Document:

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

 

 

EMPLOYMENT AGREEMENT dated as

of December 1, 2001, between Bogen Communications International, Inc., a

Delaware corporation (the “Company”), and Michael Fleischer (the “Executive”).

 

In consideration of the

mutual promises, terms, provisions and conditions set forth in this Agreement,

the parties hereby agree as follows:

 

1.             Employment,

Duties and Acceptance.

 

1.1        Employment

by the Company.  The Company

employs the Executive, for itself and its affiliates, to render exclusive and

full time services in such capacities as the Company’s Board of Directors may

assign, as the President of the Company and, in connection therewith, to comply

with the stated policies of the Company and perform such duties consistent with

such position as the Executive shall reasonably be directed to perform by the

Company’s Board of Directors. The Executive shall, together with the Chief

Executive Officer of the Company, be responsible for the implementation of the

overall direction, strategy and operations and administration of the business

of the Company with such powers and duties as are typically provided or

reserved to the senior executive officers of the Company under its by-laws and

the General Corporation law of the State of Delaware. Notwithstanding the

Executive’s obligation to render exclusive and full time services to the

Company, the Executive may (i) hold and make passive investments, and (ii)

continue to serve as a non-employee director or advisor for those companies for

which the Executive currently serves as a director or advisor or (iii) engage

in such other charitable, educational or business activities as may be

otherwise permitted by the Board of Directors of the Company; provided, that

such activities are not otherwise prohibited under Section 5.1.

 

1.2        Acceptance

of Employment by the Executive. The Executive accepts such

employment and shall render the services described above. Subject to election

by the Company’s Board of Directors as such, the Executive shall also serve

during all or any part of the Term (as defined below) as an officer of the

Company and of any of its subsidiaries, without any compensation therefore

other than as specified in this Agreement. 

The Executive shall be nominated to the Board of Directors of the

Company and, subject to election by the stockholders of the Company, shall

serve as a director of the Company during the Term, and at the discretion of

the Company, shall serve as a director of any one or more of the Company’s

subsidiaries, without any compensation therefore other than as specified in

this Agreement.  Notwithstanding the

foregoing, if the Executive is no longer employed by the Company as the

President or otherwise servicing the Company as a full-time consultant, the

Executive shall, upon request of the Company, promptly resign from the Board of

Directors of the Company and/or any of its subsidiaries.

 

1.3

       Place

of Employment.  The

Executive’s place of employment shall be Ramsey, New Jersey, or such other

location as may be agreed upon by the Executive and the Company, subject to

such reasonable travel as the rendering of the services hereunder may require.

 

 

2.             Term

of Employment and Renewal. 

The term of the Executive’s employment under this Agreement (the “Term”)

shall commence on December 1, 2001 (the “Commencement Date”) and shall end at

5:00 pm (Eastern Time) on November 30, 2004, unless sooner terminated as herein

provided.   The Term will be

automatically renewed for successive one year periods expiring on November 30

of each year unless  either

the Company or the Executive has notified the other in writing at least 180

days prior to the expiration of the initial Term (or any renewal Term) that the

Company, or the Executive, as the case may be, is electing to terminate this

Agreement on the then applicable expiration date, in which case this Agreement

shall (unless terminated sooner in accordance with the provisions hereof)

terminate on such date.  Where the Term

has been extended as provided herein, reference to “Term” shall include any

renewal Term unless otherwise indicated.

 

3.             Compensation.

 

3.1        Base

Salary. As compensation for all services to be rendered pursuant to

this Agreement, the Company shall pay the Executive, during each year of the

Term, a salary of not less than $225,000 per annum (the “Annual Salary”),

payable in accordance with the executive payroll policies of the Company as

from time to time in effect, less such deductions as shall be required to be

withheld by applicable law and regulations. 

On each anniversary of the Commencement Date, the Annual Salary shall be

increased by an amount equal to the Annual Salary for the twelve months

preceding such date multiplied by the greater of (i) 5% or (ii) the annual

increase in the Consumer Price Index for such year, as most recently reported

by the Bureau of Labor Statistics of the U.S. Department of Labor.

 

3.2        Retirement

Benefits.  The Executive

shall be entitled to participate in the Company’s 401(k) plan and/or a

non-qualified deferred compensation plan or any similar arrangement which may

be established by the Company (the “Deferred Plan”) and that employee shall be

entitled to make contributions to such 401(k) plan and the Deferred Plan (in

such combination as the Company may direct to be consistent with its plans) up

to an aggregate amount of $30,000 annually; provided, however, that if for any

year the Executive is eligible for, and the Company makes, matching

contributions to its 401(k) plan (the “Matched Amount”), the amount of the

Executive’s compensation to be paid for such year into the Deferred Plan shall

be reduced by the Matched Amount divided by the Executive’s individual combined

city, state and federal tax rate.

 

3.3

       Equity

Compensation. (a) Stock Options. The Executive shall be granted, as

soon as practicable following the `execution of this Agreement, a non-qualified

option to purchase 220,750 shares of Common Stock, $.001 par value per share

(the “Shares”), of the Company (the “Option”). The per Share exercise price of

the Option shall be the market price on the date of grant.  The Option shall be issued on terms and

provisions set forth in the form of Option Certificate approved by the Board, and shall

otherwise have terms and conditions no less favorable to Executive as those set

forth in options heretofore granted to the Executive, or as set forth herein

requiring vesting in full upon a Change of Control or

in the event the Executive’s employment is terminated by the Company, other

than for “cause” under Section 4.3. The Executive shall be eligible to

participate in any cashless exercise plan made available to any other holders

of options of the Company, or if none, the Company shall provide for Executive

a cashless exercise plan to facilitate the exercise of Executive of any and all

options and warrants held by him, of by entities of which he is a controlling

person, on such terms and conditions as may be approved by the Board. Options

shall vest according to the schedule set forth on Exhibit A.

 

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(b)           Restricted Stock Grant. 

Promptly following the execution of this Agreement, the Company shall

grant and deliver to the Executive 105,000 shares of Restricted Stock of the

Company’s common stock, par value $.0001 per share (the “Restricted Shares”),

such Restricted Shares to vest in a single installment on the fifth anniversary

of the date of grant; provided, however that such Restricted Shares shall

earlier vest as follows: if at any time the Initial Value Target (as defined below) is achieved, then 65,625

Restricted Shares shall immediately vest and become non-forfeitable, and if at

any time the Additional Value Target is achieved, then 39,375 Restricted Shares

(together with any Restricted Shares not earlier vested) shall immediately vest

and become non-forfeitable. Unless otherwise requested by the Executive, the

Company shall provide cashless delivery of such Restricted Shares to the

Executive by delivering to the Executive the net number of Restricted Shares,

after withholding Restricted Shares with a value sufficient to satisfy

withholding and other tax liabilities.

 

For

purposes hereof, the Initial Value Target shall be $4 per share of Common

Stock, and the Additional Value Target shall be $5 per share, in each case

subject to adjustment for splits, reverse splits, stock dividends and similar

matters, or as otherwise determined by the Board to reflect any spin-off,

split-up or similar extraordinary or unanticipated transaction or condition.  The targets amounts shall be deemed achieved

if either (a) the closing market price

of the Company’s Common Stock closes at or higher than the target value for ten

(10) or more consecutive days of trading, or there is any Change of Control

transaction, or other sale, merger or combination of the Company, or a sale of

its assets, that is consummated at a price above such target price.

