEST EFFORTS - Use his best efforts, industry and knowledge to improve
and increase QLT's business, to comply with all of QLT's rules,
regulations, policies and procedures, as established from time to time
and to ensure that QLT is at all times in compliance with applicable
provincial, state, federal and other governing statutes, policies and
regulations.
(d) WORKING DAY - Devote the whole of his working day attention and
energies to the business and affairs of QLT.
2. COMPENSATION
2.1 ANNUAL COMPENSATION - In return for his services under this Agreement, QLT
agrees to pay or otherwise provide the following total annual compensation
to Mr. Hastings:
(a) BASE SALARY - A base annual salary in the amount of US$500,000, in 24
equal installments payable semi-monthly in arrears, subject to
periodic reviews and increases at the discretion of the Board.
(b) BENEFIT PLANS - Coverage for Mr. Hastings and his eligible dependents
under any employee benefit plans provided by/through QLT to its
employees, subject to:
I. each plan's terms for eligibility,
II. Mr. Hastings taking the necessary steps to ensure effective
enrollment or registration under each plan, and
III. deductions of applicable employee contributions for the premiums
of each plan.
As at the date of this Agreement, the employee benefit plans provided
by/through QLT to its employees include life insurance, accidental
death and dismemberment insurance, dependent life insurance,
vision-care insurance, health insurance (including basic British
Columbia medical services plan coverage and extended health coverage),
dental insurance and short and long term disability insurance. QLT and
Mr. Hastings agree that the employee benefit plans provided by/through
QLT to its employees may change from time to time.
(c) EXPENSE REIMBURSEMENT - Reimbursement, in accordance with QLT's Policy
and Procedures Manual (as amended from time to time), of all
reasonable business related promotion, entertainment and/or travel
expenses incurred by Mr. Hastings, subject to him maintaining proper
accounts and providing documentation for these expenses upon request.
(d) VACATION -Mr. Hastings is entitled to four weeks' paid vacation during
each calendar year, including the first, of his employment and
pro-rated for any partial calendar year of employment which may be
increased from time to time in accordance with QLT's standard vacation
policy. As per QLT's Policy and Procedures Manual (as amended from
time to time), unless agreed to in writing by QLT:
I. all vacation must be taken within one year of the year in which
it is earned by Mr. Hastings, and
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II. except as set out in clause I above, vacation entitlement will
not be cumulative from year to year.
(e) RRSP CONTRIBUTIONS - Provided the conditions set out below have been
satisfied, no later than February 28 of the year following the year in
which the income is earned by Mr. Hastings (the "INCOME YEAR"), QLT
will make a contribution of up to 7% of Mr. Hastings' annual base
salary for the Income Year to Mr. Hastings' Canadian Registered
Retired Savings Plan ("RRSP"). The contribution to Mr. Hastings' RRSP
as set out above is subject the following conditions:
I. the maximum contribution to be made by QLT to Mr. Hastings' RRSP
is 50% of the annual limit for Registered Retirement Savings
Plans as established by Canada Customs & Revenue Agency for the
Income Year,
II. Mr. Hastings must have contributed an equal amount into his RRSP,
and
III. Mr. Hastings is still actively employed by QLT when the matching
contribution would otherwise be made.
(f) CASH INCENTIVE COMPENSATION PLAN - Mr. Hastings will be eligible to
participate in the Cash Incentive Compensation Plan offered by QLT to
its senior executives in accordance with the terms of such Plan, as
amended from time to time by the Board. Mr. Hastings will be eligible
to receive each year as a lump sum payment an amount up to 50% of his
base salary under the Cash Incentive Compensation Plan. The amount of
that payment will be determined at the sole discretion of the
Executive Compensation Committee of the Board annually following the
completion of each fiscal year of QLT and will be based on the
performance of Mr. Hastings and QLT relative to pre-set corporate and
individual objectives and milestones to have been achieved in the
immediately preceding fiscal year. Those goals and milestones will be
set for each year by the Board after discussion with Mr. Hastings. For
greater certainty, Mr. Hastings will not be eligible to receive any
such amount in 2002 for the preceding fiscal year but will be eligible
to receive that incentive payment in 2003 and subsequent years, based
on his employment in 2002 and in subsequent years.
(g) ANNUAL STOCK OPTIONS - Mr. Hastings will be eligible for participation
in QLT's Incentive Stock Option Plans, in accordance with the terms of
the plan in effect at the time of the stock option offer. QLT's
management responsible for the Stock Option Plan will recommend to the
Board each year during the term of this Agreement commencing in 2003
to approve options in that year for Mr. Hastings to purchase an
aggregate of 100,000 common shares of QLT, which amount may be reduced
or increased on a year-to-year basis at the sole discretion of the
Board. The grant of options may, at the sole discretion of the Board,
be spread over one or more separate grants during the course of each
year in a manner consistent with QLT's stock option practices and
policies then in effect.
(h) SIGNING STOCK OPTIONS - Conditional on Mr. Hastings entering into this
Agreement, the Board has approved and will grant the option for Mr.
Hastings to purchase 500,000 common shares of QLT plus an additional
option to be granted at a date in April, 2002 to be set by QLT for Mr.
