Exhibit 4.6
Settlement Agreement with Former CEO
SA-1
SETTLEMENT AGREEMENT
BETWEEN:
MARSULEX INC.
(the "Company")
and
DAVID GEE
(the "Executive")
WHEREAS the Executive is employed as the President and Chief Executive Officer
of the Company and of certain of its affiliates pursuant to the terms of a
letter employment agreement dated July 17, 1995;
AND WHEREAS as a result of the Executive and the Company determining that it is
in their mutual best interests to conclude their association, the parties
hereto agree that the Executive's employment with the Company shall terminate
effective January 1, 2005;
AND WHEREAS in consideration of the sums payable to the Executive and the
continuation of certain benefits contemplated herein, the Executive agrees to
be bound by the restrictive covenants contained in this Agreement;
AND WHEREAS the Executive and the Company wish to conclude their association in
an orderly fashion and are desirous of resolving all claims, demands,
liabilities and issues arising out of the Executive's employment and his
termination of employment with the Company and his resignation from its
affiliates;
NOW THEREFORE the Executive and the Company agree as follows:
1. In this Agreement, "Notice Period" means the period commencing on January
1, 2005 and ending on June 30, 2007.
2. The Executive's employment with the Company shall terminate effective
December 31, 2004. The Executive will cease to hold the position of
President and Chief Executive Officer and shall cease all directorships
with the Company and any of its affiliates effective November 19, 2004 and
shall thereafter perform those services as contemplated by paragraph 9
herein, it being understood that his compensation with the Company shall
remain unchanged through December 31, 2004. The Executive confirms his
resignation from employment with all of the Company's affiliates effective
November 19, 2004.
3. Within three (3) business days from December 31, 2004, the Company shall:
(a) pay to the Executive any accrued but unpaid salary owing to December
31, 2004; and
(b) pay to the Executive a bonus of $156,000, less applicable
withholdings and deductions, in respect of service for the 2004
year.
4. The Company shall pay to the Executive in respect of his termination of
employment a lump sum retiring allowance in the amount of $1,462,500, less
applicable withholdings and deductions which amount represents the sum of
thirty (30) months base salary plus thirty (30) months bonus. This amount
will be paid within three (3) business days from December 31, 2004.
5. The Company shall continue to make its premium contributions so as to
provide for the benefits set out in Schedule "A", attached hereto, until
the earlier of (i) the end of the Notice Period and (ii) the date the
Executive secures comparable benefit coverage.
SA-2
6. Effective December 31, 2004, and to the extent then not vested, the
Executive's Performance Share Units ("PSU") and stock options as
summarized in Schedule "B" attached hereto shall vest in their entirety
notwithstanding the terms of the Company's Performance Share Unit Plan
dated May 30, 2002 (the "PSU Plan"), or the Company's Stock Option Plan
dated October 16, 1996, (the "Option Plan"), both as amended from time to
time. The exercise of the PSUs and stock options shall otherwise be
governed by the terms of the PSU Plan and the Option Plan it being
understood that (i) for the purpose of the Option Plan, the Executive's
termination from the Company, his resignation from employment with the
affiliates and his resignation as director shall be deemed to be
involuntary, and (ii) for the purpose of both the Option Plan and the PSU
Plan, the Executive's employment with the Company and its affiliates shall
be deemed to have continued until June 30, 2007.
7. The Company shall, in respect of the Executive's participation in the
Supplementary Pension Plan ("SPP"), make a one-time lump sum contribution
to the David Gee RCA Trust Fund in the amount set forth in the Kraft
Financial Inc. memorandum dated November 18, 2004 from James W. Kraft to
Ian Matheson and others, which memorandum is attached as Schedule "C"
hereto. The Company shall continue to pay the annual insurance premiums
required to provide for the benefits contemplated by the SPP.
8. The Company will reimburse the Executive, against proper invoices, to a
maximum of $12,000 in respect of the legal fees incurred by the Executive
in obtaining independent legal advice related to the termination of his
employment and the negotiation of this Agreement.
9. For a reasonable period of time following December 31, 2004 (but in no
event later than July 1, 2005), the Executive shall, for no additional
consideration, make himself available to assist the Company with the sale
of the Company's Power Division, and for such other matters as the Board
of Directors of the Company may reasonably request. Notwithstanding the
foregoing, the Executive shall also make himself available, for no
additional consideration, to assist in the Holcim, Inc. litigation until
the final resolution of such litigation and for a reasonable period of
time thereafter for matters related to the disposition of same. The
Executive shall be reimbursed for all pre-approved expenses incurred in
the performance of these services.
