THIS AGREEMENT made as of the 1st day of August, 1998.
AMONG:
INTERNATIONAL MENU SOLUTIONS CORPORATION, a corporation incorporated
under the laws of State of Nevada, (hereinafter referred to as the
"Corporation"),
OF THE FIRST PART,
- and -
XXXXXXX X. XXXXXX, of the City of Toronto, in the Province of Ontario,
(hereinafter referred to as "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 here contained and for other good and valuable
consideration, the parties agree as follows:
1. TERM
The Corporation shall employ the Executive from August 1, 1998 unless such
employment shall be terminated as hereinafter provided.
2. DUTIES
The Executive shall serve the Corporation and any subsidiaries 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 subsidiaries and associates of the Corporation (as those
terms are defined in the Ontario 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 President and 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.
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3. REPORTING PROCEDURES
The Executive shall report to the board of directors of the Corporation.
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 matters that may arise from
time to time during the term of this agreement.
4. REMUNERATION
(a) The annual base salary payable to the Executive for his services
hereunder for the first year of the term of this agreement shall be
$160,O0O.00(USD), 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 be the subject of determination by the Executive
and the compensation committee of the board of directors of the Corporation. The
annual base salary payable to the Executive pursuant to the provisions of this
section 4 shall be payable in equal semi-monthly installments in arrears on the
1st and 15th day of each month or in such other manner as may be mutually agreed
upon, less, in any case, any deductions or withholdings required by law.
(b) The Corporation shall provide the Executive with employee benefits
comparable to those provided by the Corporation from time to time to other
senior executives of the Corporation and shall permit the Executive to
participate in any share option plan, share purchase plan, retirement plan or
similar plan offered by the Corporation from time to time to its senior
executives in the manner and to the extent authorized by the board of directors
of the Corporation.
(c) The Corporation shall pay to the Executive a bonus of $50,000.00 (USD)
upon execution of this Agreement which shall vest as to $ 10,000.00 (USD) for
each full year of employment following the date hereof and in the event that the
Executive voluntarily terminates his employment with the Corporation, the
unvested amount shall be repaid by the Executive to the Corporation.
5. PERFORMANCE BONUS
In addition to the Executive's annual base salary, the Executive shall
receive following each fiscal year end of the Corporation presently being
December 31 the following performance bonus:
1. Annual Stock Option Grant. An annual grant of stock options for common
shares in the capital stock of the Corporation with the number of such
options to be determined as follows:
(a) the number being five percent of the aggregate number of issued
and outstanding common shares and Class N shares in the capital
stock of the
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Corporation as at December 31 shall be determined, the "Five
Percent Amount"); less
(b) the aggregate number of options previously granted to the
Executive as at such December 31 shall be determined (the
"Current Options");
such difference being the number of options to be granted to the
Executive. The options shall be granted within sixty days of the end
of each fiscal year of the Corporation and at the option price of the
average of the closing price for the Corporation's common shares for
the ten (10) trading days prior to each such December 31.
2. Cash Bonus. The Corporation shall pay to the Executive within sixty
days following the approval of the audited financial statements of the
Corporation each year a cash bonus equal to five percent (5%) of the
EBDTA of the Corporation on a consolidated basis for the fiscal period
covered by the audited statements so approved. In the event that the
Corporation is not in a position to pay such bonus at the time for
payment the outstanding amount shall accrue interest at the rate of
interest being the aggregate of the Corporation's Canadian banker's
prime rate plus three percent. For purposes hereof "EBTDA" shall mean
earnings before income taxes, depreciation and amortization, as
calculated in accordance with generally accepted accounting principles
consistent with the policies used to prepare the consolidated
financial statements of the Corporation for the relevant period.
6. 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 Corporation.
7. VACATION
The Executive shall be entitled to six (6) weeks' paid vacation per fiscal
year of the Corporation at a time approved in advance by the Chairman, 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. In the event that the Executive decides not
to take all the vacation to which he is entitled in any fiscal year, the
Executive shall be entitled to take up to one week of such vacation in the next
following fiscal year at a time approved in advance by the Chairman.