Hastings to purchase 100,000 common shares of QLT. The options will be
subject to the terms and conditions set out in QLT's current Stock
Option Incentive Plan, have a five-year term from the date of grant
and will vest monthly in equal numbers over three years. The exercise
price of these signing options will be determined by the closing price
on the Toronto Stock Exchange on the day prior to granting. Stock
options may not be exercised until Mr. Hastings has successfully
completed six months' employment with QLT from the Commencement Date
and the grant will be conditional upon Mr. Hastings not having
provided a Resignation Notice (as
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later defined) nor having received a written notice of termination
from QLT on or before the end of that six month period.
(i) SIGNING BONUS - QLT will pay to Mr. Hastings an amount equal to
US$25,000 as a signing bonus promptly following the Commencement Date.
2.2 HOME RELOCATION AND HOME RELOCATION LOAN - The Company and Mr. Hastings
agree to the terms of relocation assistance, relocation repayment, and
relocation assistance upon termination by QLT as set out in SCHEDULES B and
C to this Agreement.
2.3 COMPLIANCE WITH INSIDER TRADING GUIDELINES AND RESTRICTIONS - As a result
of his position as President and Chief Executive Officer, Mr Hastings is
subject to insider trading regulations and restrictions and is required to
file insider reports disclosing the grant of any options as well as the
purchase and sale of any shares in the capital of QLT. QLT publishes
trading guidelines and restrictions for its employees, officers and
directors as are considered by the Board, in its discretion, prudent and
necessary for a publicly listed company. It is a term of Mr. Hastings'
employment as the Chief Executive Officer of QLT that he comply with such
guidelines and restrictions, as may be amended from time to time.
3. RESIGNATION
3.1 RESIGNATION - Mr. Hastings may resign from his employment with QLT by
giving QLT 90 days prior written notice (the "RESIGNATION NOTICE") of the
effective date of his resignation. On receiving a Resignation Notice, QLT
may elect to provide the following payments and benefits in lieu of notice
to Mr. Hastings and require him to cease providing employment services and
leave the premises forthwith:
(a) BASE SALARY - Base salary owing to Mr. Hastings for the 90-day notice
period.
(b) BENEFITS - Except as set out below in this subparagraph 3.1(b), for
the 90-day notice period all employee benefit plan coverage enjoyed by
Mr. Hastings and his eligible dependents prior to the date of the
Resignation Notice. Mr. Hastings acknowledges and agrees that accruals
under any pension plan (if any) and short and long term disability
plans provided through QLT will not be continued beyond the last day
that Mr. Hastings is in active full-time employment (the "LAST ACTIVE
DAY").
(c) EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy
and Procedures Manual, as amended from time to time) of all reasonable
business related promotion, entertainment and/or travel expenses
incurred by Mr. Hastings prior to his Last Active Day, subject to the
expense reimbursement provisions set out in subparagraph 2.1(c).
(d) VACATION PAY - Payment in respect of accrued but unpaid vacation pay
owing to Mr. Hastings as at the expiry of the 90-day notice period.
(e) PRORATED RRSP CONTRIBUTION - A prorated contribution to Mr. Hastings'
RRSP, the pro-ration to be with respect to the portion of the current
calendar year, up to and including the 90-day notice period, and the
contribution to be subject to the conditions set out in subparagraph
2.1(e), except 2.1(e)(III).
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3.2 OTHERS - In the event of resignation of Mr. Hastings as set out in
paragraph 3.1, the parties agree:
(a) NO BONUS - Mr. Hastings will be entitled to receive payments owing or
that become owing under the Cash Incentive Compensation Plan for the
year preceding the year in which the effective date of the resignation
occurs but Mr. Hastings will have no entitlement to participate in
QLT's Cash Incentive Compensation Plan for the year in which the
effective date of resignation occurs; and
(b) STOCK OPTION PLAN - Mr. Hastings' participation in any stock option
plan offered by QLT to its employees will be in accordance with the
terms of the plan in effect at the time of the stock option offer(s)
to Mr. Hastings.
4. RETIREMENT
4.1 RETIREMENT - Effective the date of retirement (as defined in QLT's Policy
and Procedures Manual, as amended from time to time) of Mr. Hastings from
active employment with QLT, the parties agree that:
(a) BONUS - The Company will make a prorated payment to Mr. Hastings in
respect of his entitlement to participate in QLT's Cash Incentive
Compensation Plan, the pro-ration to be with respect to the portion of
the current calendar year worked by Mr. Hastings and the entitlement
at the maximum level Mr. Hastings would have otherwise been eligible
to receive in the current calendar year.
(b) EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy
and Procedures Manual, as amended from time to time) of all reasonable
business related promotion, entertainment and/or travel expenses
incurred by Mr. Hastings prior to his date of retirement, subject to
the expense reimbursement provisions set out in subparagraph 2.1(c).
(c) VACATION PAY - QLT will pay Mr. Hastings accrued but unpaid vacation
owing to Mr. Hastings as at the retirement date.
(d) PRORATED RRSP CONTRIBUTION - The Company will make a prorated
contribution to Mr. Hastings' RRSP, the pro-ration to be with respect
to the portion of the current calendar year worked by Mr. Hastings and
the contribution to be subject to the conditions set out in
subparagraph 2.1(e), except 2.1(e)(III).
(e) STOCK OPTIONS - Mr. Hastings' participation in any stock option plan
offered by QLT to its employees will be in accordance with and subject
to the terms of the plan in effect at the time of the stock option
offer(s) to Mr. Hastings, including conditions which relate to vesting
and exercise of stock options on retirement.
