Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 24th day of November, 1999.
BETWEEN:
1348485 Ontario Inc.
a corporation incorporated under the laws of Ontario
(hereinafter referred to as the "Corporation")
OF THE FIRST PART,
- and -
Kim Allen
of the Town of Markham
in the Province of Ontario
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation wishes to retain the services of the Executive to
provide the services hereinafter described during the term hereinafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the parties agree as follows:
1. EMPLOYMENT
The Corporation shall employ the Executive, unless such employment shall be
terminated earlier as hereinafter provided. Subject to the terms and conditions
of this Agreement and applicable law, the Corporation hereby employs Executive,
and the employee agrees to serve, as Chief Executive Officer of the Corporation.
In such capacity, the Executive shall perform such duties and exercise such
power related thereto as may from time to time be assigned to him by the Board
of the Corporation to achieve the annual business plans.
The Board's failure to approve the annual business plans in a timely manner
effectively neutralizes the Executive. In such a case, the Executive may
trigger the provisions of the Termination Agreement.
For the purposes of clarity, the base pay for any renewal period shall be
the Executive's base pay for the year immediately preceding the renewal period,
and the provisions for increase of the Executive's pay as provided in paragraph
4 shall apply to the renewal period, unless otherwise agreed in writing.
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This agreement is effective January 3, 2000.
2. DUTIES
The Executive shall serve the Corporation and any associates or affiliates
of the Corporation in such capacity or capacities and shall perform such duties
and exercise such powers pertaining to the management and operation of the
Corporation and any associates or affiliates of the Corporation (as those terms
are defined in the Canada Business Corporations Act) as may be determined from
time to time by the board of directors of the Corporation consistent with the
office of the Executive.
Without limitation of the foregoing, the Executive shall occupy the office
of Chief Executive Officer of the Corporation. The Executive shall:
(a) devote his full time and attention and his best efforts during normal
business hours to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the Executive
diligently and faithfully to the best of the Executive's abilities and
in the best interests of the Corporation; and
(c) use his best efforts to promote the interests and goodwill of the
Corporation.
The nature of the Executive's duties hereunder may also require reasonable
amounts of domestic and international travel. It is understood, however, that
the Executive will not be required to relocate without his consent.
3. REPORTING PROCEDURES
The Executive shall report to the Board of Directors. The Executive shall
report fully on the management, operations and business affairs of the
Corporation and advise to the best of his ability and in accordance with
reasonable business standards on business matters that may arise from time to
time during the term of this agreement.
4. REMUNERATION
The annual base salary payable to the Executive for his services hereunder
for the first year of the term of this agreement shall be $140,000, exclusive of
bonuses, benefits and other compensation. The annual base salary payable to the
Executive for his services hereunder for each successive year of the term of
this agreement, exclusive of bonuses, benefits and other compensation, shall
increase based on the performance of the Executive and the Corporation in the
preceding fiscal year of the Corporation. The annual base salary payable to the
Executive in any fiscal year shall be based on the gross revenues of the
Corporation in the previous year as provided in the Corporation's consolidated
financial statements. The annual base salary shall be set as follows:
Gross Revenues in Previous Fiscal Year Annual Salary
$0 - $10,000,000 $140,000
$10,000,001 - $30,000,000 $160,000
$30,000,001 - $50,000,000 $180,000
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$50,000,001 - $99,999,999 $210,000
$100,000,000 - + $250,000
The annual base salary payable to the Executive pursuant to the provisions
of this section 4 shall be payable in equal bi-weekly installments in arrears or
in such other manner as may be mutually agreed upon. The Board of Directors
shall review the executive's base salary annually. When the corporation becomes
publicly traded the Board shall institute a stock option plan for the
Executives.
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall be
entitled annually to a bonus equal to 2% of the Corporation's profit after tax
as provided in the Corporation's annual consolidated financial statements. The
Corporation shall pay the annual bonus within 90 days of the end of the
Corporation's fiscal year.
6. SHARE BONUS
(a) The Executive shall be entitled to a bonus consisting of 400,000
common shares of the Corporation (the "Bonus Shares"). 50,000 of the
Bonus Shares shall be issued to the Executive on the date of execution
of this agreement and on the date of each of the six month, 12-month
and 18-month anniversaries of this agreement. 200,000 of the Bonus
Shares shall be issued to the Executive on the date of the 24-month
anniversary of this agreement (the "Final Issuance"). Bonus Shares
shall only be issued on a particular date if this agreement has not
been terminated prior to that date. The Corporation shall hold all
Bonus Shares in escrow until the date of the Final Issuance. On such
date, all Bonus Shares shall be released from escrow to the Executive.