10. Except as is required to provide the services contemplated in paragraph 9,
the Executive will maintain in confidence all confidential information
acquired by him during his employment and will not disclose to any third
party (save for such disclosures as may be required by law) or use for his
own benefit or that of any third party any such information learned during
the course of his employment other than confidential information which
becomes public knowledge other than through the actions of the Executive.
For the purposes of this Agreement, "confidential information" includes,
but is not limited to, information relating to the Company's or its
affiliates' operations or business, in whatever form, including
information relating to the Company's or its affiliates' products,
improvements, customers, methods of distribution, sales, prices, profits,
costs, contracts, suppliers, business prospects, business methods,
techniques, research, data bases, trade secrets or know-how or any other
information not publicly known or relating to the affairs of the Company
or its affiliates, all of which shall be treated in confidence.
11. On or prior to December 31, 2004, the Executive shall return to the
Company all correspondence, documents, software and other property
belonging to the Company or its affiliates, which the Executive currently
has in his possession except for such property reasonably necessary to
provide the services contemplated in paragraph 9, which property shall be
returned at the Company's request. The Executive shall not reproduce any
such property in any manner whatsoever. The Executive will be permitted to
keep the cell phone and laptop computer currently in his possession.
12. In consideration of the amounts payable to the Executive pursuant to this
Agreement, the Executive shall not, during the Notice Period, on his own
behalf or on behalf of or in connection with any person or entity,
directly or indirectly, in any capacity whatsoever including as an
employer, employee, principal, agent, joint venturer, partner, shareholder
or other equity holder, independent contractor, licensor, licensee,
franchiser, franchisee, distributor, consultant, supplier or trustee or by
and through any corporation, cooperative, partnership, trust,
unincorporated association or otherwise carry on, be engaged in, have any
financial or other interest in or be otherwise commercially involved in
any
SA-3
endeavour, activity or business in all or any part of North America
which is substantially the same as or is in competition with the then
current business of the Company or its affiliates (the "Business").
However, the Executive shall not be in default of this paragraph 12 by
virtue of (i) his holding as a passive investor not more than 5% of the
issued and outstanding shares of a corporation, the shares of which are
listed on a recognized stock exchange and with which corporation the
Executive has no other connection whatsoever, or (ii) the directorships he
holds as at the date of this Agreement including, but not limited to, his
acting as a director of Chemtrade Logistics Inc.
13. The Company and the Executive agree that during the Notice Period, the
Executive may, in writing, seek the view of the Board of Directors as to
whether or not a proposed activity is in breach of his obligations under
paragraph 12 and the Board of Directors shall provide, in writing, its
view within a reasonable period of time following the receipt of such
request.
14. In consideration of the amounts payable to the Executive pursuant to this
Agreement, the Executive shall not, during the Notice Period, on his own
behalf or on behalf of or in connection with any other person or entity,
directly or indirectly, in any capacity whatsoever
(a) canvass or solicit the business of (or procure or assist the
canvassing or soliciting of the business of) (i) any person or
entity who is on December 31, 2004 or was at any time during the
period commencing six months prior to December 31, 2004 a customer
of the Company or its affiliates ("Customers"), or (ii) any person
or entity canvassed or solicited at any time during the period
commencing six months prior to December 31, 2004 in connection with
the Business ("Prospective Customer") for a purpose which is
competitive with the Business;
(b) accept (or procure or assist the acceptance of) any business from
any Customer or Prospective Customer which business is competitive
with the Business; or
(c) supply (or procure or assist the supply of) to any Customer or
Prospective Customer, goods or services which are the same as or
substantially similar to, or in any way competitive with, the
products or services of the Business.
15. The Executive hereby expressly recognizes that the Company would not have
entered into this Agreement nor agreed to provide the payments or continue
the benefits set out in paragraphs 4 and 5 without the inclusion of the
restrictions provided for in paragraphs 12 and 14. The Executive hereby
further recognizes and expressly acknowledges that the Company would be
subject to irreparable harm should any of the provisions of paragraphs 10,
11, 12 or 14 be infringed, or should any of the Executive's obligations
thereunder be breached by the Executive, and that damages alone will be an
inadequate remedy for any breach or violation thereof and that the
Company, in addition to all other remedies, shall be entitled as a matter
of right to equitable relief, including temporary or permanent injunction
to restrain such breach.