All references in this Agreement to "Chairman" shall mean such person so
appointed by the board of directors of the Corporation from time to time
provided that such person is not the Executive and in the event that such person
is one and the same as the Executive, then all references herein to "Chairman"
shall mean the board of directors of the Corporation or such other person
designated by the board of directors of the Corporation.
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8. AUTOMOBILE
The Executive shall be supplied with a leased car selected by the
Corporation to be by him for Corporation's business. The Corporation shall pay
or reimburse the Executive for all reasonable operating costs of this 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 the originals of all
invoices or statements in respect of which the Executive seeks reimbursement.
9. 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.
10. 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 to the
Corporation, including the duty to act in the best interests of the
Corporation; or
(v) if the Executive disobeys reasonable instructions given in the
course of employment by the Chairman (if a person other than the Executive)
or the board of directors of the Corporation that are not inconsistent with
the Executive's management position and
Page 5
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 permanently disabled. The Executive
shall be deemed to have become permanently disabled if in any year during the
employment period, because of ill health, physical or mental disability, or for
other causes beyond the control of the Executive, the Executive has been
continuously unable or unwilling or has failed to perform the Executive's duties
for 120 consecutive days, or if, during any year of the employment period, the
Executive has been unable or unwilling or has failed to perform his duties for a
total of 180 days, consecutive or not. The term "any year of the employment
period" means any period of 12 consecutive months during the employment period.
This agreement shall terminate without notice upon the death of the
Executive.
11. SEVERANCE PAYMENTS
(a) Upon termination of the Executive's employment: (i) for cause; (ii) by
the voluntary termination of employment of the Executive; or (iii) by the
non-renewal of this Agreement, the Executive shall not be entitled to any
severance payment other than compensation earned by the Executive before the
date of termination calculated pro rata up to and including 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.
(b) if the Executive's employment is terminated for any other reason other
than the reason set forth subsection 11(a), the Executive shall be entitled to
receive the lesser of:
(i) the total of:
(A) 24 months' salary at the then applicable base salary rate;
(B) the present value, as determined by the Chairman, acting
reasonably, of the benefits described in section 4(b) that would be
enjoyed by the Executive during the next 24 months assuming his
employment was not terminated and assuming the then current level of
benefits were continued for those 24 months;
(C) the present value, as determined by the Chairman, acting
reasonably, of the amount that the Chairman estimates would be the
amount payable to the Executive out of the Executive Bonus Pool
assuming that the Executive's employment was not terminated until the
end of the current fiscal year and all other participants of the
Executive Bonus Pool continued in the employment of the Corporation
for the full then current fiscal year; and
Page 6
(D) the present value, as determined by the Chairman, acting
reasonably, of the amounts that would have been paid by the
Corporation or reimbursed to the Executive pursuant to section 8
during the next 24 months assuming that his employment had not been
terminated; and
(ii) the salary otherwise payable to the Executive for the unexpired
term of this agreement together with the other amounts described in clause
11 (b)(i), mutatis mutandis, provided that in no case will the Executive
receive less than the amount to which he is entitled under the Employment
Standards Act (Ontario).
The payment described in this subsection 11(b) is the only severance payment the
Executive will receive in the event of the termination of this agreement for
reasons contemplated in this subsection 11(b) unless overridden by golden
parachute.
(c) If the Executive's employment is terminated as result of the permanent
disability or death of the Executive, the Executive or his estate, as
applicable, shall be entitled to receive, within 30 days of the date of such
termination, the balance of the base salary that would otherwise be paid to the
Executive during the reminder of the term of this agreement. The Executive
agrees to reasonably comply with all requirements necessary for the Corporation
to obtain life insurance for the term of this agreement.
(d) For the purposes of this section 11, whenever a payment is to be
determined with reference to the remaining term of this agreement, if less than
six months remain in the term of this agreement and no party has given notice of
its intention not to renew this agreement as contemplated by section 1, the
"remaining term of this agreement" shall include the remainder of the then
existing term of this agreement plus the renewal period.