(f) THIS AGREEMENT - Subject to the provisions of paragraph 10.6, both
parties' rights and obligations under this Agreement will terminate
without further notice or action by either party.
5. TERMINATION
5.1 TERMINATION FOR CAUSE - QLT reserves the right to immediately terminate Mr.
Hastings' employment for cause. Should Mr. Hastings be terminated for
cause, he will not be entitled to any advance notice of termination or pay
in lieu thereof.
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5.2 TERMINATION OTHER THAN FOR CAUSE - QLT reserves the right to terminate Mr.
Hastings' employment at any time without cause. However, if QLT terminates
Mr. Hastings' employment for:
(a) any reason other than cause, or
(b) any reason not covered by a separate Change in Control Letter
Agreement dated of even date between QLT and Mr. Hastings,
then, except in the case of Mr. Hastings becoming completely disabled
(which is provided for in paragraph 5.7) and subject to the provisions set
forth below, Mr. Hastings will be entitled to receive notice, pay and/or
benefits (or any combination of notice, pay and/or benefits) as more
particularly set out in paragraph 5.3.
5.3 SEVERANCE NOTICE AND PAY - In the event QLT terminates Mr. Hastings'
employment as set out in paragraph 5.2, Mr. Hastings will be entitled to:
(a) NOTICE - advance written notice of termination ("SEVERANCE NOTICE"),
or pay in lieu thereof ("SEVERANCE PAY"), or any combination of
Severance Notice and Severance Pay, equal to 24 months' Severance
Notice, or Severance Pay in lieu of Severance Notice (the "SEVERANCE
NOTICE PERIOD"). Mr. Hastings acknowledges and agrees that Severance
Pay is in respect of (i) base salary and (ii) an amount equal to Mr.
Hastings' entitlement under the Cash Incentive Compensation Plan over
the Severance Notice Period pro-rated for any partial years included
in the Severance Notice Period and will be made on a bi-weekly or
monthly basis, at QLT's discretion. Mr. Hastings' entitlement under
the Cash Incentive Compensation Plan payable under (ii) above will be
calculated at the target level of 50% referred to in subparagraph
2.1(f) that Mr. Hastings would have otherwise been eligible to receive
for the year in which the termination occurs.
(b) BENEFITS - except as set out below, for 30 days after Mr. Hastings'
Last Active Day, all employee benefit plan coverage enjoyed by Mr.
Hastings and his dependents prior to the date of termination.
Thereafter, and in lieu of employee benefit plan coverage, Mr.
Hastings will receive compensation ("BENEFITS COMPENSATION") in the
amount of 10% of his base salary for the balance of his Severance
Notice period. Notwithstanding the foregoing, Mr. Hastings
acknowledges and agrees that accruals under any pension plan (if any)
and short and long term disability plans provided through QLT will not
be continued beyond Mr. Hastings's Last Active Day.
(c) OUT PLACEMENT COUNSELING - in the event QLT terminates Mr. Hastings'
employment as set out in paragraph 5.2, QLT will pay to a qualified
out placement counseling service (to be agreed to by Mr. Hastings and
QLT) a maximum of Cdn$5,000 for assistance rendered to Mr. Hastings in
the year following termination in seeking alternative employment.
(d) OTHER COMPENSATION -the parties further agree as follows:
I. the Company will reimburse (in accordance with QLT's Policy and
Procedures Manual, as amended from time to time) Mr. Hastings for
all reasonable business related promotion, entertainment and/or
travel expenses incurred by Mr. Hastings prior to the date of
termination, subject to the expense reimbursement provisions set
out in subparagraph 2.1(c).
II. the Company will make a payment to Mr. Hastings in respect of his
accrued but unpaid vacation pay to the date of termination.
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III. the Company will make a prorated contribution to Mr. Hastings'
RRSP, the pro-ration to be with respect to the portion of the
current calendar year worked by Mr. Hastings and for the
Severance Notice Period and the contribution to be subject to the
conditions set out in subparagraph 2.1(e), except 2.1(e)(III).
IV. in addition to the payments under subparagraph 5.3(a), the
Company will make a prorated payment to Mr. Hastings in respect
of his entitlement to participate in QLT's Cash Incentive
Compensation Plan, the pro-ration to be with respect to the
portion of the current calendar year worked by Mr. Hastings and
the entitlement at the target level of 50% referred to in
subparagraph 2(f) that Mr. Hastings would have otherwise been
eligible to receive in the current calendar year.
V. Mr. Hastings' participation in any stock option plan offered by
QLT to its employees will be in accordance with the terms of the
plan in effect at the time of the stock option offer(s) to Mr.
Hastings.
5.4 ACKNOWLEDGEMENT - Mr. Hastings acknowledges and agrees that in the event
QLT terminates Mr. Hastings' employment as set out in paragraph 5.2, in
providing:
(a) The Severance Notice or Severance Pay, or any combination thereof;
(b) The Benefits Compensation;
(c) Out placement counseling service as more particularly set out in
subparagraph 5.3(c); and
(d) The other compensation set out in subparagraph 5.3(d);
(e) All compensation owing to the date of termination;
as set out in paragraph 5.10, QLT will have no further obligations,
statutory or otherwise, to Mr. Hastings in respect of this Agreement and
Mr. Hastings' employment under this Agreement.
5.5 FUNDAMENTAL BREACH - Mr. Hastings acknowledges and agrees that material
violation any of the restrictions set out in Section 7 or paragraph 8.1,
will be deemed to be a fundamental breach of this Agreement and QLT's
obligations to pay Severance Pay, Benefits Compensation and other
compensation as set out in paragraph 5.3 will cease immediately.