If this agreement is terminated for cause or as a result of the
resignation of the Executive prior to the date of the Final Issuance,
the Corporation shall cancel all Bonus Shares. If this agreement is
terminated for any other reason prior to the Final Issuance, the
Executive shall be entitled immediately to a release from escrow of
all Bonus Shares issued prior to the date of termination. If the
company is not publicly trading within 180 days of the execution of
this agreement, the Employee will have 10% equity of the Corporation,
and all rights of the shareholders agreement shall come in effect.
(b) The Executive shall be entitled to purchase up to 400,000 shares at an
exercise price of $1.00 Canadian, once the company becomes publicly
traded. The option to purchase the share is at the sole discretion of
the executive. If this agreement is terminated for any other reason
prior to the Executive exercising his option, the Executive shall be
entitled to exercise the option for a period of one year after the
date of termination.
In the event that the Corporation completes an initial public offering or
other going public transaction, the Executive agrees to pool or escrow some or
all of the Bonus Shares as may be required by underwriters or agents retained by
the Corporation or by applicable securities regulation.
7. BENEFITS
During the term of this agreement, the Executive shall be entitled to
participate in the benefits program offered by the Corporation to members of its
senior management.
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8. NO FURTHER SALARY OR BONUS ADJUSTMENTS
Other than as herein provided, there shall be no cost-of-living increase or
merit increase in the annual base salary or the Executive bonus unless agreed to
in writing by the Board of Directors of the Corporation.
9. VACATION
The Executive shall be entitled to four weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Board of Directors
of the Corporation, which approval shall not be unreasonably withheld but shall
take into account the staffing requirements of the Corporation and the need for
the timely performance of the Executive's responsibilities.
10. AUTOMOBILE
The Corporation shall pay the Executive mileage, at rates permitted by the
Income Tax Act (Canada), to reimburse the Executive for all reasonable operating
costs of a vehicle, including leasing costs, insurance, maintenance, gas and
oil, properly incurred or to be incurred in connection with the Executive
carrying out his duties hereunder. The Executive shall supply the Corporation
with such documentation in support of his claims as the Corporation may
reasonably require.
11. EXPENSES
The Executive shall be reimbursed for all reasonable travel and other out-
of-pocket expenses actually and properly incurred by the Executive from time to
time in connection with carrying out his duties hereunder. For all such
expenses the Executive shall furnish to the Corporation originals of all
invoices or statements in respect of which the Executive seeks reimbursement.
12. TERMINATION
(a) For Cause
The Corporation may terminate the employment of the Executive without
notice or any payment in lieu of notice for cause, which, without limiting
the generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the part of the
Executive to perform the material duties of the Executive's position
in a competent manner and where the Executive fails to substantially
remedy the failure within a reasonable period of time after
receiving written notice of such failure from the Corporation;
(ii) if the Executive is convicted of a criminal offence involving fraud
or dishonesty;
(iii) if the Executive or any member of his family makes any personal
profit arising out of or in connection with a transaction to which
the Corporation is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of the
Corporation;
(iv) if the Executive fails to honour his fiduciary duties to the
Corporation, including the duty to act in the best interests of the
Corporation; or
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(v) if the Executive disobeys reasonable instructions given in the course
of employment by the Board of Directors of the Corporation that are
not inconsistent with the Executive's management position and not
remedied by the Executive within a reasonable period of time after
receiving written notice of such disobedience.
(b) For Disability/Death
This agreement may be immediately terminated by the Corporation by notice
to the Executive if the Executive becomes subject to a disability. As used
herein, "disability" shall mean that the Executive shall fail or be unable
to perform his duties hereunder as the result of any physical or mental
disability, with reasonable accommodation as required by law, for a period
of 60 days whether or not consecutive in any 180 day period. The parties
agree that the Corporation shall have the option to declare that this
Agreement shall have been frustrated and the Corporation may at its option
terminate this Agreement upon not less than fifteen (15) calendar days'
notice.
This agreement shall terminate without notice upon the death of the
Executive.
