EXHIBIT 10.6.1
EMPLOYMENT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 2nd day of March, 1999.
B E T W E E N:
PAUL MELNUK,
of the City of Toronto in the
Province of Ontario,
(hereinafter referred to as the "Executive"),
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BRACKNELL CORPORATION,
a corporation existing under the laws
of the Province of Ontario,
(hereinafter referred to as "Bracknell").
WHEREAS the Executive was appointed as the President and Chief
Executive Officer of Bracknell effective as of March 3, 1999 on the terms and
conditions set out herein;
AND WHEREAS the Executive and Bracknell have agreed to enter into this
Agreement in order to provide for the terms and conditions upon which the
Executive shall be employed by Bracknell;
NOW THEREFORE in consideration of the respective covenants hereinafter
set forth, and in consideration of $1.00 paid by each party hereto to each other
party hereto and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto agree as
follows:
1) Definitions
In this Agreement:
a) "Agreement" means this Agreement, as amended from time to time
hereafter;
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b) "Annual Salary" has the meaning ascribed thereto in Section
4(a) hereof;
c) "Board" means the Board of Directors of Bracknell;
d) "business day" means any day other than a Saturday or Sunday
upon which banks are open for business in Toronto, Ontario;
e) "Change in Control" shall mean the occurrence of either of the
following:
i) the purchase or acquisition of Shares and/or
securities of Bracknell ("Convertible Securities")
convertible into Shares or carrying the right to
acquire Shares as a result of which a person, group
of persons or persons acting jointly or in concert
(excluding, for this purpose, the Executive and any
corporation controlled, directly or indirectly, by
the Executive) (collectively, the "Holders")
beneficially own or exercise control or direction
over Shares and/or Convertible Securities such that,
assuming the conversion of or the exercise of the
purchase rights attaching to the Convertible
Securities beneficially owned by the Holders as well
as those attaching to all other Convertible
Securities of the same class or series as those owned
by the Holders, the Holders would beneficially own
shares which would entitle the Holders to cast more
than 50% of the votes attaching to all shares in the
capital of Bracknell which may be cast to elect
directors of Bracknell; or
ii) the completion of an amalgamation, arrangement,
merger or other consolidation of Bracknell with
another corporation pursuant to which the
shareholders of Bracknell immediately prior to the
completion of such transaction do not thereafter own
shares of the successor or continuing corporation
which would entitle them to cast more than 50% of the
votes attaching to all shares in the capital of the
successor or continuing corporation which may be cast
to elect directors of that corporation;
f) "Conventional Options" has the meaning ascribed thereto in
Section 5(a) hereof;
g) "Date of Grant" has the meaning ascribed thereto in Section
5(b) hereof;
h) "Effective Date" means March 3, 1999;
i) "Performance Options" has the meaning ascribed thereto in
Section 5(b) hereof;
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j) "Permanent Incapacity" means the inability of the Executive by
reason of illness, disease, mental or physical disability or
incapacity or otherwise to perform his duties under this
Agreement (A) for a period of 90 business days in the
aggregate during any period of 120 consecutive business days
unless, at the end of such 120 business days there are
reasonable grounds for expecting that the Executive will be
capable of resuming and willing to resume his duties on a
full-time basis within a further period of 60 business days,
or (B) for a period of 180 business days in the aggregate
during any period of 210 consecutive business days;
k) "person" includes an individual, body corporate, partnership,
unincorporated syndicate, unincorporated organization, trust,
trustee, executor, administrator or other legal
representative; and
l) "Shares" means common shares of Bracknell.
2) Employment and Acceptance
On and subject to the terms and conditions of this Agreement, Bracknell
shall employ the Executive on the terms and conditions set forth herein
and the Executive hereby accepts such employment. The employment of the
Executive hereunder shall terminate on the Executive's 60th birthdate.
