Exhibit 99.3
RESTRICTED SHARE AGREEMENT
THIS AGREEMENT is made effective as of the fifth day of
October 2001, between Delano Technology Corporation, an Ontario corporation (the
"Company"), and Xxxxx Xxxxxx (the "Grantee").
WHEREAS, the Company desires to induce the Grantee to accept employment
with the Company and one or more of its subsidiaries as Chief Executive Officer;
WHEREAS, the Grantee has represented to the Company that he will not
accept employment with the Company without the grant of common shares
contemplated by this Agreement and that, accordingly, the grant of common shares
contemplated by this Agreement is an essential inducement to his employment with
the Company;
WHEREAS, as of the date hereof, the Company and the Grantee are
entering into an Employment Agreement in connection with the Grantee's
employment with the Company and one or more of its subsidiaries (the "Employment
Agreement"); and
WHEREAS, this Restricted Share Agreement, together with the Employment
Agreement, is intended by the Company and the Grantee to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the Securities Act.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF RESTRICTED SHARES. The Company hereby grants to
the Grantee 4,230,000 common shares on the terms and subject to the conditions
set forth herein (the "Restricted Shares"). The Restricted Shares granted
hereunder shall be registered in the Grantee's name, but the certificates
evidencing such Restricted Shares shall be retained by the Company during the
period prior to the vesting of such shares as set forth in Section 3 hereof (the
"Restriction Period"). The Grantee shall execute a stock power, in blank, with
respect to such Restricted Shares and deliver the same to the Company. The
Company will retain custody of all dividends and distributions made or declared
on the Restricted Shares until such time, if ever, as such Restricted Shares
vest and the Restriction Period with respect thereto lapses. Such retained
dividends or distributions shall not bear interest. If any such dividend or
distribution is taxable to the Grantee, the Company shall release to the Grantee
a portion of such retained dividend or distribution sufficient to pay the taxes
payable thereon (at the highest marginal rate to which Grantee is subject) at
the time such taxes become payable. The Grantee shall not be entitled to vote
any Restricted Share until the Restriction Period with respect thereto lapses.
2. NON-TRANSFERABILITY. During the Restriction Period, the
Grantee may not sell, transfer, pledge or otherwise encumber or dispose of
Restricted Shares which have not then vested. Any attempted sale, transfer,
assignment or other disposition of Restricted Shares shall be null and void and
of no effect.
3. LAPSE OF RESTRICTIONS; FORFEITURE.
(a) Except as otherwise provided in this Section 3, the
Restricted Shares granted hereunder shall vest, and the Restriction Period shall
lapse as follows:
On the date hereof 705,000 shares
On the 1st day of each month hereafter, 117,500 additional shares
commencing November 1, 2001
Except as otherwise provided in this Section 3, at the end of 30 months from the
date hereof, the Restricted Shares shall be fully vested and the Restriction
Period imposed thereon shall have fully lapsed.
(b) If the Grantee dies or becomes Disabled (as defined in the
Employment Agreement), the Restriction Period shall lapse with respect to all
previously unvested Restricted Shares on the date of death or Disability. Upon
an event of Business Combination (as defined in Exhibit A hereto), the
Restriction Period shall lapse with respect to all previously unvested
Restricted Shares as of the consummation of the event which results in the
Business Combination.
(c) If the Grantee voluntarily terminates his employment with
the Company or the Company terminates his employment for Cause (as defined in
the Employment Agreement), the Restricted Shares, to the extent not vested prior
to such termination, shall be immediately forfeited to the Company and the
Grantee shall have no further rights with respect to such unvested shares. If
the Grantee terminates his employment with the Company for Good Reason (as
defined in the Employment Agreement) or the Company terminates the Grantee's
employment without Cause, the Restriction Period shall lapse with respect to all
Restricted Shares immediately upon termination of employment.