5.6 NO DUPLICATION - In the event that the Severance Pay provisions of this
Agreement and the payment provisions of the Change in Control Letter
Agreement are both applicable, Mr. Hastings agrees that he will give
written notice to QLT with respect to which agreement he wishes to be paid
out under and that he is not entitled to severance pay under both
agreements.
5.7 TERMINATION DUE TO INABILITY TO ACT
(a) TERMINATION - QLT may immediately terminate this Agreement by giving
written notice to Mr. Hastings if he becomes completely disabled (as
defined below) to the extent that he cannot perform his duties under
this Agreement either:
I. for a period exceeding six consecutive months, or
II. for a period of 180 days (not necessarily consecutive) occurring
during any period of 365 consecutive days,
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and no other reasonable accommodation can be reached between QLT and
Mr. Hastings. Notwithstanding the foregoing, QLT agrees that it will
not terminate Mr. Hastings pursuant to this provision unless and until
Mr. Hastings has been accepted by the insurer for ongoing long-term
disability payments or, alternatively, has been ruled after all
available appeals ineligible for such payments.
(b) PAYMENTS - In the event of termination of Mr. Hastings' employment
with QLT pursuant to the provisions of this paragraph 5.7, QLT agrees
to pay to Mr. Hastings Severance Pay, Benefits Compensation and other
compensation as set out in paragraph 5.3.
(c) DEFINITION - The term "completely disabled" as used in this paragraph
5.7 will mean the inability of Mr. Hastings to perform the essential
functions of his position under this Agreement by reason of any
incapacity, physical or mental, which the Board, based upon medical
advice or an opinion provided by a licensed physician acceptable to
the Board, determines to keep Mr. Hastings from satisfactorily
performing any and all essential functions of his position for QLT
during the foreseeable future.
5.8 DEATH - Except as set out below, effective the date of death of Mr.
Hastings (the "DATE OF DEATH"), this Agreement and both parties' rights and
obligations under this Agreement will terminate without further notice or
action by either party. QLT will fulfill any obligations of QLT under the
group life insurance plan or any other applicable benefit plan of QLT.
Within 30 days after the Date of Death (and the automatic concurrent
termination of this Agreement), QLT will pay the following amounts to Mr.
Hastings' estate:
(a) BASE SALARY - Base salary owing to Mr. Hastings up to his Date of Death.
(b) PAYMENT IN LIEU OF BENEFITS - In lieu of employee benefit coverage for his
eligible dependents after his Date of Death (except for group life
insurance and other benefits payable as a result of the death), a payment
in the amount of 10% of his annual base salary in effect at his Date of
Death.
(c) EXPENSE REIMBURSEMENT - Reimbursement (in accordance with QLT's Policy and
Procedures Manual, as amended from time to time) of all reasonable business
related promotion, entertainment and/or travel expenses incurred by Mr.
Hastings prior to his Date of Death, subject to the expense reimbursement
provisions set out in subparagraph 2.1(c).
(d) VACATION PAY - Payment in respect of accrued but unpaid vacation pay owing
to Mr. Hastings as at his Date of Death.
(e) RRSP CONTRIBUTION - A prorated contribution to Mr. Hastings' RRSP, the
pro-ration to be with respect to the portion of the current calendar year
worked by Mr. Hastings and the contribution to be subject to the conditions
set out in subparagraph 2.1(e), except 2.1(e)(III).
(f) BONUS - A prorated payment to Mr. Hastings in respect of his entitlement to
participate in QLT's Cash Incentive Compensation Plan, the pro-ration to be
with respect to the portion of the current calendar year worked by Mr.
Hastings and the entitlement to be at the maximum level Mr. Hastings would
have otherwise been eligible to receive in the current calendar year.
After his Date of Death, Mr. Hastings' participation and/or entitlement
under any stock option plan offered by QLT to its employees will be in
accordance with the terms of the plan in effect at the time of the stock
option offer(s) to Mr. Hastings.
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5.10 ACKNOWLEDGEMENT - Mr. Hastings expressly acknowledges and agrees that he
will not be entitled by reason of this Agreement, his employment with QLT
or any termination of such employment, to any renumeration, compensation or
benefits other than as expressly set forth in this Agreement.
6A. RESIGNATION FROM BOARD ON RESIGNATION OR TERMINATION
6A.1 RESIGNATION FROM BOARD POSITIONS UPON RESIGNATION OR TERMINATION - In the
event Mr. Hastings resigns from his employment with QLT or upon receiving
written notice of termination from QLT under paragraphs 5.1, 5.2 or 5.7,
then the following will apply:
(a) RESIGNATION - in the case of a resignation, Mr. Hastings will
immediately tender his resignation from the Board of QLT and its
subsidiaries and affiliates. For this purpose, the Resignation Notice
will be deemed to constitute the resignation of Mr. Hastings from the
Board of QLT and its affiliates effective, in QLT's discretion, on or
before the expiry of the 90 day notice period set out in paragraph
3.1; or
(b) TERMINATION - upon receiving written notice of termination from QLT
under paragraphs 5.1, 5.2 or 5.7, Mr. Hastings will immediately tender
his resignation from the Board of QLT and its subsidiaries and
affiliates. For this purpose, written notice of termination from QLT
will be deemed to constitute the resignation of Mr. Hastings from the
Board of QLT and its subsidiaries and affiliates effective on the date
Mr. Hastings receives written notice of termination from QLT.