 

3.4

       Limitations

Imposed by Law. Notwithstanding anything to the contrary contained

in this Agreement, the provisions of this Agreement relating to the

compensation to be paid to the Executive shall be subject to any limitations

provided by law or regulation which may from time to time limit the

compensation payable to the Executive.

 

3.5

       Participation

in Employee Benefits. Subject to the acceptance of the Executive and

his dependents by any applicable insurance company or applicable benefit

provider, the Executive shall be permitted during the Term, if and to the

extent eligible, to participate in any group life, hospitalization or

disability insurance plan, health program, loan program, pension plan or

similar benefit plan of the Company, and shall be entitled to such vacation,

personal time, car allowance and the like, which may be available to other

executives of the Company and generally on the same terms as such other

executives. In addition to the benefit programs set forth above, the Company

shall use reasonable efforts, consistent with the Company’s overall business

interests, to assist the Executive in accomplishing the effective exercise of

the vested portion of the Option, whether by cashless exercise, loans or

otherwise, at the Company’s discretion.

 

3.6

       Expenses;

Reimbursement of Travel and

Lodging Expenses.

 

3.6.1.       Reimbursement for Travel and Lodging Expenses.  Notwithstanding anything to the contrary

contained herein, the Executive shall be entitled to reimbursement of all

reasonable out-of-pocket travel expenses actually incurred by the Executive in

connection with his travel between his home and the Company’s New Jersey office

and reasonable lodging expenses actually incurred for lodging in the vicinity

of the Company’s New Jersey office.  The

Executive shall keep an accounting of all such expenses and reasonable evidence

or other supporting information with respect thereto.

 

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3.6.2        Other Expenses. 

Except as set forth in Section 3.6.1 above, subject to such policies as

may from time to time be established by the Company’s Board of Directors, the

Company shall pay or reimburse the Executive for all reasonable expenses

actually incurred or paid by the Executive during the Term in the performance

of the Executive’s services under this Employment Agreement upon presentation

of expense statements or vouchers or such other supporting information as it

may require.

 

3.7        Change

of Control.

 

3.7.1        Right to Change of Control Benefits.  The Company agrees that the Executive shall

have the right to terminate this Agreement and receive the severance benefits

set forth in subsection 3.7.2 below in the event of a Change of Control (as

defined in subsection 3.7.3 below) under the circumstances described in this

Section 3.7.  No right to terminate or

benefits shall be applicable or payable under subsection 3.7.2 below unless

there shall have been a Change of Control.

 

3.7.2        Benefit.  In

the event that (i) within six months of a Change of Control the Executive dies

or his employment is terminated by reason of disability pursuant to Section 4.2

or , (ii) within twelve months of a Change of Control the Executive terminates

his employment with the Company for Good Reason (as hereinafter defined), or

(iii) within twelve months after a Change of Control the Executive’s

employment with the Company is terminated by the Company for any reason other

than for Cause as defined in Section 4.3, (including, without limitation, death

or disability), the Executive shall receive a lump sum compensation, payable

within five days after termination of his employment, equal to one half (1/2)

his Annual Salary immediately prior to such termination in the case of a

termination under (i), and one times such Annual Salary in the event of a

termination under (ii) or (iii).  In

addition,  the Company shall maintain in

full force and effect, for the continued benefit of the Executive and/or his

family for one year after the date his employment terminates or, if earlier,

the date the Executive receives comparable coverage from a new employer, all

medical and dental insurance plans in which he was entitled to participate

immediately prior to the Change of Control, provided that his continued participation

is possible under the general terms and provisions of such plans (in the event

that his participation in any such plan is barred, the Company shall arrange to

provide the Executive with benefits substantially similar to those which he is

entitled to receive under such plans).

 

3.7.3        Definition

of Change of Control.  For purposes

of this Agreement, a “Change of Control” shall mean a change of control of the

Company of a nature that would be required to be reported in response to Item

6(e) of Schedule 14A of Regulation 14A promulgated under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the

Company is in fact required to comply therewith; provided, that, without

limitation, such a change of control shall be deemed to have occurred if:

 

(i)                                     any “person” (as

such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than

the Company, any trustee or other fiduciary holding securities under an

employee benefit plan of the Company, any corporation controlled by or under

common control with any entity which as of the date hereof holds in excess of

five percent (5%) of the Company’s common stock,  or a corporation owned, directly or indirectly, by the

stockholders of the Company in substantially the same proportions as their

ownership of stock of the Company, is or becomes the “beneficial owner” (as

defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of

securities of the Company representing 50.01% or more of the combined voting

power of the Company’s then outstanding securities;

 

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(ii)                                  the Company

shall have consummated a merger or consolidation or sale of

assets or significant subsidiaries with any other corporation, other than a

merger or consolidation which results in the voting securities of the Company

outstanding immediately prior thereto continuing to represent (either by

remaining outstanding or by being converted into voting securities of the

surviving entity) at least 50% (but less than 80%) of the combined voting

securities of the Company or such surviving entity outstanding immediately

after such merger or consolidation; or

 

(iii)                               the Company

shall have liquidated or sold all or substantially all of the Company’s assets.

 

3.7.4        Definition of Good Reason.  For purposes of this Agreement, “Good Reason” means:

 

(i)                                     the assignment

to the Executive of any duties inconsistent with his position (including

status, offices, titles and reporting requirements), authority, duties or responsibilities

as in effect on the date of the Change of Control, or any other action by the

Company which results in a diminution in such position, authority, duties

or responsibilities, excluding for this purpose an isolated, insubstantial and

inadvertent action not taken in bad faith and which is remedied by the Company

promptly after receipt of notice from the Executive;

 

(ii)                                  any reduction of

the Executive’s Annual Salary or the failure by the Company to provide him with

benefits which in the aggregate are no less favorable than the benefits to

which he was entitled prior to the Change of Control;

 

(iii)                               the Company’s

requiring the Executive to be based at any office or location other than the

office and location at which he is employed on the date of the Change of

Control, except for travel reasonably required in the performance of his

responsibilities; or

 

(iv)                              any action taken

or suffered by the Company as of or following the Change of Control (such as,

without limitation, transfer or encumbrance of assets or incurring of

indebtedness) which materially impairs the ability of the Company to make any

payments due or which may become due to the Executive under this Agreement.

 

4.             Termination.

 

4.1

       Termination

upon Death. If the Executive dies during the Term, this Agreement

shall terminate, except that the Executive’s legal representatives shall be

entitled to receive all compensation and benefits provided for under this

Agreement accrued, earned, called for or vested as of the period ending on the

last day of the sixth (6th) month after the month in which the

Executive’s death occurs; provided, however, that nothing herein shall be

construed as providing for the vesting of options other than as set forth in

Section 3.3 hereof.