13. SEVERANCE PAYMENTS
Upon termination of the Executive's employment: (i) for cause; (ii) by the
voluntary termination of employment of the Executive (resignation); (iii) as a
result of disability; (iv) as a result of death; or (v) by the non-renewal of
this Agreement, the Executive shall not be entitled to any severance payments
other than compensation earned by the Executive before the date of termination
calculated pro rata up to and including the date of termination and
reimbursement for business expenses as provided in paragraph 11 that were
incurred prior to the termination of the Executive's employment. The
Corporation shall not be obligated to pay any other amounts under this agreement
after the date of such termination, including any liabilities pursuant to the
Employment Standards Act (Ontario).
14. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as an
Executive of the Corporation, he has had and will continue in the
future to have access to and has been and will be entrusted with
detailed confidential information and trade secrets (printed or
otherwise) concerning past, present, future and contemplated products,
services, operations and marketing techniques and procedures of the
Corporation and its subsidiaries, including, without limitation,
information relating to addresses, preferences, needs and requirements
of past, present and prospective clients, customers, suppliers and
Executives of the Corporation and its subsidiaries (collectively,
"Trade Secrets"), the disclosure of any of which to competitors of the
Corporation or to the general public, or the use of same by the
Executive or any competitor of the Corporation or any of its
subsidiaries, would be highly detrimental to the interests of the
Corporation;
(b) in the course of performing his duties and responsibilities for the
Corporation, the Executive has been and will continue in the future to
be a representative of the Corporation to its customers, clients and
suppliers and as such has had and will continue in the future to have
significant responsibility for maintaining and enhancing the goodwill
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of the Corporation with such customers, clients and suppliers and
would not have, except by virtue of his employment with the
Corporation, developed a close and direct relationship with the
customers, clients and suppliers of the Corporation;
(c) the Executive, as an officer of the Corporation, owes fiduciary duties
to the Corporation, including the duty to act in the best interests of
the Corporation; and
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the
benefit of any relationships that have developed between the Executive
and the customers, clients and suppliers of the Corporation by virtue
of the Executive's employment with the Corporation constitute
proprietary rights of the Corporation, which the Corporation is
entitled to protect.
In acknowledgement of the matters described above and in consideration of
the payments to be received by the Executive pursuant to this agreement, the
Executive hereby agrees that he will not, during the period commencing on the
date hereof and ending ten years following the termination of the term of this
agreement, directly or indirectly disclose to any person or in any way make use
of (other that for the benefit of the Corporation), in any manner, any of the
Trade Secrets, provided that such Trade Secrets shall be deemed not to include
information that is or becomes generally available to the public other than as a
result of disclosure by the Executive.
15. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period commencing
on the date hereof and ending two years following the termination of the term of
this agreement, be a party to or abet any solicitation of customers, clients or
suppliers of the Corporation or any of its associates or affiliates (as those
terms are defined in the Canada Business Corporations Act) to transfer business
from the Corporation or any of its associates or affiliates to any other person,
or seek in any way to persuade or entice any Executive of the Corporation or any
of its associates or affiliates to leave that employment or to be a party to or
abet any such action.
16. NON-COMPETITION
The Executive covenants and agrees that he will not, either during the term
of this agreement and his employment, or at any time within a period of one year
following the date of termination of his employment for any reason whatsoever,
without the prior written consent of the Board of Directors of the Corporation,
whether individually or in partnership or jointly or in conjunction with any
person or persons, firms, partnership, corporation, or other legal entity,
whether as principal, agent, shareholder or in any other capacity whatsoever,
carry on, be engaged in, employed by, or have any interest in any business
similar to the business now or at any time during the employment of the
Executive hereunder was carried on by the Corporation or any of its associates
or affiliates (a "Competitive Business"). This will not prohibit, however, the
Executive from acquiring or holding not more than 5% of any class of equity
securities of any publicly traded corporation engaged in a Competitive Business.
17. DISCLOSURE
During the employment period, the Executive shall promptly disclose to the
Board of Directors full information concerning any interest, direct or indirect,
of the Executive (as owner, shareholder, partner, lender or other investor,
director, officer, Executive, consultant or otherwise) or any member of
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his family in any business that is reasonably known to the Executive to purchase
or otherwise obtain services or products from, or to sell or otherwise provide
services or products to the Corporation or to any of its suppliers or customers.
18. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disks, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its associates or affiliates (as those
terms are defined in the Canada Business Corporations Act) that may come into
the possession or control of the Executive shall at all times remain the
property of the Corporation or such associates or affiliates, as the case may
be. On termination of the Executive's employment for any reason, the Executive
agrees to immediately deliver to the Corporation all such property of the
Corporation in the possession of the Executive or directly or indirectly under
the control of the Executive. The Executive agrees not to make for his personal
or business use or that of any other party, reproductions or copies of any such
property or other property of the Corporation.
19. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario.
20. SEVERABILITY
If any provision of this agreement, including the breadth or scope of such
provision, shall be held by any court of competent jurisdiction to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the validity or enforceability of the remaining provisions, or part
thereof, of this agreement and such remaining provisions, or part thereof, shall
remain enforceable and binding.
21. LIFE INSURANCE
It is agreed that the Corporation or any of its associates or affiliates
(as those terms are defined in the Canada Business Corporations Act) shall have
the right to obtain life insurance on the Executive's life, at the Corporation's
sole expense and with the Corporation or such associate or affiliate as the sole
beneficiary thereof. The Executive shall: (a) cooperate fully in obtaining such
life insurance; (b) sign any necessary consents, applications and other related
forms or documents and (c) take any reasonably required medical examinations.
22. ENFORCEABILITY
The Executive hereby confirms and agrees that the covenants and
restrictions pertaining to the Executive contained in this agreement, including,
without limitation, those contained in sections 14, 15, 16, 17 and 18 hereof,
are reasonable and valid and hereby further acknowledges and agrees that the
Corporation would suffer irreparable injury in the event of any breach by the
Executive of his obligations under any such covenant or restriction.
Accordingly, the Executive hereby acknowledges and agrees that damages would be
an inadequate remedy at law in connection with any such breach and
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that the Corporation shall therefore be entitled in lieu of any action for
damages, temporary and permanent injunctive relief enjoining and restraining the
Executive from any such breach.
23. MODIFICATION
This Agreement may not be orally canceled, changed, modified or amended,
and no cancellation, change, modification or amendment shall be effective or
binding, unless in writing and signed by the parties to this Agreement.
24. NO ASSIGNMENT
The Executive may not assign, pledge or encumber the Executive's interest
in this agreement nor assign any of the rights or duties of the Executive under
this agreement without the prior written consent of the Corporation.
25. SUCCESSORS
This agreement shall be binding on and enure to be benefit of the
successors and assigns of the Corporation and the heirs, executors, personal
legal representatives and permitted assigns of the Executive.
26. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. At any time other than during a general discontinuance of
postal service due to strike, lock-out or otherwise, a notice so mailed shall be
deemed to have been received three (3) business days after the postmarked date
thereof or, if delivered by hand, shall be deemed to have been received at the
time it is delivered. If there is a general discontinuance of postal service
due to strike, lock-out or otherwise, a notice sent by prepaid registered mail
shall be deemed to have been received three (3) business days after the
resumption of postal service. Notices shall be addressed as follows:
a) If to the Corporation:
1348485 Ontario Inc.
30 West Beaver Creek Road
Richmond Hill, Ontario L4B 3K1
Tel: 905-881-6474
Fax: 905-881-1152
b) If to the Executive:
Kim Allen
49 Freeman Road
Markham, Ontario L3P 4E9
Tel: 905-472-5238
Fax: 905-471-9958
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27. COUNTERPARTS
This Agreement may be executed simultaneously in several counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same original.
28. ENTIRE AGREEMENT
This Agreement represents the entire agreement between the Company and the
Executive with respect to the subject matter hereof and all prior agreements
relating to the Executive's employment or compensation, written or oral, are
nullified and superseded hereby.
29. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity, at the Corporation's
expense to seek and was not prevented nor discouraged by the Corporation from
seeking independent legal advice prior to the execution and delivery of this
agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this agreement, he did so voluntarily without any
undue pressure and agrees that his failure to obtain independent legal advice
shall not be used by him as a defence to the enforcement of his obligations
under this agreement.
IN WITNESS WHEREOF this agreement has been executed by the parties hereto
as of the date first above written.
SIGNED, SEALED & DELIVERED ) 1348485 Ontario Inc.
in the presence of: )
)
) /s/ Angelo Boujos
--------------------------
) Title: Chairman
)
)
/s/ William McGill ) /s/ Kim Allen
_____________________________ --------------------------
Witness ) Kim Allen
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