6. CONFLICT OF INTEREST
6.1 AVOID CONFLICT OF INTEREST - Except as set out below, during the term of
his employment with QLT, Mr. Hastings agrees to conduct himself at all
times so as to avoid any real or apparent conflict of interest with the
activities, policies, operations and interests of QLT. To avoid improper
appearances, Mr. Hastings agrees that he will not accept any financial
compensation of any kind, nor any special discount, loan or favour from
persons, corporations or organizations having dealings or potential
dealings with QLT, either as a customer or a supplier or a co-venturer.
This does not prevent Mr. Hastings from accepting customary or ordinary
accommodation of modest value such as meals. QLT and Mr. Hastings
acknowledge and agree that from time to time the Board may consent in
writing to activities by Mr. Hastings which might otherwise appear to be a
real or apparent conflict of interest.
6.2 NO FINANCIAL ADVANTAGE - During the term of his employment with QLT, Mr.
Hastings agrees that he will not disclose or take financial advantage of or
benefit financially from or allow or permit any member of his immediate
family to receive financial advantage or benefit financially from
information that is obtained in the course of his employment related duties
and responsibilities unless the disclosure is required by law or the
information is generally available to the public.
6.3 COMPLY WITH POLICIES - During the term of his employment with QLT, Mr.
Hastings agrees to comply with all written policies issued by QLT dealing
with conflicts of interest.
6.4 BREACH EQUALS CAUSE - Mr. Hastings acknowledges and agrees that a material
breach by him of the provisions of this Section 6 will be cause for
immediate termination by QLT of his employment with QLT.
7. CONFIDENTIALITY
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7.1 INFORMATION HELD IN TRUST - Mr. Hastings acknowledges and agrees that all
business and trade secrets, confidential information and confidential
knowledge which Mr. Hastings acquires during his employment with QLT
relating to the business and affairs of QLT or to technology, systems,
programs, ideas, products or services which have been or are being
developed or utilized by QLT, or in which QLT is or may become interested
(collectively, "CONFIDENTIAL INFORMATION"), will for all purposes and at
all times, both during the term of Mr. Hastings' employment with QLT and at
all times thereafter, be the sole property of QLT and be held by Mr.
Hastings in trust for the exclusive benefit of QLT.
7.2 NON DISCLOSURE - Mr. Hastings acknowledges and agrees that both during the
term of his employment with QLT and at all times thereafter, without the
express or implied consent of QLT, Mr. Hastings will not:
(a) DISCLOSE - except as required by law, disclose to any company, firm or
person, other than QLT, its directors and officers and its employees
on a need to know basis, any of the private affairs of QLT or any
Confidential Information of QLT or of third parties to whom QLT owes
an obligation of confidentiality; or
(b) USE - Use or copy any Confidential Information that he may acquire
with respect to QLT's affairs for his own purposes or for any purposes
other than those of QLT.
7.3 INTELLECTUAL PROPERTY RIGHTS
(a) DISCLOSE INVENTIONS - Mr. Hastings agrees to promptly disclose to QLT
any and all ideas, developments, designs, articles, inventions,
improvements, discoveries, machines, appliances, processes, methods,
products or the like that Mr. Hastings may invent, conceive, create,
design, develop, prepare, author, produce or reduce to practice,
either solely or jointly with others, in the course of his employment,
or involvement in any capacity, with QLT (collectively, "INVENTIONS").
(b) INVENTIONS ARE QLT PROPERTY - All Inventions and all other work of Mr.
Hastings in the course of his employment, or involvement in any
capacity, with QLT will at all times and for all purposes be the
property of QLT for QLT to use, alter, vary, adapt and exploit as it
will see fit, and will be acquired or held by Mr. Hastings in a
fiduciary capacity solely for the benefit of QLT.
(c) ADDITIONAL REQUIREMENTS - Mr. Hastings agrees to:
I. Treat all information with respect to Inventions as Confidential
Information unless the information is generally available to the
public.
II. Keep complete and accurate records of Inventions, which records
will be the property of QLT and copies of which records will be
maintained at the premises of QLT.
III. Execute all assignments and other documents required to assign
and transfer to QLT (or such other persons as QLT may direct) all
right, title and interest in and to the Inventions and all other
work of Mr. Hastings in the course of his employment, or
involvement in any capacity, with QLT, and all writings,
drawings, diagrams, photographs, pictures, plans, manuals,
software and other materials, goodwill and ideas relating
thereto, including, but not limited to, all rights to acquire in
the name of QLT or its nominee(s) patents, registration of
copyrights, design patents and registrations, trade marks and
other forms of protection that may be available.
IV. Execute all documents and do all acts reasonably requested by QLT
to give effect to this provision.
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7.4 RECORDS - Mr. Hastings agrees that all records or copies of records
concerning QLT's activities, business interests or investigations and any
other Confidential Information of QLT made or received by him during his
employment with QLT are and will remain the property of QLT. Mr. Hastings
further agrees to keep such records or copies in the custody of QLT and
subject to its control, and to surrender the same at the termination of his
employment or at any time during his employment at QLT's request.
7.5 NO USE OF FORMER EMPLOYER'S MATERIALS - Mr. Hastings certifies that he will
not bring to QLT and will not use while performing his employment duties
for QLT any materials or documents of any former employer which are not
generally available to the public, except if the right to use the materials
or documents has been acquired by QLT.