 

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4.2

       Termination

upon Disability. If, during the Term, the Executive becomes

physically or mentally disabled, whether totally or partially, so that the

Executive is unable substantially to perform his services hereunder for (i) a

period of three consecutive months, or (ii) for shorter periods aggregating

three months during any six month period, the Company (as directed by a vote of

the Board of Directors, excluding the Executive and Jonathan Guss) may at any

time after the last day of the three consecutive months of disability or the

day on which the shorter periods of disability equal an aggregate of three

months, by ten days’ prior written notice to the Executive, terminate the Term

of the Executive’s employment hereunder. Nothing in this Section 4.2 shall be

deemed to extend the Term. The Executive shall be entitled to all compensation

and benefits provided for under this Agreement accrued, earned, called for or

vested for a period ending on the last day of the third (3d) month after the

month in which the Executive’s employment is terminated; provided, however,

that nothing herein shall be construed as providing for the vesting of options

other than as set forth in Section 3.3 hereof.

 

4.3

       Termination

for Cause. The Company (as directed by a vote of the Board of

Directors, excluding the Executive and Jonathan Guss, but for which vote each

of the Executive and Mr. Fleischer are given at least one (1) day’s prior

written notice) may at any time by written notice to the Executive terminate

the Term of the Executive’s employment under this Agreement for “cause” (as

defined herein) and the Executive shall have no right to receive any

compensation or benefit hereunder on and after the effective date of such

notice, other than compensation accrued, earned or vested through the date of

termination; provided, however, that nothing herein shall be construed as

providing for the vesting of options other than as set forth in Section 3.3

hereof.  For purposes of this Agreement,

“cause” shall mean

 

(i)

                                  an act or acts

of personal dishonesty taken by the Executive at the expense of or against the

interests of the Company;

 

(ii)

                               violation by the

Executive of his obligations under this Agreement, including, without

limitation, any failure or refusal to comply with the oral or written policies

or directives of the Company’s Board of Directors; provided, however, that if

such violation may be substantially cured, the Executive may not be terminated

for cause unless the Executive fails to cure such violation within a reasonable

period of time (not to exceed 30 days) after receipt of notice from the Company

of such violation;

 

(iii)

                            any direct or

indirect disclosure of any confidential information or other special knowledge

of the finances, business or other affairs of the Company contrary to his

obligations under Section 5.1.2;

 

(iv)

                           the conviction

of the Executive of a felony; or

 

(v)

                              the conviction

of the Executive of a serious misdemeanor involving illegal use, possession or

sale of drugs, larceny, crimes of violence or sex offenses.

 

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4.4

       Involuntary

Termination. Notwithstanding anything herein to the contrary, the

Company (as directed by a vote of the Board of Directors, excluding the

Executive and Jonathan Guss) shall have the right, at any time upon 90 days’

prior notice to the Executive, to terminate the Term of the Executive’s

employment hereunder. If during the Term, the Company terminates the

Executive’s employment other than for the reasons set forth in Sections 4.1,

4.2 and 4.3 hereof, it shall be deemed to be an involuntary termination and the

Company shall pay to the Executive (in addition to any accrued compensation or

expense reimbursements otherwise due) within ten business days following the

date of termination as a full and final severance payment the lesser of (i) the

balance of the Annual Salary payable to the Executive for the remainder of the

Term (or any renewal term called for), and (ii) one year of the then-current

Annual Salary; provided, however, that if any payment is due the Executive

pursuant to Section 3.7 hereof, then the Executive shall not be entitled to any

payment under this Section 4.4.

 

4.5

       Voluntary

Termination. The Executive agrees to provide the Company with 90 days

notice prior to voluntarily terminating the Term of the Executive’s employment

hereunder. At the end of such 90-day period, this Agreement shall terminate

automatically and, except as provided under Section 3.7 hereof, the Company

shall have no further obligations to the Executive under this Agreement, other

than those obligations accrued, earned or vested by the Executive as of the

date of the termination.

 

4.6

       Notice

of Termination. Any notice of termination by the Company for any

reason or by the Executive for any reason shall be communicated by a written

notice which indicates (i) the specific termination provision in this Agreement

relied upon, (ii) the facts and circumstances claimed to provide a basis for

such termination, and (iii) the date or proposed date of termination.

 

5.             Certain

Covenants of the Executive.

 

5.1

       Covenants

Against Competition. The Executive acknowledges that (i) the

principal business of the Company and its subsidiaries is the development,

assembly and distribution of sound processing equipment and telecommunication

peripherals (together with other related businesses which the Company and its

subsidiaries are in currently and which the Company and its subsidiaries may

become involved with during the Term, the “Company Business”); (ii) the Company

Business is international in scope; (iii) his work for the Company will bring

him, into close contact with many confidential affairs not readily available to

the public; and (iv) the Company would not enter into this Agreement but for the

agreements and covenants of the Executive contained herein. In order to induce

the Company to enter into this Agreement, the Executive covenants and agrees

that:

 

5.1.1        Non-Compete. During the Term and for a period of two

years following the termination (whether for cause or otherwise) of the

Executive’s employment with the Company or any of its affiliates (the

“Restricted Period”), the Executive shall not, in the United States of America

or in any foreign country, directly or indirectly, (i) engage in whole or in

part in the Company Business for his own account; (ii) enter the employ of, or

render any services to, any person engaged in whole or in part in the Company

Business; and (iii) become interested in any person engaged in the Company

Business, directly or indirectly, as an individual, partner, shareholder,

officer, director, principal, agent, employee, trustee, consultant or in any

other relationship or capacity; provided, however, that the Executive may own,

directly or indirectly, solely as an investment, securities of any person which

are traded on any national securities exchange or the Nasdaq National Market

System, if the Executive (a) is not a controlling person of, or a member of a

group which controls, such person, or (b) does not, directly or indirectly, own

1% or more of any class of securities of such person.

 

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5.1.2    Confidential Information. During

the Term of this Agreement and during and after the Restricted Period, the

Executive shall keep secret and retain in strictest confidence, and shall not

use for the benefit of himself or others except in connection with the business

and affairs of the Company, all confidential matters of the Company and its

affiliates. Such confidential matters, include, without limitation, trade

“know-how,” secrets, customer lists, details of consultant contracts, pricing

policies, operational methods, marketing plans or strategies, product

development techniques or plans, business acquisition plans, new personnel

acquisition plans, methods of manufacture, technical processes, designs and

design projects, inventions and research projects and other business affairs of

the Company and its affiliates (collectively, “Confidential Information”),

learned by or disclosed to the Executive heretofore or hereafter, and shall not

disclose them to anyone outside of the Company and its affiliates, either

during or after his employment by the Company or any of its affiliates of the

Company, except as required in the course of performing duties hereunder.

 

5.1.3    Property of the Company. All

documents and other materials including, without limitation, memoranda, notes,

lists, records and other documents made or compiled by or made available to the

Executive prior to the commencement of employment hereunder or during the Term

by the Company and any copies thereof, whether or not containing Confidential

Information, are and shall be the property of the Company and shall, at the

request of the Company, be delivered to the Company promptly upon the

termination of the Executive’s employment with the Company or any of its

affiliates or at any other time on request. Except as required in connection

with the services to be performed hereunder, the Executive agrees not to remove

from the Company’s premises, without permission, any and all papers or drawings

belonging to the Company, including those prepared or worked on by him. All

ideas, reports, and other creative works conceived by the Executive during the

Term and relating to Company Business, shall be disclosed to the Company and

shall be the sole property of the Company.