12. Termination of Employment
12.01 In the event that at any time after the date hereof:
(a) a Fundamental Change (as hereinafter defined) occurs with respect to
the Company, and the Executive, at any time within 180 days following
the date of such Fundamental Change, voluntarily resigns as an
officer, director and employee of the Company; or
(b) The Executive's office and employment are terminated by the Company on
or after the occurrence of a Fundamental Change;
Page 7
the Executive shall be entitled to receive, and the Company shall pay
to the Executive immediately following the earlier of the effective
date of resignation or of termination (the "Date of Termination"), a
cash amount payable as a retiring allowance equal to the aggregate of:
(c) all amounts earned or accrued to the Date of Termination but unpaid,
including unpaid salary, reimbursement of expenses and all other
benefits and entitlements which F-re payable in cash and to which the
Executive is then entitled; and
(d) the product obtained by multiplying by three the aggregate of:
(A) the aggregate salary paid or payable by the Company to the
Executive in respect of the 12 month period preceding the month
in which the date of Termination occurred; and
(B) the aggregate of all bonuses paid or payable by the Company to
the Executive in respect of the 12 month period preceding the
month in which the Date of Termination occurred.
12.02 For the purposes of Section 12.01;
(a) a "Fundamental Change" means:
(i) a transaction or series of' transactions in or pursuant to which,
directly or indirectly, the Company shall merge, consolidate or
amalgamate with or into or enter into an arrangement with) any other
person where all or part of the outstanding voting securities of the
Company are changed in any way, reclassified or convened into or
exchanged for shares or other securities or cash or any other
property;
(ii) a transaction or series of transactions in which, directly or
indirectly, the Company (or any successor company) shall sell or
otherwise transfer, dispose of (or one or more of its subsidiaries
shall sell or otherwise transfer or dispose of) all or substantially
all of the business, operations, properties and/or assets of the
Company (taken on a consolidated basis);
(iii) any change in Beneficial Ownership, direct or indirect, of
voting securities of the Company (or any successor company) which
occurs which results in a Person beneficially owning greater than 20%
of the voting securities of the Company calculated on a Partially
Diluted Basis; and/or
Page 8
(iv) any change in the constitution of the membership of the board of
directors of the Company as it exists on the date hereof, such that
more than 50% of the directors of the Company are individuals who are
not directors of the Company as at the date hereof and are not
approved by a majority of the board of directors of the Company as it
exists on the date hereof;
(b) a Person shall be deemed to be the "Beneficial Owner" and to have
"Beneficial Ownership" of, and to "Beneficially Own" any securities which
it or any Person Acting Jointly or in concert with it is or may be deemed
to be the beneficial owner of pursuant to Section 90 of - the Securities
Act (Ontario) (or, pursuant to any comparable or successor laws or
regulations or, if the said section shall be rescinded and there shall be
no comparable or successor laws or regulations, pursuant to Section 90 of
the Securities Act (Ontario) as in effect on the date of this Agreement);
(c) a Person shall be deemed to be a "Person Acting Jointly or in Concert"
with another Person if either Person is an "associate" or an "affiliate" of
the other Person (as such terms are defined in the Securities Act
(Ontario));
(d) a "Person" means an individual, corporation, partnership or trust,
unincorporated association, pension fund, government or government agency,
department or instrumentality and pronouns have a familiarly extended
meaning;
(e) for the purposes of calculating the number of securities Beneficially
Owned by a Person on a "Partially Diluted Basis", if a Person is deemed to
be the Beneficial Owner of unissued securities pursuant to subsection
12.02(b) hereof, such securities shall be deemed to be outstanding;
12.03 The provisions of Section 12.01 shall apply successively to each
Fundamental Change affecting the Company.
12.04 Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment is terminated prior to a Fundamental Change and the
Executive reasonably demonstrates that such termination (i) was at the request
or instance of a Person or group of Persons whose subsequent acquisition of
voting securities of the Company (or any successor company) resulted in a
Fundamental Change occurring or ii) otherwise occurred in connection with or in
anticipation of or as a precondition to a Fundamental Change, then, for all
purposes of this Agreement, the Executive shall be entitled to receive all
payments referred to in Section 12.01 as if such Executive's employment had been
terminated following the occurrence of such Fundamental Change.
12.05 The parties acknowledge and agree that the intention of this
Agreement is:
(a) to avoid litigation; and
Page 9
(b) to provide both the Company and the Executive with a genuine negotiated
pre-estimate of damages.
