THIS AGREEMENT is made as of the July 24,
2007
The
Corporation and the Executive wish to enter into this Agreement to
set out the rights and obligations of each of them respecting the
Executive’s employment with the Corporation.
NOW THEREFORE in consideration of the mutual covenants and
agreements contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged), the Corporation and the Executive agree as
follows:
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1.1
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“Agreement”
means this agreement as
it may be amended from time to time;
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1.2
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“Affiliate”
has the meaning
attributed to such term in the Business Corporations Act
(Ontario) as the same may be amended from time to time and any
successor legislation thereto, and includes an
Associate;
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1.3
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“Associate”
has the meaning
attributed to such term in the Business Corporations Act
(Ontario) as the same may be amended from time to time and any
successor legislation thereto;
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1.4
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“Benefits”
has the meaning set out
in section 6;
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1.5
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“Board”
means the Board of
Directors of Corel Corporation
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1.6
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“Business”
means the development,
marketing or sale of computer software for office productivity,
graphics, or digital media, or any other software which the
Corporation may be involved in developing, marketing, or selling
during the term of this Agreement;
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1.7
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“Commencement
Date” means August 10,
2007;
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1.8
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“Confidential
Information” means all information, intellectual
property (including trade secrets) and facts relating to, used or
proposed to be used in the Business of the Corporation and its
Affiliates, acquired by the Executive during any period in which
the Executive was affiliated with the Corporation in the capacity
of an employee, director or shareholder which is confidential based
upon its nature or the circumstances surrounding its disclosure,
and includes, without limiting the generality of the foregoing,
information:
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a)
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relating to the Corporation’s
or an Affiliate’s products and services or to the
Corporation’s or a Affiliate’s research and development
projects or plans;
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b)
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relating to the Corporation’s
or an Affiliate’s trade secrets, technology, patentable and
unpatentable inventions, discoveries, processes, test procedures
and results, records, specifications, data, formulations, know-how,
samples, specimens, manufacturing processes and regulatory
information;
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c)
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relating to the Corporation’s
or an Affiliate’s business policies, strategies, operations,
finances, plans or opportunities, including the identity of, or
particulars about, the Corporation’s or an Affiliate’s
clients or suppliers;
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a)
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means any transaction or series of
transactions, whether by way of consolidation, amalgamation,
merger, reorganization or plan of amalgamation involving Corel
Corporation, into any other person (other than an Affiliate of the
Corporation or Vector);
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b)
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any
transfer, conveyance, sale, lease, exchange or otherwise of all or
substantially all of the assets of Corel Corporation, to any other
person (other than Vector); and
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c)
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the
lawful acquisition by any person, or by a group of persons acting
jointly or in concert, of that number of voting shares of Corel
Corporation, which is 35% or more of the total voting shares issued
and outstanding immediately after such acquisition, unless Vector
continues to hold a number of voting shares which represents a
greater percentage than the first-mentioned person or group of
persons.
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Provided that
shares of Corel Corporation acquired through a public offering
shall be deemed to not result in a Change of Control.
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1.10
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“Date of
Termination” has the meaning set out in section
7.1 of this Agreement;
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1.11
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“Disability”
means the mental or
physical state of the Executive such that:
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a)
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subject to applicable human rights
legislation, due to illness, disease, mental or physical disability
or similar cause, the Executive cannot substantially perform his
duties as an employee, officer or director of the Corporation or
any of its Subsidiaries, as applicable;
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b)
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a
court of competent jurisdiction has declared the Executive to be
mentally incompetent or incompetent to manage his
affairs;
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c)
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the
Executive is eligible for, has applied for, and has been accepted
for long-term disability benefits under the Corporation’s
long-term disability plan; or
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d)
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an
attorney pursuant to a continuing power of attorney for personal
care or similar instrument is appointed to manage the affairs of
the individual due to the Executive’s mental
incompetence;
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a)
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theft, fraud, dishonesty or willful
misconduct by the Executive in connection with the
executive’s duties or involving the property, business or
affairs of the Corporation, or the carrying out of the
Executive’s duties;
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b)
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the
significant breach by the Executive in any material respect of the
Executive’s employment agreement; or
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c)
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any
other conduct that would be determined by the courts of California
to constitute gross misconduct.