 

5.1.4    Employees of the Company. During

the Restricted Period, the Executive shall not, directly or indirectly hire,

solicit or encourage to leave the employment of the Company or any of its

affiliates, any employee of the Company or its affiliates or hire any such

employee who has left the employment of the Company or any of its affiliates

within one year of the termination of such employee’s employment with the

Company or any of its affiliates.

 

5.1.5    Consultants and Independent Contractors

of the Company. During the Restricted Period, the Executive shall not,

directly or indirectly, hire, solicit or encourage to cease to work with the

Company or any of its affiliates, any consultant, sales representative and

other person then under contract with the Company or any of its affiliates;

provided, however, that the Executive may hire or solicit consultants who in

the ordinary course of such consultant’s business provide services to a broad

client base.

 

5.2         Rights

and Remedies Upon Breach. If the Executive breaches, or threatens to

commit a breach of, any of the provisions of Section 5.1 (the “Restrictive

Covenants”), the Company shall have the right and remedy to have the

Restrictive Covenants specifically enforced by any court having equity

jurisdiction, it being acknowledged and agreed that any such breach or

threatened breach will cause irreparable injury to the Company and its

affiliates and that money damages will not provide an adequate remedy to the

Company; provided, however, that such right and remedy shall be in addition to,

and not in lieu of, any other rights and remedies available to the Company

under law or in equity.

 

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5.3         Enforceability

in Jurisdictions. The parties intend to and hereby confer

jurisdiction to enforce the Restrictive Covenants upon the courts of any

jurisdiction within the geographical scope of such Restrictive Covenants. If

the courts of any one or more of such jurisdictions hold the Restrictive

Covenants wholly unenforceable by reason of the breadth of such scope or

otherwise, it is the intention of the parties that such determination not bar

or in any way affect the Company’s right to the relief provided above in the

courts of any other jurisdiction within the geographical scope of such

Restrictive Covenants, as to breaches of such Restrictive Covenants in such

other respective jurisdictions, such Restrictive Covenants as they relate to

each jurisdiction being, for this purpose, severable into diverse and

independent covenants.

 

6.             Executive’s

Representations. The Executive represents and warrants to the

Company that there are no agreements or arrangements, whether written or oral,

in effect which would prevent the Executive from rendering exclusive services

to the Company during the Term. The Executive further represents, warrants and

agrees with the Company that as of the date hereof he has not made and will not

make during the Term any commitment to do any act in conflict with this

Agreement, or take any action that might divert from the Company any

opportunity which would be in the scope of any present or future business of

the Company or any affiliate thereof.

 

7.             Indemnification.

The Company shall indemnify and hold harmless the Executive from all claims,

losses, liabilities, damages and causes of action relating to or arising out of

the Executive’s performance, duties and responsibilities to, for, or on behalf

of the Company to the extent provided by the Company’s certificate of

incorporation and by-laws, as the same may be amended from time to time.

 

8.             Other

Provisions.

 

8.1           Notices. Any

notice or other communication required or which may be given hereunder shall be

in writing and shall be delivered personally, by facsimile transmission, or

sent by certified, registered or express mail, postage prepaid, and shall be

deemed given when so delivered personally, transmitted by facsimile

transmission, or if mailed, two days after the date of mailing, as follows:

 

(i)          if to the Company:

 

Bogen

Communications International, Inc.

50 Spring Street

Ramsey, New Jersey  07446

Attention:  Ms. Maureen Flotard

Telecopy:   (201) 995-2078

 

with a copy to:

 

 

 

 

Attention:

Telecopy:

 

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(ii)         if to the Executive, to:

 

Mr. Michael Fleischer

 

 

 

 

 

Telecopy:

 

with a copy to:

 

                                                                        

                                                                         

                                                                        

Attention:

Telecopy:

 

8.2        Entire

Agreement. This Agreement contains the entire agreement between the

parties with respect to the subject matter hereof and supersedes all prior

agreements, written or oral, with respect thereto.

 

8.3        Waivers

and Amendments. This Agreement may be amended, modified, superseded,

cancelled, renewed or extended, and the terms and conditions hereof may be

waived, only by a written instrument signed by the parties or, in the case of a

waiver, by the party waiving compliance. No delay on the part of any party in

exercising any right, power or privilege hereunder shall operate as a waiver

thereof, nor shall any waiver on the part of any party of any right, power or

privilege hereunder, nor any single or partial exercise of any right, power or

privilege hereunder preclude any other or further exercise thereof or the

exercise of any other right, power or privilege hereunder.

 

8.4        Governing

Law. This Agreement shall be governed by and construed in accordance

with the laws of the State of New Jersey applicable to agreements made and to

be performed entirely within such State.

 

8.5        Assignment.

Except as otherwise agreed to by the Company, this Agreement, and the

Executive’s rights and obligations hereunder, may not be assigned by the

Executive. The Company may assign this Agreement and its rights, together with

its obligations hereunder, in connection with any sale, transfer or other disposition

of all or substantially all of its assets or business, whether by merger,

consolidation or otherwise.

 

8.6        Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall

be deemed an original but all of which together shall constitute one and the

same instrument.  The delivery of a

signature page of this Agreement by one party to the other via facsimile

transmission shall constitute the execution and delivery of this Agreement by the

transmitting party.

 

8.7        Headings.

The headings in this Agreement are for reference purposes only and shall not in

any way affect the meaning or interpretation of this Agreement.

 

8.8        Severability.

If any term, provision, covenant or restriction contained in this Agreement, or

any part thereof, is held by a court of competent jurisdiction or any foreign,

 

10

 

 federal, state, county or local government or any other

governmental regulatory or administrative agency or authority to be invalid,

void, unenforceable or against public policy for any reason, the remainder of

the terms, provisions, covenants and restrictions of this Agreement shall

remain in full force and effect and in no way shall be affected, impaired or

invalidated. If any court construes any of the terms, provisions, covenants or

restrictions contained in this Agreement, including, without limitation, the

Restrictive Covenants, or any part thereof, to be unenforceable because of the

duration of such provision or the area covered thereby, such court shall have

the power to reduce the duration or area of such provision and, in its reduced

form, such provision shall then be enforceable and shall be enforced.

 

11

 

IN WITNESS WHEREOF, the parties

have executed this Agreement as of the date first above written.

 

	

   

  	

  BOGEN COMMUNICATIONS

  INTERNATIONAL, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   /s/ Yoav Stern

  	

   

  
	

   

  	

  Name: Yoav Stern

  
	

   

  	

  Title:   Co-Chairman of the Board

  
	

   

  	

   

  
	

   

  	

   /s/ Michael Fleischer

  	

   

  
	

   

  	

  Michael Fleischer

  
					

 

12

 

EXHIBIT A

 

Vesting Schedule

 

	

  Portion of Option

  Immediately Vested:

  	

   

  	

  56,682 shares

  
	

   

  	

   

  	

   

  
	

  Portion of Option Vesting

  Cumulatively 

  	

   

  	

   

  	

   

  
	

  on the Last Day of Each

  Fiscal 

  	

   

  	

   

  	

   

  
	

  Quarter Beginning June 30,

  2002 

  	

   

  	

   

  	

   

  
	

  and Ending September 30,

  2004(1):

  	

   

  	

   

  	

  16,406.8 shares

  

 

(1) 

The option ;may not be exercised for fractional shares.