16. The Executive further acknowledges that any violation by him of the
covenants set out in paragraphs 10, 12 and 14 may result in material
irreparable harm to the Company or its affiliates for which there is no
adequate remedy at law and that damages may not remedy such harm. In the
event that a court of competent jurisdiction determines that a breach of
any such covenant has occurred, the Executive will forfeit any claim to
and the Company will be entitled, in addition to any remedy available to
it under paragraph 15, to cease payment of any amounts or benefits
remaining due and owing pursuant to the terms of this Agreement provided
however, as such relates to a breach of paragraph 10, the Executive must
have intentionally disclosed confidential information.
17. The Executive and the Company agree that the terms of this Agreement shall
remain confidential as between the Executive and the Company and shall not
be disclosed by either party, other than as required by law, to any
person, corporation, association or organization with the exception of
members of the Executive's immediate family, the parties' legal and
financial advisors and those at the Company who need to know and then only
in strictest confidence.
SA-4
18. The Executive further agrees that if any provision of this Agreement or a
part thereof is found to be unenforceable, it shall only be ineffective to
the extent of such invalidity or unenforceability without affecting in any
way the remaining provisions hereof.
19. All payments by the Company to the Executive under this Agreement shall be
in Canadian currency and shall be subject to applicable withholdings.
20. The Executive shall not at any time, denigrate, through adverse or
disparaging communication, written or oral, whether true or not, the
operations or business of the Company, its affiliates or its or their
current or former employees, officers or directors except where such
communication is truthful and required by law. The Company shall make no
adverse or disparaging communication, written or oral, whether true or not
concerning the Executive or his relationship with the Company except where
such communication is truthful and required by law.
21. The Executive shall be covered by any Director and Officer insurance that
applies to the directors generally, in respect of the services rendered by
him prior to December 31, 2004 or provided pursuant to paragraph 9 herein.
22. It is agreed by the parties that the Executive shall confirm his
acceptance of the terms contained herein by signing this Agreement and the
Release which is attached hereto as Schedule "D" and which is a condition
of this Agreement.
23. This Agreement shall be interpreted in accordance with the laws in the
province of Ontario and the laws of Canada applicable therein.
24. The Company will announce the Executive's termination as President and
Chief Executive Officer on November 19, 2004 by delivery of the Press
Release attached hereto as Schedule "E".
25. This Agreement and the Schedules attached hereto constitute the entire
agreement between the parties with respect to the subject matter herein.
All previous agreements, written or oral, express or implied between the
parties or on their behalf relating to the subject matter of this
Agreement are terminated and cancelled.
26. This Agreement may be executed in counterparts and by each party hereto
on a separate counterpart, all of which when so executed shall be deemed
to be an original and all of which taken together, shall constitute one
and the same agreement. Delivery of an executed counterpart of this
Agreement and in the case of the Executive, the Release attached as
Schedule "D" by telecopier or facsimile transmission shall be effective
as delivery of a manually executed counterpart of this Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement.
Dated at this day of November, 2004.
MARSULEX INC.
Per: ________________________________
Dated at this day of November, 2004.
________________________________ ___________________________________
Witness DAVID GEE
SA-5
SCHEDULE "A"
MARSULEX INC.
DAVID GEE BENEFITS
------------------
BASIC LIFE INSURANCE
- --------------------
Formula: 2 times annual earnings
All eligible Employees
Survivor Benefits 2-year Survivor Extension applies to
Dependent Life, Health & Dental benefits
Overall Maximum $1,000,000
Cost Sharing Paid by Marsulex
BASIC ACCIDENTAL DEATH &
- ------------------------
DISMEMBERMENT
- -------------
Formula Matches Life Schedule
Maximum
Cost Sharing Paid by Marsulex
HEALTH CARE INSURANCE
- ---------------------
Deductible
- Single Nil
- Family Nil
Overall Annual Maximum Unlimited
Hospital Accommodation Semi-Private
Reimbursement Level
- Hospital 100%
- Vision care 100%
- Medical + Drugs 100%
- Out of Country 100%
Vision Care Maximum $300/24 mos
Annual Paramedical Maximum $500
Cost Sharing Paid by Marsulex
*Deductible not applicable to Hospital,
Vision Care and Out of Country
----------------------------------------
SA-6
----------------------------------------
DENTAL INSURANCE
- ----------------
Fee Schedule Current
Deductible
- - Single Nil
- - Family Nil
Reimbursement Level
- Basic & Supplementary 100%
- Dentures/Major Restorative 80%
- Orthodontics 50%
Annual Maximum
- Basic & Supplementary $1,000
- Dentures/Major Restorative $1,500
Lifetime Maximum
- Orthodontics $2,000
Cost Sharing Paid by Marsulex
*Deductible not applicable to Basic &
Supplementary
MARSULEX HEALTHCARE SPENDING ACCOUNT $1,000/calendar year for both employee
- ------------------------------------ and spouse
CAR ALLOWANCE $1,716.14/month plus reimbursement of
- ------------- annual automobile insurance premium.