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Anything herein to the contrary
notwithstanding, Executive’s employment shall not be
terminated for “Just Cause” above unless written notice
stating the basis for the termination is provided to Executive,
Executive is given thirty (30) days after receipt of such
notice to cure the neglect or conduct that is the basis of such
claim (but only with respect to curable actions or failures to
act), and Executive has an opportunity to be heard before the full
Board of Directors, and, after such hearing, there is a majority
vote of the non-employee directors of the Corporation to terminate
Executive for Just Cause.
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1.13
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“Good Reason”
means any of the
following, unless consented to by the Executive:
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a)
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any
material reduction in the Executive’s annual base salary,
benefits or perquisites;
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b)
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any
material reduction in the Executive’s ability to earn
incentive compensation. A material reduction shall include any
unreasonable change to targets and goals within any fiscal year or
from year to year but shall exclude a reduction caused by the
failure of the Corporation of the Executive to meet incentive
compensation targets or goals; or
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c)
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any
material reduction or material adverse change in Executive’s
title, the nature or scope of the authorities, power, functions,
responsibilities or duties of the executive;
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d)
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any
breach by the Corporation of any of it’s obligations under
this agreement.
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e)
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a
relocation of Executive’s principal place of employment more
than thirty-five (35) miles from its current
location;
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f)
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the
failure of any successor-in-interest to assume all of the
obligations of the Corporation under this Agreement; or
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g)
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the
assignment of duties that are substantially inconsistent with
Executive’s training, education, professional experience and
the job for which he was initially hired hereunder.
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1.14
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“Salary”
has the meaning set out
in section 3(a).
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1.15
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“Vector
” means any entity
or fund Affiliated with, or managed directly or indirectly by,
Vector Capital Corporation or its Affiliates, or any other entity
controlled, directly or indirectly, by such entities or
funds
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2
Employment of the Executive
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2.1
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The
Corporation shall employ the Executive in the position of President
and General Manager, Digital Media, of the Corporation for an
indefinite period, subject to termination pursuant to section
7;
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2.2
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While employed by the
Corporation:
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i.
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The
Executive shall report to the Chief Executive Officer of Corel
Corporation and shall perform such duties, have such
responsibilities and exercise such powers and authorities as are
assigned to him by the Chief Executive Officer from time to time;
and
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ii.
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The
Executive shall devote substantially all of his business time,
attention and ability to the Business;
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iii.
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The
Executive shall work out of the Fremont, California office, however
Executive acknowledges that he will be required to spend at least
50% of his business time traveling to attend to running the
business.
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Commencing
and effective as of the Commencement Date, the remuneration of the
Executive for services hereunder shall be as follows:
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3.1
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The
Executive shall receive an annual gross salary (before deduction
for income taxes and other required deductions) of USD $300,000,
which shall be reviewed periodically and which may be increased
(but not decreased without the prior written consent of the
Executive) at the discretion of the Board (the
“Salary”), payable in accordance with the policy of the
Corporation for payments of salary to senior management.
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3.2
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The
Executive shall also be eligible for an incentive bonus of USD
$300,000 (subject to statutory withholdings and deductions), at
target. The incentive bonus shall be paid based upon the successful
realization of objectives set on a periodic basis by the
Corporation in consultation with the Executive. All payments will
be made by bank credit transfer. Subject to section 8, payment of
the incentive bonus for fiscal year 2007 will be paid on a pro rata
basis for the period of actual employment in the fiscal year and
with all targets deemed to have been attained at the 100%
level.
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3.3
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The
Executive shall be eligible to participate in the
Corporation’s equity incentive plan. The Executive hereby
acknowledges that the granting of
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options or
other equity incentives is made only to full time employees; solely
at the Corporation’s discretion and that any such grant shall
be subject to the terms and conditions of the grant and of the plan
in effect, from time to time. Without limiting the foregoing,
nothing in this Agreement shall in any way alter the terms and
conditions of any grant or of the plan. At the first scheduled
Compensation Committee meeting following Executives’ first
day of employment, the Corporation shall recommend for approval a
grant of 150,000 stock options which would vest according to the
Corporation’s normal vesting schedule with 25% vesting on the
one year anniversary date and remaining vesting quarterly
thereafter. In addition, the Corporation will also recommend for
approval a grant of 50,000 Restricted Share Units
(“RSUs&rdq
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