3) Responsibilities
a) Duties. The Executive shall serve as the President and Chief
Executive Officer of Bracknell during the term of his
employment hereunder, unless the Executive and the Board
otherwise mutually agree. The Executive shall perform such
duties and exercise such powers at Bracknell as may from time
to time be prescribed by the Board.
b) Reporting. The Executive shall report directly to the Board.
c) Performance of Duties. In the performance of his duties, the
Executive shall act honestly, in good faith and in the best
interests of Bracknell and shall exercise the degree of
diligence and responsibility that a person holding the
position of President and Chief Executive Officer of Bracknell
would reasonably be expected to exercise in comparable
circumstances, subject always to the instructions, control and
direction of the Board. The Executive shall devote the whole
of his time, attention and ability during business hours to
serving Bracknell on an exclusive and full-time basis as
aforesaid, except during holidays, in case of illness or
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accident, or as may be otherwise approved from time to time by
the Board. The Executive shall be bound by and shall
faithfully observe and abide by all of the rules, regulations
and corporate policies of Bracknell from time to time in force
which are brought to the attention of the Executive or of
which he should reasonably be aware.
d) Office Location. The Executive shall be provided with an
office at the head office of Bracknell in Toronto, Ontario.
4) Compensation
a) Annual Salary. Bracknell shall pay the Executive an annual
salary of $450,000 (the "Annual Salary"), payable in
accordance with the usual practices of Bracknell, less such
deductions as shall be required to be withheld by applicable
law and regulation. The Annual Salary payable to the Executive
by Bracknell will be reviewed annually by the Board in
accordance with the policies and procedures that apply to
other senior officers of Bracknell in order to determine
whether any change to the Annual Salary is warranted;
provided, however, that under no circumstances will the Annual
Salary paid to the Executive be less than the amount payable
as at the Effective Date as set forth above.
b) Annual Bonuses. The Executive shall be paid, by Bracknell, an
annual bonus in such amount as shall be determined by the
Board or by a committee of the Board in accordance with the
policies and procedures that apply to other senior officers of
Bracknell, however, that unless the Board determines otherwise
in its sole discretion, such amount shall not exceed 100% of
the Executive's Annual Salary.
5) Stock Options
a) Conventional Options. As soon as is reasonably practicable on
or after the Effective Date, Bracknell shall grant the
Executive an option to purchase 300,000 Shares in accordance
with the stock option plan of Bracknell (the "Conventional
Options"). The exercise price of the Conventional Options
shall be the closing price for the Shares on the trading day
immediately preceding the date of grant of those options, as
quoted on The Toronto Stock Exchange. Except as provided in
Section 9(f) below, on each of the first three anniversary
dates of the grant of the Conventional Options, the Executive
shall acquire the right to purchase one-third of the Shares
subject to the Conventional Options. Except as otherwise set
out herein, the Conventional Options shall expire ten years
from the date of grant. Except as set forth in Section 9(f)
below, all other terms and conditions of the Conventional
Options,
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such as events of forfeiture, shall be as set forth in the
stock option plan of Bracknell pursuant to which the
Conventional Options were granted. The Executive acknowledges
having received a copy of such stock option plan, as presently
in effect.
b) Granting of Performance Options. As soon as is reasonably
practicable on or after the Effective Date, Bracknell shall
grant the Executive options (the "Performance Options") to
purchase an additional 300,000 Shares in accordance with the
stock option plan of Bracknell (such date of grant hereinafter
referred to as the "Date of Grant"). The exercise price
("Exercise Price") of the Performance Options shall be the
closing price for the Shares on the trading day immediately
preceding the Date of Grant, as quoted on The Toronto Stock
Exchange. All of the Performance Options shall vest on the
seventh anniversary of the Date of Grant, unless vesting is
otherwise accelerated as follows. One-third of the Performance
Options will become eligible to vest on each of the first,
second and third anniversaries of the Date of Grant
(respectively, "Tranche One", "Tranche Two", and "Tranche
Three"), as described in more detail below.
c) Vesting of Performance Options in Year One. Tranche One of the
Performance Options shall vest on the first anniversary date
of the Date of Grant, provided that the trading price of the
Shares at any time during such first year from the Date of
Grant is at least 120% of the Exercise Price. In the event
that Tranche One of the Performance Options does not vest as
described above, then such tranche remains eligible to vest
prior to or upon the third anniversary of the Date of Grant,
as described below.
d) Vesting of Performance Options in Year Two. Tranche Two and
Tranche One (if not already vested) of the Performance Options
shall vest on the second anniversary date of the Date of
Grant, provided that the trading price of the Shares at any
time during such second year from the Date of Grant is at
least 144% of the Exercise Price. In the event that Tranche
One or Tranche Two of the Performance Options do not vest as
described above, then such tranches remain eligible to vest
upon the third anniversary of the Date of Grant, as described
below.
e) Vesting of Performance Options in Year Three. Tranche Three,
and any Performance Options not already vested, shall vest on
the third anniversary date of the Date of Grant, provided that
the trading price of the Shares at any time during such third
year from the Date of Grant is at least 173% of the Exercise
Price.