 

Vesting Schedule–Special Circumstances

 

Notwithstanding the foregoing:

 

(i)                                     in the event of

a Change of Control, the unvested portion of the Option shall immediately vest;

 

(ii)                                  in the event

that the Executive’s employment under this Agreement is terminated by the

Company for any reason other than pursuant to Section 4.3 hereof, the unvested

portion of the Option shall vest on the date notice of termination is given to

the Executive and shall expire on the sooner of (a) ten (10) years from the

date of grant, or (b) one year after the Executive ceases to render services to

the Company, either as an employee or as a consultant; and

 

(iii)                               in the event that

the Agreement is terminated by the Company pursuant to Section 4.3 hereof, or

by reason of the voluntary resignation of the Executive (X) the Option, other

than with respect to that portion of the Option which has vested as of or prior

to the date of termination, shall be cancelled, and (Y) the portion of the

Option vested hereunder shall not expire sooner than the sooner of (a) ten (10)

years from the date of grant, or (b) 90 days after the Executive ceases to

render services to the Company, either as an employee or as a consultant.

 

13<PAGE>

                                                                   EXHIBIT 10.14

                            HUB INTERNATIONAL LIMITED
                              EQUITY INCENTIVE PLAN

         1. PURPOSES. The purposes of the HUB INTERNATIONAL LIMITED EQUITY
INCENTIVE PLAN, as amended from time to time (the "Plan"), are to advance the
interests of Hub International Limited, a corporation organized under the laws
of the province of Ontario, and any successor thereto (the "Company"), by
linking the personal interests of participants to those of the Company's
stockholders by providing Participants (as such term is defined below) with an
incentive for outstanding performance. The Plan is further intended to assist
the Company in its ability to motivate, and retain the services of, Participants
upon whose judgment, interest and special effort the successful conduct of the
Company's and its Subsidiaries' (as such term is defined below) operations is
largely dependent.

         2. DEFINITIONS AND RULES OF CONSTRUCTION.

         (a) Definitions. For purposes of the Plan, the following capitalized
words shall have the meanings set forth below:

                  "Account" means the bookkeeping record established by the
         Company for each Participant. An Account is established only for
         purposes of measuring the value of the Company's obligation to a
         Participant in respect of Restricted Share Units and not to segregate
         assets or to identify assets that may be used to settle Restricted
         Share Units.

                  "Associate" has the meaning ascribed to such term in the
         Securities Act (Ontario), as amended from time to time.

                  "Award" means an award made pursuant to the terms of the Plan
         to an Eligible Individual (as hereinafter defined) in the form of Stock
         Options, Restricted Shares or Restricted Share Units.

                  "Award Document" means an agreement, certificate or other type
         or form of document or documentation approved by the Committee which
         sets forth the terms and conditions of an Award. An Award Document may
         be in written, electronic or other media may be limited to a notation
         on the books and records of the Company and, unless the Committee
         requires otherwise, need not be signed by a representative of the
         Company or a Participant, provided that, if the Company is providing
         financial assistance to a Participant, the Award Document shall include
         a promissory note signed by the Participant.

                  "Board" means the Board of Directors of the Company.

<PAGE>

                  "Code" means the Internal Revenue Code of 1986, as amended
         from time to time, and the rules and regulations (including any
         proposed regulations) promulgated thereunder.

                  "Committee" means the Compensation Committee of the Board, or
         such other committee of the Board as may be designated from time to
         time by the Board to administer the Plan.

                  "Common Stock" means the common shares of the Company.

                  "Date of Grant" means the date of grant of an Award as set
         forth in the applicable Award Document.

                  "Disability" shall have the meaning ascribed to such term in
         the Company's long- term disability plan. The Committee's determination
         as to whether or not a Participant has incurred a Disability is final
         and conclusive and binding on all persons.

                  "Effective Date" means May 10, 2002.

                  "Eligible Individual" means an individual described in Section
         5(a) who is eligible for an Award under the Plan.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended from time to time, and the rules and regulations promulgated
         thereunder.

                  "Fair Market Value" means, for purposes of this Plan, unless
         otherwise required by any applicable provision of the Code or any
         regulations thereunder, the value of a Share on a particular date,
         determined as follows:

                           (a) if the Common Stock is listed or admitted to
                  trading on such date on the Toronto Stock Exchange, any
                  national securities exchange or quoted through the Nasdaq
                  National Market System ("Nasdaq"), the greater of the closing
                  sale price of a Share as reported on: (i) the relevant
                  composite transaction tape, (ii) the principal exchange
                  (determined by trading value in the Common Stock) or (iii)
                  through Nasdaq, as the case may be, on such date, or in the
                  absence of reported sales on such date, the mean between the
                  highest reported bid and lowest reported asked prices reported
                  on such composite transaction tape or exchange or through the
                  Nasdaq, as the case may be, on such date; or

                           (b) if the Common Stock is not listed or quoted as
                  described in the preceding clause, but bid and asked prices
                  are quoted through Nasdaq, the mean between the highest
                  reported bid and lowest reported asked prices as quoted
                  through Nasdaq on such date; or

                           (c) if the Common Stock is not listed or quoted on
                  the Toronto Stock Exchange, any other national securities
                  exchange or through Nasdaq or, if pursuant to (a) and (b)
                  above the Fair Market Value is to be determined based

                                       2
<PAGE>

                  upon the mean of the highest reported bid and lowest reported
                  asked prices provided that if the Committee determines that
                  such mean does not properly reflect the Fair Market Value, by
                  such other method as the Committee determines to be reasonable
                  and consistent with applicable law; or

                           (d) if the Common Stock is not publicly traded, such
                  amount as is determined by the Committee in good faith.

                  "Insider" has the meaning ascribed to such term in Section 627
         of The Toronto Stock Exchange Company Manual.

                  "Option" means a stock option granted under Section 6, which
         is not an "incentive stock option" within the meaning of Section 422 of
         the Code.

                  "outstanding issue" has the meaning ascribed to such term in
         Section 627 of The Toronto Stock Exchange Company Manual.

                  "Participant" means an Eligible Individual who has been
         granted an Award under the Plan.

                  "Pro Rata Portion" means, in respect of a particular Award on
         a particular date, the portion represented by the fraction A divided by
         B, where A is the number of days from (but excluding) the date the
         particular Award was granted until (and including) the particular date
         and B is the number of days from (but excluding) the date the
         particular Award was granted until (and including) the date when that
         Award would have been fully vested.

                  "Restricted Period" means, with respect to any Restricted
         Share or Restricted Share Unit, the period of time determined by the
         Committee in accordance with the terms of the Plan during which such
         Restricted Share or Restricted Share Unit is subject to the
         restrictions set forth in the applicable Award Document.