Paid by Marsulex
FINANCIAL PLANNING Annual for reasonable expenses.
- ------------------ Paid by Marsulex
MEMBERSHIP FEES
- ---------------
Beacon Hall Golf Club and Annual dues.
World Presidents Organization Paid by Marsulex.
----------------------------------------
SA-7
SCHEDULE "B"
PERFORMANCE SHARE UNITS AND STOCK OPTIONS
SUMMARY OF STOCK OPTIONS
Grant Strike Vesting
Date Grant Price Date Options
---- ----- ----- ---- -------
August 12, 1997 190,000 $4.65 8/12/1997 94,500
8/12/1998 32,000
8/12/1999 32,000
8/12/2000 31,500
May 22, 1998 66,000 $8.80 5/22/1999 22,000
5/22/2000 22,000
5/22/2001 22,000
May 10,1999 150,000 $3.85 5/10/2000 50,000
5/10/2001 50,000
5/10/2002 50,000
May 10, 2000 190,000 $3.40 5/10/2001 63,334
5/10/2002 63,333
5/10/2003 63,333
March 21, 2001 325,000 $2.23 3/21/2002 108,333
3/21/2003 108,333
3/21/2004 108,334
February 28, 2002 32,500 $3.90 2/28/2003 10,833
2/28/2004 10,833
2/28/2005 10,834
953,500 953,500
======= =======
SA-8
SUMMARY OF PSU GRANTS
Year Units Grant Release
Granted* Granted Period Date Vesting Units
- -------- ------- ------ ---- ------- -----
2002 97,300.00 March 1, 2002 - March 1, 2005 March 31, 2005 2002 32,433.33
2003 32,433.33
2004 32,433.33
2003 140,000.00 March 1, 2003 - February 28, 2006 March 31, 2006 2003 46,666.67
2004 46,666.67
2005 46,666.67
2004 72,600.00 March 1, 2002 - March 1, 2007 March 31, 2007 2004 24,200.00
2005 24,200.00
2006 24,200.00
Total 309,900.00
==========
*Effective Date March 1st of each year.
SA-9
SCHEDULE "D"
FINAL RELEASE
In consideration of the terms set out in the attached Settlement Agreement,
dated November 18, 2004 (the "Agreement"), I, David Gee (the "Releasor") hereby
release and forever discharge Marsulex Inc. (the "Releasee") from any and all
actions, causes of action, complaints, contracts and covenants, whether express
or implied, claims and demands for damages, indemnity, costs, interest, loss or
injury of every nature and kind whatsoever arising, which I may heretofore have
had, may now have or may hereinafter have in any way relating to my hiring by,
my employment with or the termination of my employment by the Releasee, which
specifically includes but is not limited to any claims for notice, pay in lieu
of notice, wrongful dismissal, severance pay, bonus, overtime pay, incentive
compensation, including Performance Share Units, stock options, interest,
vacation pay, supplemental pension benefits, health and welfare benefits or any
claims under applicable employment standards or human rights legislation or any
employment-related legislation; provided, however, that this Release shall not
include any claim for contribution and indemnity the Releasor may have against
the Releasee, as a result of claims by third parties against the Releasor
relating to the performance of the Releasor's duties and responsibilities as an
officer and director of the Releasee and this Release does not apply to the
Releasee's obligations under the Settlement Agreement.
It is understood and agreed that for the said consideration, I will not make
any claim or take any proceeding in connection with the claims released herein
against any other person or party who may claim contribution or indemnity from
the Releasee by virtue of said claim or proceeding.