The parties further acknowledge and agree that the Executive shall have no
obligation to mitigate the Executive's damages in the event of termination of
the Executive's employment in the circumstances described in Section 12.01.
12.06 In the event of termination of the Executive's employment in the
circumstances described in Section 12.01, the Executive shall, upon due payment
and performance by the Company of its obligations set out under Section 12.01,
be deemed to have accepted such payment and performance in full satisfaction of
any legal rights or remedies which the Executive might otherwise have as a
result of termination and the Company and the Executive shall each be required
forthwith to execute in favour of the other a general release signifying such
satisfaction.
12.07 The Executive hereby acknowledges and agrees that the directors of the
Company, from time to time, shall not be personally liable or responsible for
the payment of any amounts owing to the Executive hereunder, such payment being
the sole obligation of the Company and the Executive further acknowledges and
agrees that he shall have no cause of action against any director of the Company
in such director's personal capacity with respect to the non-payment of any
monies by the Company hereunder.
12.08 The Company shall pay all reasonable legal fees incurred by the Executive
in enforcing the Executive's rights hereunder.
13. CONFIDENTIALITY
The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities as an
officer of the Corporation, he has had and will continue in the future to
have access to and has been 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, (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 of
the Corporation with such customers,
Page 10
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 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 acknowledgment of the matters described above and in consideration of
the payments to be received by the Executive pursuant to this agreements the
Executive hereby agrees that he will not, for one (1) year from the date hereof,
directly or indirectly disclose to any person or in any way make use of (other
than 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.
14. NON-SOLICITATION
The Executive hereby agrees that he will not, during the period commencing
on the date hereof and ending one (1) year following the expiration of the terms
of this agreement, be a party to or abet any solicitation of customers, clients
or suppliers of the Corporation or any of its subsidiaries, to transfer business
from the Corporation or any of its subsidiaries, to any other person, or seek in
any way to persuade or entice any employee of the Corporation or any of its
subsidiaries to leave that employment or to be a party to or abet any such
action.
15. DISCLOSURE
During the employment period, the Executive shall promptly disclose to the
Chairman full information concerning any interest, direct or indirect, of the
Executive (as owner, shareholder, partner, lender or other investor, director,
officer, employee, consultant or otherwise) or any member of 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.
16. PLACE OF EMPLOYMENT
The Corporation shall not move or otherwise relocate the place of business
at which the Executive reports to work more than 50 kilometres from the current
place of business at Xxxxxxx, Xxxxxxx.
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17. RETURN OF MATERIALS
All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disk, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Executive shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Executive's employment for any reason, the Executive
agrees to deliver promptly 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.
18. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario.
19. 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.
20. ENFORCEABILITY
The executive hereby confirms and agree that the covenants and restrictions
pertaining to the Executive contained in this agreement, including, without
limitation those contained in section 12 and 13 hereof, are reasonable and valid
and hereby further acknowledges and agree 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 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.
21. 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.
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22. SUCCESSORS
This agreement shall be binding on and enure to the benefit of the
successors and assigns of the Corporation and the heirs, executors, personal
legal representatives and permitted assigns of the Executive.
23. 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 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 business days after the resumption of
postal service. Notice shall be addressed as follows:
(a) If to the Corporation:
000 Xxxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
(b) If to the Executive:
Xx. 0 Xxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxx
XXX0X0
24. LEGAL ADVICE
The Executive hereby represents and warrants to the Corporation and
acknowledges and agrees that he had the opportunity to seek and was not
prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the executive 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.
25. COUNTERPARTS
This agreement may be executed in any number of counterparts, each 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.
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IN WITNESS WHEREOF the parties hereto have executed this agreement as of
the date first above written.
INTERNATIONAL MENU SOLUTIONS
CORPORATION
Per: /s/ [ILLEGIBLE]
---------------------------------
Director
Per: /s/ [ILLEGIBLE]
---------------------------------
Director
--------------------------------- /s/ Xxxxxxx X. Xxxxxx
Witness ---------------------------------
Xxxxxxx X. Xxxxxx