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f) Calculation of Trading Price for Performance Options. For the
purposes of Sections 5(c) to (e) above, the trading price of
the Shares on or as at any date shall be determined based on a
simple average of the closing price of the Shares on The
Toronto Stock Exchange on each trading day during the 20
trading day period ending on the business day prior to the
applicable date. In the event that the Shares do not trade on
any of such trading days, the average of the closing bid and
closing ask prices on The Toronto Stock Exchange on such date
shall be used as the closing price for that date.
g) Expiration of Performance Options. All Performance Options
which have not vested by the third anniversary date of the
Date of Grant will in any event vest on the seventh
anniversary of the Date of Grant. Except as otherwise set out
herein, all Performance Options which have vested will expire
ten years from the Date of Grant. Except as set forth in
Section 9(f) below, all other terms and conditions of the
Performance Options, such as events of forfeiture, shall be as
set forth in the stock option plan of Bracknell pursuant to
which the Performance Options were granted.
6) Expenses
Subject to such policies as may from time to time be established by the
Board or a committee of the Board, Bracknell shall pay or reimburse the
Executive for all reasonable travelling and other out-of-pocket
expenses actually incurred or paid by the Executive in the performance
of the Executive's duties as an officer of Bracknell upon presentation
of such expense statements or vouchers or such other supporting
information as Bracknell may require.
7) Benefits
a) Automobile. Bracknell shall provide the Executive with a
leased automobile for his use, or an automobile allowance in
accordance with Bracknell's policies for its senior executives
in place from time to time. Bracknell shall pay or reimburse
the Executive for all reasonable operating expenses such as
gas, maintenance, parking and insurance incurred or paid by
the Executive in connection therewith.
b) Health Club. Bracknell will pay or reimburse the Executive for
all reasonable expenses paid or incurred by the Executive in
respect of membership fees at a health club, golf club or
similar organization to be used by the Executive for health
and dinner purposes.
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c) Benefits. The Executive shall be entitled to fully participate
in all other benefit plans available to senior executives of
Bracknell from time to time including, without limitation,
Bracknell's' medical, dental, insurance and similar programs.
8) Vacation
During the term of this Agreement, the Executive will be entitled to 4
weeks of paid vacation per calendar year.
9) Termination of Employment
The following terms and provisions shall apply to the termination of
the Executive's employment hereunder:
a) Termination For Cause. Bracknell may at any time terminate the
employment of the Executive for cause without any requirement
of a notice period and without payment of any compensation of
any nature or kind (including, without limitation, by way of
anticipated earnings, damages or payment in lieu of notice).
Notwithstanding the foregoing, in the event that any portion
of the Executive's Annual Salary has been earned but not paid
or any expenses referred to in Sections 6 or 7 have been
incurred by the Executive but not reimbursed, in each case to
the date of termination of his employment, together with any
amount to which the Executive is entitled under the Employment
Standards Act (Ontario), as amended and enforced from time to
time, to the extent that the same cannot be waived by the
Executive, such amounts shall be paid to the Executive within
15 business days following such date of termination.
b) Permanent Incapacity. In the event of the Permanent Incapacity
of the Executive, his employment may thereupon be terminated
by Bracknell without payment of any compensation of any nature
or kind (including, without limitation, by way of anticipated
earnings, damages or payment in lieu of notice); provided
that, in such event, Bracknell shall pay or cause to be paid
to the Executive the amounts specified in any benefit and
insurance plans applicable to the Executive as being payable
in the event of the permanent incapacity or disability of the
Executive, such sums to be paid in accordance with the
provisions of those plans as then in effect.