It is understood and agreed that the amounts provided to me are intended to be
inclusive of, and not in addition to, any benefits and allowances or
obligations prescribed by applicable employment standards legislation and are
to be in full payment of the obligations under such legislation, including the
individual notice, termination pay and benefits requirements and entitlements
of such legislation.
It is further understood and agreed that the provisions hereof shall enure to
the benefit of the Releasee, its parent, subsidiary, affiliated or predecessor
companies and its and their respective current and former directors, officers,
employees, successors and assigns, and shall be binding upon the Releasor, his
heirs, executors, administrators, assigns and other legal representatives.
And for the said consideration, I further covenant and agree to save harmless
and indemnify the Releasee from and against all claims, charges, taxes or
penalties and demands which may be made by the appropriate taxing authorities
in Canada and Ontario requiring the Releasee to pay income tax, charges or
penalties under applicable statutes and regulations in respect of income tax
payable by me for services I rendered to the Releasee, and in respect of any
and all claims, charges, taxes, or penalties and demands which may be found
payable by the Releasee in respect of myself relating to governmentally
regulated or other employment insurance or pension plan programs except to the
extent such claims, charges, taxes or penalties arise as a result of errors
made by the Company.
I expressly declare, except as set out in the Settlement Agreement, that I have
no claim of any nature or kind to any entitlement whatsoever arising under or
from any group health or welfare insurance policy maintained by the Releasee
for the benefit of its employees including disability or life insurance plans.
I hereby declare that I have been given the opportunity to obtain independent
legal advice with respect to the matters addressed in this Release and the
Agreement. I hereby voluntarily accept the said terms for the purpose of making
full and final compromise, adjustment and settlement of all claims as
aforesaid.
It is further understood and agreed that the giving of the aforementioned
consideration is deemed to be no admission of liability on the part of the said
Releasee, said liability in fact being denied. IN WITNESS WHEREOF I have
hereunto executed this Release by affixing my hand and seal this _____ day of
November, 2004, in the presence of the witness whose signature is subscribed
below.
SA-10
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF: )
)
)
____________________________ ) _________________________
Signature of Witness ) DAVID GEE
)
)
____________________________ )
Name of Witness )
)
)
____________________________ )
Address )
)
)
____________________________ )
SA-11
MARSULEX
NEWS RELEASE
SCHEDULE "E"
MARSULEX ANNOUNCES SENIOR MANAGEMENT CHANGES
TORONTO, November 19, 2004 -- Marsulex Inc. (TSX.MLX) announced today that
David M. Gee, President and Chief Executive Officer, will be stepping aside
after nine years of leading the Company. Mr. Laurie Tugman, previously Chief
Operating Officer, has been appointed President and Chief Executive Officer.
The Company said that it had reached a mutually acceptable arrangement with Mr.
Gee that will see Mr. Gee leave his current position effective today, but
remain available as an advisor to the Company on a number of on-going projects.
Mr. Gee, who joined Marsulex in August 1995, has led the Company through a
series of significant changes that have established it as a leading industrial
services provider with a focus on air emission control. Marsulex completed its
initial public offering in December 1996, and in July 2001 spun off its North
American and international removal services business to Chemtrade Logistics
Income Fund in a $170 million public offering. Recently, it has completed an
environmental services facility at the Syncrude Upgrader Expansion project in
Mildred Lake, Alberta, and announced a planned $47 million expansion of its
Montreal facility which handles sulphur recovery and site emissions for the
Petro-Canada and Shell oil refineries.
Mr. Tugman, who joined Marsulex in August 1994 as Chief Financial Officer, has
been responsible for operations since 2001 and was appointed Chief Operating
Officer in March 2004. Mr. Tugman led the orderly transition of the Company
following the Chemtrade transaction and has enabled the formation of the
strong, cohesive team that guides the Company today.
Mr. Gee said, "Marsulex has been transformed from a company with significant
exposure to market price and volume risk to a critical services provider that
is generating high quality earnings, has demonstrated excellent growth
potential and has the financial flexibility to pursue new initiatives. Laurie
Tugman has been a key part of that transformation from the very beginning and I
am delighted he will be leading Marsulex on the next stage of its growth."
Marsulex, which is based in Toronto, Ontario, is a leading industrial services
company with a focus on outsourced air quality compliance services. The
Company's services encompass the complete outsourcing of environmental
compliance activities including the ownership and operation of compliance
assets. Website: www.marsulex.com.
# # # #
For further information:
Laurie Tugman
President and CEO
Tel: (416) 496-4157
SA-12