                  "Restricted Share" means an Award of restricted shares of
         Common Stock that has not vested or remains subject to forfeiture,
         transfer or other restrictions in accordance with Section 7 and the
         applicable Award Document

                  "Restricted Share Units" means an Award of restricted share
         units of Common Stock that has not vested or remains subject to
         forfeiture, transfer or other restrictions in accordance with Section 8
         and the applicable Award Document

                  "Retirement" means a Participant's retirement at the age
         regarded by the Company or a Subsidiary as the normal retirement age
         for its employees in general, based upon the Company's or the
         Subsidiary's normal employment and related policies and practices.

                  "Shares" means the shares of Common Stock and any shares or
         other securities into which such Shares have been for whatever reason
         changed or which have for

                                       3
<PAGE>

         whatever reason been substituted for, or distributed (as a dividend or
         otherwise) upon, such Shares.

                  "Subsidiary" shall have the same meaning ascribed to such term
         in the Securities Act (Ontario).

                  "Termination of Employment" means a Participant's termination
         of employment or service with the Company or a Subsidiary for any
         reason whatsoever (including, without limitation, as a result of
         termination by the Company or a Subsidiary without cause) at a time
         when the Participant is not (and is not imminently about to be) an
         employee or a director of either the Company or any Subsidiary or
         otherwise providing services to the Company.

         (b) Rules of Construction. The masculine pronoun shall be deemed to
include the feminine pronoun and the singular form of a word shall be deemed to
include the plural form, unless the context requires otherwise. Unless the
context indicates otherwise, references to sections are to sections of the Plan.

         3. ADMINISTRATION.

         (a) Power and Authority of the Committee. The Plan shall be
administered by the Committee, which shall have full power and authority,
subject to the requirements of The Toronto Stock Exchange, where applicable, and
the express provisions hereof:

                  (i)      to select Participants from the Eligible Individuals;

                  (ii)     to make Awards in accordance with the Plan;

                  (iii)    to determine the number of shares of Common Stock
                           subject to each Award;

                  (iv)     to determine the terms and conditions of each Award,
                           including, without limitation, those related to
                           transferability, vesting, forfeiture and
                           exercisability and the effect, if any, of a
                           Participant's Termination of Employment, and
                           including the authority to adjust the terms of an
                           Award to comply with the laws, regulations or rules
                           of any applicable jurisdiction or stock exchange;

                  (v)      to determine the terms and conditions of any
                           financial assistance provided to a Participant in
                           accordance with the Plan;

                  (vi)     to amend the terms and conditions of an Award after
                           the granting thereof to a Participant in a manner
                           that either is not prejudicial to the rights of such
                           Participant in such Award or has been consented to in
                           writing by the Participant;

                                       4
<PAGE>

                  (vii)    to specify and approve the provisions of the Award
                           Documents delivered to Participants in connection
                           with their Awards;

                  (viii)   to construe and interpret any Award Document
                           delivered under the Plan;

                  (ix)     to prescribe, amend and rescind rules and procedures
                           relating to the Plan;

                  (x)      subject to the provisions of the Plan and subject to
                           such additional limitations and restrictions as the
                           Committee may impose, to delegate to one or more
                           officers of the Company some or all of its authority
                           under the Plan;

                  (xi)     to adopt, on behalf of the Company, one or more
                           sub-plans applicable to separate classes of
                           Participants who are subject to the laws of
                           jurisdictions outside of the United States and
                           Canada;

                  (xii)    to employ such legal counsel, independent auditors
                           and consultants as it deems desirable for the
                           administration of the Plan and to rely upon any
                           opinion or computation received therefrom; and

                  (xiii)   to make all other determinations (including, without
                           limitation, factual and legal determinations) and to
                           formulate such procedures as may be necessary or
                           advisable for the administration of the Plan.

         (b) Plan Construction and Interpretation. The Committee shall have full
power and authority, subject to the express provisions hereof, to construe and
interpret the Plan.

         (c) Corporate Governance. The administration of the Plan shall in all
respects be subject to the Company's Articles and By-laws, as may be amended
from time to time, and all applicable laws, regulations and rules.

         (d) Determinations of Committee Final and Binding. All determinations
by the Committee in carrying out and administering the Plan and in construing
and interpreting the Plan shall be final, binding and conclusive for all
purposes and upon all interested persons. Every action, including an exercise of
discretion by the Committee, is wholly without precedent value for any purpose.

         4. COMMON STOCK SUBJECT TO THE PLAN.

         (a) Plan Limit. Subject to Section 10, the maximum aggregate number of
shares of Common Stock that may be issued in connection with Awards granted
under the Plan is 2,100,000 shares (the "Plan Limit"). Subject to compliance
with applicable laws, regulations and rules of any applicable jurisdiction or
stock exchange, Shares utilized in connection with the Plan may be purchased on
the open market or otherwise acquired, newly issued, treasury shares or any
combination thereof. Notwithstanding the foregoing, the maximum aggregate number
of

                                       5
<PAGE>

Awards under the Plan which may be newly issued shares is limited to 500,000.
Subject to Section 10(b), the maximum number of shares of Common Stock that may
be subject to an Award granted to any Participant in any calendar year shall not
exceed 1,000,000 shares.

         The Shares available for issuance under the Plan together with all of
the Company's other previously established or proposed share compensation
arrangements cannot, at any time, result in:

                  (i)      the number of Shares reserved for issuance pursuant
                           to Options granted to Insiders exceeding 10% of the
                           outstanding issue;

                  (ii)     the issuance to Insiders, within a one-year period,
                           of a number of Shares exceeding 10% of the
                           outstanding issue;

                  (iii)    the issuance to any one Insider and such Insider's
                           Associates, within a one-year period, of a number of
                           Shares exceeding 5% of the outstanding issue; or

                  (iv)     the number of Shares reserved for issuance to any one
                           Participant exceeding 5% of the outstanding issue.

         (b) Rules Applicable to Determining Shares Available for Issuance. For
purposes of determining the number of Shares that remain available for issuance
under the Plan, the following Shares shall be added back to the Plan Limit and
again be available for Awards:

                  (i)      the number of Shares withheld from any Award to
                           satisfy a Participant's tax withholding obligations
                           or, if applicable, to pay the exercise price of an
                           Option; and

                  (ii)     the number of Shares underlying any Award that are
                           surrendered and cancelled without being exercised.

         5. PARTICIPATION.

         (a) Eligible Individuals. Awards may be granted by the Committee to
individuals ("Eligible Individuals") who are directors, officers or other key
employees of the Company or a Subsidiary with the potential to contribute to the
future success of the Company or its Subsidiaries. Awards shall not be affected
by any change of duties or positions so long as the holder continues to be a
director, officer, employee of, or consultant to, the Company or a Subsidiary.

         (b) Awards to Participants. The Committee shall have no obligation to
grant any Eligible Individual an Award or to designate an Eligible Individual as
a Participant.

                                       6
<PAGE>

         6. STOCK OPTIONS. Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions as the Committee shall deem appropriate, not inconsistent with the
terms of the Plan and applicable law, regulations and rules:

         (a) Award Document. The terms and conditions of each Option shall be
set forth in an Award Document in a form approved by the Committee, which shall
incorporate the Plan by reference. The vesting, forfeiture and other
restrictions applicable to an Option (which will include, without limitation,
restrictions on transferability) shall be determined by the Committee and shall
be set forth in the applicable Award Document.