c) Death. If the Executive's employment is terminated by reason
of the Executive's death, the Executive's estate will be
entitled to receive and Bracknell shall pay or cause to be
paid to
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them or it, as the case may be, the amounts specified in the
benefit and insurance plans of Bracknell applicable to the
Executive, such sums to be paid in accordance with the
provisions of those plans as then in effect.
d) Termination by Executive. The Executive may terminate his
employment with Bracknell upon giving 30 days' written notice
or such shorter period of notice as Bracknell may accept. The
Executive shall not be entitled to any severance payment other
than the Annual Salary earned by the Executive but not paid
before the date of termination and any expenses referred to in
Section 6 or 7 incurred by the Executive but not yet
reimbursed, in each case to the date of termination, together
with any amount to which the Executive is entitled under the
Employment Standards Act (Ontario), as amended and in force
from time to time, to the extent that the same cannot be
waived by the Executive.
e) Other Termination by Bracknell. Bracknell may terminate the
Executive's employment at any time for any reason other than
as contemplated above in this Section 9 by providing written
notice to the Executive to that effect, in which event the
termination shall take effect as at such time as such notice
is received by the Executive. In the event that the
Executive's employment is so terminated by Bracknell, the
Executive shall be entitled to receive an amount by way of
lump sum payment equal to the aggregate of (i) 2.5 times the
Executive's Annual Salary then in effect, plus (ii) 2.5 times
the Executive's Annual Bonus Amount. For these purposes, the
term Annual Bonus Amount means, at any time, the average of
the annual cash bonuses paid to the Executive by Bracknell in
respect of the two completed fiscal years next preceding the
date of termination of his employment pursuant to Section 4(b)
above; provided, however, that if there is only one completed
fiscal year between the date hereof and the date of
termination of the Executive's employment, the bonus paid to
the Executive in respect of that fiscal year shall be the
Annual Bonus Amount. The payment described in this Section
9(e) is the only severance payment or payment in lieu of
notice that the Executive will be entitled to receive in the
event of the termination of his employment on the basis
contemplated in this Section 9(e).
f) Change of Control. In the event that the Executive's
employment with Bracknell is terminated by Bracknell without
cause (whether expressly or constructively) within three
months following the occurrence of a Change in Control, the
Executive shall be entitled to receive an amount by way of
lump sum payment equal to the aggregate of (i) 2.5 times the
Executive's Annual Salary then in effect, plus (ii) 2.5 times
the Executive's Annual Bonus Amount. For these purposes, the
term Annual Bonus Amount means, at any time, the average of
the annual cash bonuses paid to the Executive by Bracknell in
respect of the two
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completed fiscal years next preceding the date of termination
of his employment pursuant to Section 4(b) above; provided,
however, that if there is only one completed fiscal year
between the date hereof and the date of termination of the
Executive's employment, the bonus paid to the Executive in
respect of that fiscal year shall be the Annual Bonus Amount.
The payment described in this Section 9(f) is the only
severance payment or payment in lieu of notice that the
Executive will be entitled to receive in the event of the
termination of his employment on the basis contemplated in
this Section 9(f). A constructive termination of employment
shall include a transfer involving a significant geographic
relocation, a fundamental demotion involving reduced
responsibilities and/or positioning within the corporate
hierarchy, or reductions in salary, bonus opportunity and/or
employee benefits.
g) Stock Options. In the event that the Executive's employment
with Bracknell is terminated as contemplated above in this
Section 9 or terminates as contemplated in Section 2, the
right of the Executive or his estate, as the case may be, to
retain and exercise vested or unvested stock options then held
by the Executive shall be determined in accordance with the
stock option plan pursuant to which those stock options were
granted. Notwithstanding the foregoing or any other provision
of this Agreement:
i) in the event that the Executive's employment with
Bracknell is terminated by Bracknell as contemplated
above in Section 9(f) within three months following
the occurrence of a Change in Control, all unvested
Conventional Options and Performance Options held by
the Executive shall automatically vest on the date
the Executive is so terminated or on such earlier
date as the Board may in its sole discretion
determine; and
ii) in the event that the Executive's employment with
Bracknell is not terminated as contemplated in
Section 9(f) but is terminated as contemplated in
Section 9(e), all unvested Conventional Options then
held by the Executive shall automatically vest on the
date the Executive is so terminated;
iii) and at any time prior to the expiry of the three
month period following the date upon which the
Executive is so terminated, the Executive will have
the right to exercise all Conventional Options and
all Performance Options that were vested on or prior
to the date upon which the Executive is so
terminated, at which time all unexercised options
will be forfeited.