4. DELIVERY OF SHARE CERTIFICATES. Promptly following the
execution and delivery hereof, certificate(s) evidencing 705,000 of the
Restricted Shares shall be delivered to the Grantee. Upon the vesting of any of
the other Restricted Shares granted hereunder, the certificates evidencing such
Restricted Shares shall be delivered promptly to the Grantee. In the case of the
Grantee's death, such certificates will be delivered to the beneficiary
designated in writing by the Grantee pursuant to a form of designation provided
by the Company or to the Grantee's executors or personal representatives, as the
case may be.
5. REGISTRATION. The Company will promptly prepare, file and
use reasonable best efforts to cause to be effective with the Securities and
Exchange Commission on
Form S-8 a registration statement that will enable Grantee to publicly resell
the Restricted Shares granted hereunder. The Company shall maintain such
registration statement in effect until all such shares have been resold. If, for
any reason, Form S-8 is not available with respect to the Restricted Shares, the
Company will promptly prepare and file and use reasonable best efforts to cause
to be effective with the Securities and Exchange Commission on Form F-3 (or
other comparable form) a re-sale registration statement relating to the
Restricted Shares.
6. BINDING EFFECT. This Agreement shall be binding upon and
inure the benefit of the heirs, executors, administrators and successors of the
parties hereto.
7. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the Province of Ontario without
reference to rules relating to conflicts of law.
8. HEADINGS. Headings are for the convenience of the parties
and are not deemed to be a part of this Agreement.
9. NO EMPLOYMENT GUARANTEE. Nothing in this Agreement shall be
construed to confer upon the Grantee any right to continued employment with the
Company (it being understood that the Employment Agreement governs the Grantee's
employment relationship with the Company). --
10. WITHHOLDING TAXES. If the Company has any withholding tax
obligation with respect to the grant of Restricted Shares contemplated hereby,
upon the Company's request, the Grantee shall immediately pay to the Company in
cash the amount of such withholding tax.
11. LEGENDS. The certificates for the Restricted Shares
granted hereunder shall bear such legends relating to the provisions of this
Agreement and applicable securities law as the Company reasonably determines.
Any such legend relating to the provisions of this Agreement shall be removed at
the time of transfer of the applicable certificate(s) to the Grantee. Any such
legend relating to applicable securities law shall be removed in accordance with
applicable law and customary practice.
12. PLAN. This Agreement, together with the Employment
Agreement, is intended by the Company and the Grantee to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the Securities Act.
13. 83(b) ELECTION. In the event an 83(b) election is made in
connection with the grant of Restricted Shares hereunder, the Company shall
promptly deliver to Grantee appropriate documentation reflecting a fair market
value of $0.11 per share, consisting of publicly available information on the
Company's trading prices as of the date hereof, it being understood by the
parties that the closing price on this date was $0.11.
EXECUTED effective as of the day and year first written above.
DELANO TECHNOLOGY CORPORATION
By:/s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Chairman
GRANTEE:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
EXHIBIT A
Business Combination. For purposes of this Agreement, an event
of "Business Combination" shall be deemed to have occurred if: (i) there shall
have been consummated any merger or other business combination of the Company in
which the voting shareholders of the Company, prior to such merger or other
business combination, end up with less than 66.67% of the voting shares of the
new or combined entity as the case may be following the consummation of such
merger or other business combination, a sale or transfer of all or substantially
all of the Company's consolidated assets or a combination of the foregoing
transactions (a "Transaction") other than a Transaction involving only the
Company and one or more of its Subsidiaries; or (ii) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof,
including any "group" as defined in Section 13(d)(3) thereof (a "Person"), but
excluding the Company, any majority owned subsidiary of the Company (a
"Subsidiary") and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee)), becomes the beneficial owner of securities of the Company having at
least 33% of the total voting power represented by all then outstanding voting
securities of the Company, or has the power or ability to elect or cause the
election of directors then consisting of a majority of the Board of Directors of
the Company.