8. POST-EMPLOYMENT RESTRICTIONS
8.1 NON-COMPETE - Mr. Hastings agrees that, without the prior written consent
of QLT, for a period of two years following termination of his employment
with QLT for any reason (by resignation or otherwise), as measured from his
Last Active Day, Mr. Hastings will not:
(a) PARTICIPATE IN A COMPETITIVE BUSINESS - Directly or indirectly, own,
manage, operate, join, control or participate in the ownership,
management, operation or control of, or be a director or an employee
of, or a consultant to, any business, firm or corporation that, as a
part of conducting its business, is in any way competitive with QLT
with respect to the development, commercialization and/or marketing of
light-activated pharmaceutical products for photodynamic therapy in
the treatment of cancer, ophthalmology and auto-immune disease
anywhere in the United States, Canada, Mexico or the European Union.
(b) SOLICIT ON BEHALF OF A COMPETITIVE BUSINESS - Directly or indirectly
call upon or solicit any QLT employee or QLT customer or known
prospective customer of QLT as at the date of termination on behalf of
any business, firm or corporation that, as part of conducting its
business, is in any way competitive with QLT with respect to:
I. The development, commercialization and/or marketing of
light-activated pharmaceutical products for photodynamic therapy
in the treatment of cancer, ophthalmology and auto-immune
disease, or
II. The development, commercialization and/or marketing of other
pharmaceutical products that are based on a significantly similar
technology platform and are used in the treatment of
substantially the same medical indications as products which have
become a significant component of QLT's core business,
anywhere in the United States, Canada, Mexico or the European Union.
(c) SOLICIT EMPLOYEES - Directly or indirectly solicit any individual to
leave QLT's employment for any reason or interfere in any other manner
with the employment relationship existing between QLT and its current
or known prospective employees as at the date of termination.
(d) SOLICIT CUSTOMERS - Directly or indirectly induce or attempt to induce
any customer, supplier, distributor, licensee or other business
relation of QLT to cease doing business with QLT or in any way
interfere with the business relationship between any such customer,
supplier, distributor, licensee or other business relation and QLT
existing as at the date of termination.
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8.2 MINORITY SHARE INTERESTS ALLOWED - The parties agree that nothing contained
in paragraph 8.1 is intended to prohibit Mr. Hastings from owning any
minority interest (less than 5%) in any company where stock or shares are
traded publicly.
9. REMEDIES
9.1 IRREPARABLE DAMAGE - Mr. Hastings acknowledges and agrees that:
(a) BREACH - Any breach of any provision of this Agreement could cause
irreparable damage to QLT; and
(b) CONSEQUENCES OF BREACH - In the event of a breach of any provision of
this Agreement by him, QLT will have, in addition to any and all other
remedies at law or in equity, the right to an injunction, specific
performance or other equitable relief to prevent any violation by him
of any of the provisions of this Agreement including, without
limitation, the provisions of Sections 7 and 8.
9.2 INJUNCTION - In the event of any dispute under Sections 7 and/or 8, Mr.
Hastings agrees that QLT will be entitled, without showing actual damages,
to a temporary or permanent injunction restraining his conduct, pending a
determination of such dispute and that no bond or other security will be
required from QLT in connection therewith.
9.3 ADDITIONAL REMEDIES - Mr. Hastings acknowledges and agrees that the
remedies of QLT specified in this Agreement are in addition to, and not in
substitution for, any other rights and remedies of QLT at law or in equity
and that all such rights and remedies are cumulative and not alternative or
exclusive of any other rights or remedies and that QLT may have recourse to
any one or more of its available rights and remedies as it will see fit.
10. GENERAL MATTERS
10.1 TAX WITHHELD - The parties acknowledge and agree that all payments to be
made by QLT to Mr. Hastings under this Agreement will be subject to
withholding by QLT of applicable withholding taxes.
10.2 INDEPENDENT LEGAL ADVICE - Mr. Hastings acknowledges that he has obtained
or had the opportunity to obtain independent legal advice with respect to
this Agreement and all of its terms and conditions. QLT will compensate Mr.
Hastings for the cost of obtaining independent legal advice concerning this
Agreement.
10.3 BINDING AGREEMENT - The parties agree that this Agreement will enure to the
benefit of and be binding upon each of them and their respective heirs,
executors, successors and assigns.
10.4 GOVERNING LAW - The parties agree that this Agreement will be governed by
and interpreted in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable to this Agreement. All disputes
arising under this Agreement will be referred to the Courts of the Province
of British Columbia, which will have exclusive jurisdiction, unless there
is mutual agreement to the contrary.
10.5 NOTICE - The parties agree that any notice or other communication required
to be given under this Agreement will be in writing and will be delivered
personally or by facsimile transmission to the addresses set forth on page
1 of this Agreement to the attention of the following persons:
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(a) IF TO QLT - Attention: Chairman of the Board of QLT c/o QLT, Fax No.