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h) Statutory Deductions. All payments required to be made to the
Executive or his estate under this Section 9 shall be made net
of all deductions required to be withheld by applicable law
and regulation.
i) Fair and Reasonable, etc. The parties acknowledge and agree
that the payment provisions contained in this Section 9 above
are fair and reasonable and the Executive acknowledges and
agrees that such payments are inclusive of any notice or pay
in lieu of notice or severance pay to which he would otherwise
be entitled under statute, pursuant to common law or otherwise
in the event that his employment is terminated pursuant to or
as contemplated in this Section 9. The parties further agree
that upon any termination of the employment of the Executive
as contemplated in this Section 9 and the payment to the
Executive or his estate, as the case may be, of the amounts
contemplated therein, as well as any expenses which the
Executive is entitled to have reimbursed as contemplated in
Sections 6 or 7 above, the Executive shall have no action,
cause of action, claim or demand of any nature or kind
whatsoever against Bracknell or Bracknell or against any other
person as a consequence of, in respect of or in connection
with this Agreement or such termination of the Executive's
employment.
j) Return of Property. Upon any termination of the employment of
the Executive by the Executive or by Bracknell as contemplated
above in this Section 9, the Executive or the Executive's
estate shall at once deliver or cause to be delivered to
Bracknell all books, documents, effects, money, securities,
credit cards or other property belonging to Bracknell or for
which Bracknell is liable to others which are in the
possession, charge, control or custody of the Executive.
10) Confidentiality
The Executive shall not (either during the term of his employment by
Bracknell or at any time thereafter) disclose any information relating
to the private or confidential affairs of Bracknell or relating to any
secrets of Bracknell to any person other than for the purposes of
Bracknell or use any such information for any purpose whatsoever other
than for the purposes of Bracknell.
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11) Miscellaneous
a) Notices. Any notice required or permitted to be given to
Bracknell hereunder shall be sufficiently given if delivered
personally or mailed by pre-paid registered mail addressed to
the Chairman of the Board c/o Bracknell Corporation, Suite
1506, 150 York Street, Toronto, Ontario, M5H 3S5, or to the
Executive at the principal office of Bracknell or at his last
place of residence contained in the records of Bracknell. Any
such notice, if delivered, shall be deemed to have been given
upon its delivery and, if mailed as aforesaid, shall be deemed
to have been given on the fourth business day following the
date of mailing. Any party hereto may change its address for
notice by notice given to each party hereto in accordance with
the foregoing.
b) Time of Essence. Time shall be of the essence of this
Agreement and of every provision hereof.
c) Divisions and Headings. The division of this Agreement into
Articles, Sections and clauses and the insertion of headings
are for convenience of reference only and shall not affect the
construction or interpretation hereof.
d) Gender and Number. In this Agreement, unless the context
otherwise requires, words importing the singular include the
plural and vice versa and words importing gender include all
genders.
e) Severability. The invalidity or unenforceability of any
provision or part of any provision of this Agreement shall not
affect the validity or enforceability of any other provision
or part thereof and any such invalid or unenforceable
provision or part thereof shall be deemed to be severable, and
no provision or part thereof shall be deemed dependent upon
any other provision or part thereof unless expressly provided
for herein.
f) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior discussions,
understandings and arrangements between the parties in respect
thereof. No amendment, waiver or termination of this Agreement
shall be binding unless executed in writing by each party to
be bound thereby. No waiver of any provision of this Agreement
shall be deemed to or shall constitute a waiver of any other
provision and no such waiver shall constitute a continuing
waiver unless otherwise expressly provided.
g) Successors and Assigns. This Agreement shall not be assignable
by any of the parties hereto without the prior written consent
of each other party, but subject thereto shall enure to
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the benefit of and be binding upon the parties hereto and
their respective legal personal representatives, successors
and assigns.
h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
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) PAUL MELNUK
BRACKNELL CORPORATION
by _______________________________