         (b) Form of Award. The Committee is authorized to grant Options to
Eligible Individuals. An Option shall entitle a Participant to purchase a
specified number of Shares during a specified time at an exercise price
determined in accordance with Section 6(c) below. An Option shall become
exercisable after or at the time such Option becomes vested as determined by the
Committee. An Option shall be exercisable during such period(s) as shall be
determined by the Committee and the Committee may, subject to regulatory
approval, extend the term of an Option after the Date of Grant. An Option which
is not exercised during its period of exercisability shall expire without any
payment to the Participant.

         (c) Exercise Price. The exercise price per share of Common Stock
purchasable under an Option shall be fixed by the Committee on the Date of Grant
or, alternatively, shall be determined by a method specified by the Committee on
the Date of Grant; provided, that such exercise price shall not be less than the
Fair Market Value of a share of Common Stock on the Date of Grant.

         (d) Method of Exercise. Subject to the provisions of the applicable
Award Document, the exercise price of an Option may be paid in cash, certified
check or bank check or a combination thereof, and, if the applicable Award
Document so provides, in whole or in part through the withholding of shares
subject to the Option with a value equal to the exercise price. The Committee
may also establish procedures pursuant to which an Option may be exercised
through a "cashless exercise" procedure involving a broker or dealer approved by
the Committee, that affords Participants the opportunity to sell immediately
some or all of the Shares underlying the exercised portion of the Option in
order to generate sufficient cash to pay the Option exercise price and/or to
satisfy the minimum required withholding tax obligations related to the Option.

         (e) Unvested Options. The following provisions apply to the unvested
portion of an Option held by a Participant except to the extent, if any,
otherwise provided in the applicable Award Document:

                  (i)      upon a Participant ceasing to be an Eligible
                           Individual for any reason other than death,
                           Disability or Retirement, the unvested portion of the
                           Option shall be forfeited and cancelled without any
                           payment to such Participant and shall not be
                           exercisable in whole or in part unless otherwise
                           provided by the Committee, the Plan or the Award
                           Document;

                                       7
<PAGE>

                  (ii)     upon a Participant ceasing to be an Eligible
                           Individual because of death or Disability, the Pro
                           Rata Portion of the unvested portion of an Option
                           shall immediately vest (the number of Shares under
                           such Option vesting being rounded to the next highest
                           whole number of Shares if such number would otherwise
                           include a fraction) and the remainder of such
                           unvested portion shall immediately be forfeited and
                           cancelled without any payment to such Participant;
                           and

                  (iii)    upon a Participant ceasing to be an Eligible
                           Individual by reason of Retirement, the unvested
                           portion of an Option shall immediately vest in full.

Notwithstanding the foregoing, the Board may in any particular case, in its sole
discretion and without precedent value, suspend or vary the operation of the
foregoing provisions, based on such factors or criteria as the Committee may
determine in its sole discretion (including, without limitation, accelerating
the vesting of an Option, in whole or in part), but only (i) with prior approval
of the Toronto Stock Exchange and (ii) in a manner that is not adverse to the
Participant and complies with applicable laws, regulations and rules of any
applicable jurisdiction or stock exchange.

         (f) Termination of Employment. Upon a Participant's death, Disability
or Retirement, the Participant shall, except to the extent, if any, otherwise
provided in the applicable Award Document, retain the right to exercise the
vested portion of any Option held by such Participant for the applicable term of
the Option. Upon a Participant's Termination of Employment for any reason other
than death, Disability or Retirement, the Participant shall, except to the
extent, if any, otherwise provided in the applicable Award Document, retain the
right to exercise the vested portion of any Option held by such Participant for
ninety days following such termination.

         (g) Term of Option. Each Option shall be effective for such term as
shall be determined by the Committee and set forth in the applicable Award
Document; provided, however, that the term of any Option shall not exceed 10
years from the Date of Grant.

         (h) Fractional Shares. No fractional Shares may be issued upon any
exercise of an Option, and the Committee may determine the manner, if any, in
which fractional share value shall be treated.

         7. RESTRICTED SHARES. Restricted Shares awarded under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions as the Committee shall deem appropriate, not inconsistent
with the terms of the Plan and applicable law, regulation and rules:

        (a) Award Document. The terms and provisions of each Restricted Share
awarded under the Plan shall be set forth in an Award Document in a form
approved by the Committee, which shall incorporate the Plan by reference. The
vesting, forfeiture and other restrictions applicable to a Restricted Share
(which may include, without limitation, restrictions

                                       8
<PAGE>

on transferability) shall be determined by the Committee and shall be set forth
in the applicable Award Document.

         (b) Terms of Restricted Shares; Generally.

                  (i)      Subject to Section 7(b)(iii), Restricted Shares may
                           be granted to any Eligible Individual by the
                           Committee, in its sole discretion, and shall comply
                           with the terms and conditions of the Plan and the
                           applicable Award Document.

                  (ii)     Restricted Shares shall be held in escrow rather than
                           delivered to the Participant pending the release of
                           the applicable restrictions and the Participant shall
                           execute and deliver to the Company (1) an escrow
                           agreement satisfactory to the Committee and (2) the
                           appropriate blank stock powers with respect to the
                           Restricted Shares covered by such agreements. If a
                           Participant does not execute an escrow agreement and
                           stock powers, the Award shall be null and void.
                           Subject to the restrictions set forth in Section
                           7(d), the Participant shall generally have the rights
                           and privileges of a stockholder as to such Restricted
                           Shares, including the right to vote the Restricted
                           Shares and to receive dividends. In the sole
                           discretion of the Committee, cash dividends and stock
                           dividends with respect to the Restricted Shares may
                           be either currently paid to the Participant or
                           withheld by the Company for the Participant's account
                           and subject to such terms as determined by the
                           Committee. Cash dividends or stock dividends may, in
                           the sole discretion of the Committee, be subject to
                           the same restrictions as the underlying Restricted
                           Shares.

                  (iii)    Unless such Restricted Shares are acquired on the
                           open market, Restricted Shares granted under the Plan
                           shall not be issued until the consideration for the
                           Restricted Shares is fully paid in money, property or
                           past service that is not less in value than the fair
                           equivalent of the money that the Company would have
                           received if the Restricted Shares had been issued for
                           money (as determined by the Board in its sole
                           discretion).

         (c) Certificates. Upon the award of Restricted Shares, the Committee
shall cause a share certificate (or appropriate electronic entry) registered in
the name of the Participant to be issued and deposited together with the powers
with an escrow agent designated by the Committee. The Committee shall cause the
escrow agent to issue to a Participant a receipt evidencing any share
certificate held by it registered in the name of such Participant.

         (d) Restrictions.