(604) 875-0001,
WITH A COPY TO:
Farris, Vaughn, Wills & Murphy
Barristers & Solicitors
26th Floor, 700 West Georgia Street
Vancouver, British Columbia
V7Y 1B3
Attention: R. Hector MacKay-Dunn
Fax No.: (604) 661-1730
(b) IF TO MR. HASTINGS - Fax No. (415) 252-0488,
WITH A COPY TO:
Bull, Housser & Tupper
Barristers & Solicitors
30th Floor, 1055 West Georgia Street
Vancouver, British Columbia
V6E 3R3
Attention: Herbert J. Isherwood
Fax No.: (604) 641-4949
or to such other addresses and persons as may from time to time be notified
in writing by the parties. Any notice delivered personally will be deemed
to have been given and received at the time of delivery. Any notice
delivered by facsimile transmission will be deemed to have been given and
received on the next business day following the date of transmission.
10.6 SURVIVAL OF TERMS
(a) EMPLOYEE'S OBLIGATIONS - Mr. Hastings acknowledges and agrees that his
representations, warranties, covenants, agreements, obligations and
liabilities under any and all of Sections 6, 7, 8 and 10 of this
Agreement will survive any termination of this Agreement.
(b) COMPANY'S OBLIGATIONS - The Company acknowledges and agrees that its
representations, warranties, covenants, agreements, obligations and
liabilities under any and all of Sections 3, 4, 5 and 10 of this
Agreement will survive any termination of this Agreement.
(c) WITHOUT PREJUDICE - Any termination of this Agreement will be without
prejudice to any rights and obligations of the parties arising or
existing up to the effective date of such expiration or termination,
or any remedies of the parties with respect thereto.
10.7 WAIVER - The parties agree that any waiver of any breach or default under
this Agreement will only be effective if in writing signed by the party
against whom the waiver is sought to be enforced, and no waiver will be
implied by indulgence, delay or other act, omission or conduct. Any waiver
will only apply to the specific matter waived and only in the specific
instance in which it is waived.
10.8 ENTIRE AGREEMENT - The parties agree that the provisions contained in this
Agreement, Mr. Hastings' Change in Control Letter Agreement and any Stock
Option Agreements between QLT and
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Mr. Hastings constitute the entire agreement between QLT and Mr. Hastings
with respect to the subject matters hereof, and supersede all previous
communications, understandings and agreements (whether verbal or written)
between QLT and Mr. Hastings regarding the subject matters hereof. To the
extent that there is any conflict between the provisions of this Agreement,
Mr. Hastings' Change in Control Letter Agreement and any Stock Option
Agreements between QLT and Mr. Hastings, the following provisions will
apply:
(a) CHANGE IN CONTROL - If the conflict is with respect to an event,
entitlement or obligation in the case of a Change in Control of QLT
(as defined in the Change in Control Letter Agreement), the provisions
of the Change in Control Letter Agreement will govern (unless Mr.
Hastings otherwise elects).
(b) STOCK OPTIONS - If the conflict is with respect to an entitlement or
obligation with respect to stock options of QLT, the provisions of the
Stock Option Agreements will govern (unless the parties otherwise
mutually agree).
(c) OTHER - In the event of any other conflict, the provisions of this
Agreement will govern (unless the parties otherwise mutually agree).
10.9 SEVERABILITY OF PROVISIONS - If any provision of this Agreement as applied
to either party or to any circumstance is adjudged by a court of competent
jurisdiction to be void or unenforceable for any reason, the invalidity of
that provision will in no way affect (to the maximum extent permissible by
law):
(a) The application of that provision under circumstances different from
those adjudicated by the court;
(b) The application of any other provision of this Agreement; or
(c) The enforceability or invalidity of this Agreement as a whole.
If any provision of this Agreement becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction by reason of the scope, extent or
duration of its coverage, then the provision will be deemed amended to the
extent necessary to conform to applicable law so as to be valid and
enforceable or, if the provision cannot be so amended without materially
altering the intention of the parties, then such provision will be stricken
and the remainder of this Agreement will continue in full force and effect.
10.10 CAPTIONS - The parties agree that the captions appearing in this Agreement
have been inserted for reference and as a matter of convenience and in no
way define, limit or enlarge the scope or meaning of this Agreement or any
provision.
10.10A TIME - Time is of the essence.
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10.11 AMENDMENTS - Any amendment to this Agreement will only be effective if the
amendment is in writing and is signed by QLT and Mr. Hastings.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first written above.
QLT INC.
BY: ___________________________ ______________________________
E. DUFFSCOTT PAUL J. HASTINGS
CHAIRMAN OF THE BOARD
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SCHEDULE "A"
DUTIES AND RESPONSIBILITIES
To be attached.
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SCHEDULE "B"
RELOCATION ASSISTANCE
(THESE AMOUNTS ARE IN CANADIAN FUNDS)
CERTAIN PAYMENTS MADE TO MR. HASTINGS UNDER SCHEDULE "B" WILL BE TAXABLE
BENEFITS. THESE PAYMENTS WILL BE GROSSED UP TO MAKE WHOLE ANY TAXABLE BENEFITS
MR. HASTINGS RECEIVES UNDER SCHEDULE "B" AND MR. HASTINGS WILL BE PROVIDED WITH
A CHEQUE FOR THIS AMOUNT AT THE END OF THE TAXATION YEAR (MARCH) IN WHICH THE
EXPENSE WAS INCURRED.
1. Return air fare to Vancouver (tickets provided by QLT) for Mr. Hastings to
find suitable accommodation together with hotel and rental of an economy
car for a period of 3-4 days.
2. Six (6) months of interim accommodation upon arrival in Vancouver to a
maximum of $3,000.00 per month. QLT will assist in locating this
accommodation, if necessary. As required under the Income Tax Act, these
payments must be used to provide for temporary accommodation while Mr.
Hastings is waiting to occupy Mr. Hastings' new permanent residence,
otherwise, they will be subject to the same required statutory withholdings
in Canada as base salary.
3. Reimbursement of real estate commission fees and reasonable legal expenses
relating to the sale of Mr. Hastings' existing single principal residence
within two years from Mr. Hastings' Commencement Date. These payments will
be subject to the same required statutory withholdings in Canada as base
salary.
4. Reimbursement for reasonable legal expenses on Mr. Hastings' purchase of a
single permanent principal residence in Greater Vancouver Regional District
within two years from Mr. Hastings' Commencement Date and subject to a
maximum reimbursement of $2,000.00.
5. Reimbursement of the B.C. Property Purchase Tax paid on Mr. Hastings'
residence.
6. Moving costs for household possessions, including two (2) automobiles, and
excluding bulky items of low value. QLT will assign a corporate moving
company.
7. Moving expenses incurred as a result of moving from Mr. Hastings' interim
accommodations to Mr. Hastings' permanent residence in the Greater
Vancouver area, to a maximum of $2,000.00. QLT will assign a corporate
moving company.
8. Reimbursement for the rental of an economy car for a one-month period if
necessary.
9. One-way air fares for Mr. Hastings and Mr. Hastings' immediate family from
Mr. Hastings' present location to Vancouver at the time of the move (or
return air fare for Mr. Hastings if Mr. Hastings relocates to Vancouver
prior to Mr. Hastings' family).
10. Accountable allowance: Reimbursement of up to $10,000.00 to cover other
reasonable expenses associated with Mr. Hastings' move. The attached list
"Other Allowable Expenses" outlines those moving-related expenses which
Revenue Canada allows us to reimburse Mr. Hastings for without incurring a
taxable benefit. Supporting receipts will be required.
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11. Non-accountable allowance: As part of Mr. Hastings' relocation, Mr.
Hastings will likely incur a number of incidental expenses which may not
appear on the attached list (eg. cleaning costs). QLT will reimburse Mr.
Hastings for these costs up to $650.00 on a tax-free basis in line with
Revenue Canada's accepted policy for non-accountable allowances (this is in
addition to the accountable allowance noted above). Note that we do not
require Mr. Hastings to supply supporting receipts for this reimbursement,
however, Mr. Hastings will be required to provide us with a memo certifying
that Mr. Hastings incurred at least this much in incidental costs. Any
additional reimbursement Mr. Hastings receives for "incidentals" that are
not on the attached list will be considered a taxable benefit.
POTENTIAL REPAYMENT OF RELOCATION ASSISTANCE. In the event of a termination of
employment by Mr. Hastings pursuant to Section 3.1 within twenty-four (24)
months from the Commencement Date, Mr. Hastings shall be required to reimburse
QLT for a portion of the financial assistance provided by QLT under this
Schedule "B". The amount of the repayment shall be computed by prorating the
amount of the financial assistance by the time remaining in the twenty-four (24)
month period. Such amount shall be payable to QLT within one hundred and twenty
(120) days from the effective date of termination of Mr. Hastings' employment.
RELOCATION ASSISTANCE UPON TERMINATION BY QLT. In the event of a termination by
QLT, other than for cause, within twenty-four (24) months from the Commencement
Date, QLT shall provide financial assistance for Mr. Hastings to relocate to
another location in North America for purposes of new employment. The amount of
such financial assistance shall be computed in accordance with this Schedule
"B", but in no event shall the amount payable exceed the amount paid under this
Schedule "B" to relocate Mr. Hastings to Vancouver. In addition, the assistance
will only be provided by QLT in the event that the relocation by Mr. Hastings
occurs within six (6) months from the effective date of termination of Mr.
Hastings' employment.
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SCHEDULE "C"
HOME RELOCATION LOAN
HOME RELOCATION LOAN - QLT will make available to Mr. Hastings a home relocation
loan of US$400,000.00 upon his purchase of a principal residence in the Greater
Vancouver Regional District within two years from the Commencement Date. The
loan will be non-interest bearing and forgivable over a 4-year period with 25%
forgivable for each full 12 month period of continuous employment with QLT that
is completed by Mr. Hastings calculated from the date of the initial advance of
the loan from QLT to Mr. Hastings. There are certain taxable benefit
implications associated with non-interest bearing, forgivable home relocation
loans. As a condition of QLT advancing the loan to Mr. Hastings, Mr. Hastings
(and any other persons with a fee simple ownership interest in the home) will
grant to QLT a mortgage in the form reasonably requested by QLT, which mortgage
will be registered 1st in priority to all other financial encumbrances against
title to the home. In the event that Mr. Hastings' employment with QLT is
terminated for any reason prior to the end of the 4-year period then:
(a) in the case of a resignation by Mr. Hastings or his termination for
cause prior to full forgiveness of the loan, the outstanding balance of
the loan will revert to an interest-bearing loan due the earlier of the
end of the 4-year period or the date of the sale of the house. The loan
will convert to interest bearing at the commercial rate for residential
fixed term mortgage loans of the same duration as set from time to time
by the Royal Bank of Canada; or
(b) in the case Mr. Hastings' employment with QLT is terminated by QLT
other than for cause or by reason of his death, the entire amount then
outstanding under the relocation loan will be forgiven by QLT effective
on the date of Mr. Hastings' termination.