                  (i)      Restricted Shares awarded to a Participant shall be
                           subject to the following restrictions until the
                           expiration of the Restricted Period,

                                       9
<PAGE>

                           and to such other terms and conditions as may be set
                           forth in the applicable Award Document: (1) the
                           Participant shall not be entitled to delivery of the
                           share certificate; (2) the Shares shall be subject to
                           the restrictions on transferability set forth in the
                           Award Document; and (3) the Shares shall be subject
                           to forfeiture to the extent provided in Section 7(f)
                           and the applicable Award Document and, to the extent
                           such Shares are forfeited, the share certificates
                           shall be returned to the Company, and all rights of
                           the Participant to such Shares and as a stockholder
                           shall terminate without further obligation on the
                           part of the Company and all such Shares shall be
                           cancelled.

                  (ii)     The Committee shall have the authority to remove any
                           or all of the restrictions on the Restricted Shares
                           whenever it may determine that, by reason of changes
                           in applicable laws or other changes in circumstances
                           arising after the date of the Award, such action is
                           appropriate.

         (e) Restricted Period. The duration of the Restricted Period and the
other restrictions, if any, that shall be imposed upon the Restricted Shares
shall be determined by the Committee at the time each grant of Restricted Shares
is made and, at the discretion of the Committee, may be set forth in the
applicable Award Document. The Committee may, in any particular case, in its
sole discretion and without precedent value, reduce any Restricted Period or any
other restrictions regarding the transferability or forfeiture of all or a
portion of any Award.

         (f) Termination of Employment. Unless otherwise determined by the
Committee, in its sole discretion, or specified in the applicable Award
Document:

                  (i)      upon a Participant ceasing to be an Eligible
                           Individual by reason of death or Disability, the
                           Restricted Period applicable to each grant of
                           Restricted Shares to the Participant shall end as to
                           the Pro Rata Portion of the Restricted Shares (the
                           number of Restricted Shares so calculated being
                           rounded to the next highest whole number of
                           Restricted Shares if such number would otherwise
                           include a fraction), and the remainder of the
                           Restricted Shares comprising such grant shall be
                           forfeited and cancelled without any payment to such
                           Participant;

                  (ii)     upon a Participant ceasing to be an Eligible
                           Individual by reason of Retirement, the Restricted
                           Period applicable to any Restricted Shares granted to
                           such Participant shall terminate; and

                  (iii)    upon a Participant ceasing to be an Eligible
                           Individual for any reason other than death,
                           Disability or Retirement, all of the Participant's
                           Restricted Shares shall be forfeited without any
                           payment to such Participant.

                                       10
<PAGE>

Notwithstanding the foregoing, the Committee may, in any particular case, in its
sole discretion, but with prior approval of the Toronto Stock Exchange, and
without precedent value, suspend or vary the operation of the foregoing
provisions, upon such terms and to such extent as it may determine, but only in
a manner that is not adverse to the Participant and complies with applicable
laws, regulations and rules of any jurisdiction or stock exchange.

         (g) Delivery of Restricted Shares. Upon the expiration of the
Restricted Period with respect to any Restricted Share, the restrictions set
forth in Section 7(d) and the Award Document shall be of no further force or
effect with respect to such Restricted Share, provided that the Restricted Share
has not been forfeited. Upon such expiration, the Company shall deliver to the
Participant, without charge, a share certificate evidencing the Restricted
Shares which have not been forfeited and with respect to which the Restricted
Period has expired (to the nearest full share) and any cash dividends or share
dividends credited to the Participant's account with respect to such Restricted
Share and the interest thereon, if any.

         8. RESTRICTED SHARE UNITS. Restricted Share Units shall consist of a
grant of units, each of which represents the right of the Participant to receive
one Share, subject to the following terms and conditions and shall contain such
additional terms and conditions as the Committee shall deem appropriate, not
inconsistent with the terms of the Plan and applicable law, regulations and
rules:

         (a) Terms set forth in Award Document. The terms and provisions of each
Restricted Share Unit awarded under the Plan shall be set forth in an Award
Document in a form approved by the Committee, which shall incorporate the Plan
by reference. The vesting, forfeiture and other restrictions applicable to a
Restricted Share Unit (which may include, without limitation, restrictions on
transferability) shall be determined by the Committee and shall be set forth in
the applicable Award Document.

         (b) Deferral. By their terms, Restricted Share Units are automatically
deferred upon grant as provided in the applicable Award Document. Pursuant to
rules and regulations adopted by the Committee, the Committee may permit a
Participant to further defer the settlement of a Restricted Share Unit until the
earlier of his or her (i) termination of employment or (ii) death. Amounts
deferred in accordance with the preceding sentence shall be noted in a
Participant's Account.

         (c) Accounts. Upon the grant of a Restricted Share Unit, the Board
shall credit a Participant's Account with the number of Restricted Share Units
granted. In the event that the Company pays any cash or other dividend or makes
any other distribution in respect of the Common Stock, a Participant's Account
will be credited with an additional number of Restricted Share Units (including
fractions thereof) determined by dividing (i) the amount of cash, or the value
(as determined by the Board) of any securities or other property, paid or
distributed in respect of a Share by (ii) the Fair Market Value of a Share for
the date of such payment or distribution, and multiplying the result of such
division by (iii) the number of Restricted Share Units that were credited to a
Participant's Account immediately prior to the date of the dividend or other
distribution. Credits shall be made effective as of the date of the dividend or
other distribution in respect of the Common Stock. Dividends credited to a
Participant's Account may, in the sole discretion of the Committee, be either
currently paid to

                                       11
<PAGE>

the Participant or withheld by the Company and credited to the Participant's
Account as additional Restricted Share Units. Dividends credited to a
Participant's Account may, in the sole discretion of the Committee, be subject
to the same restrictions as the underlying Restricted Share Units.

         (d) Restrictions.

                  (i)      Restricted Share Units awarded to a Participant shall
                           be subject to the following restrictions until the
                           expiration of the Restricted Period, and to such
                           other terms and conditions as may be set forth in the
                           applicable Award Document: (1) the Participant shall
                           not be entitled to delivery of the share certificate
                           and (2) the Restricted Share Units shall be subject
                           to forfeiture to the extent provided in Section 8(e)
                           and the applicable Award Document.

                  (ii)     The Committee shall have the authority to remove any
                           or all of the restrictions on the Restricted Shares
                           Units whenever it may determine that, by reason of
                           changes in applicable laws or other changes in
                           circumstances arising after the date of the Award,
                           such action is appropriate.

         (e) Restricted Period. The duration of the Restricted Period and the
other restrictions, if any, that shall be imposed upon the Restricted Share
Units shall be determined by the Committee at the time each grant of Restricted
Share Units is made and, at the discretion of the Committee, may be set forth in
the applicable Award Document. The Committee may, in any particular case, in its
sole discretion and without precedent value, reduce any Restricted Period or any
other restrictions regarding the transferability or forfeiture of all or a
portion of any Award.

         (f) Termination of Employment. Unless otherwise determined by the
Committee, in its sole discretion, or specified in the applicable Award
Document:

                  (i)      upon a Participant ceasing to be an Eligible
                           Individual by reason of death or Disability, the
                           Restricted Period applicable to each grant of
                           Restricted Share Units to the Participant shall end
                           as to the Pro Rata Portion of the Restricted Shares
                           Units (the number of Restricted Share Units so
                           calculated being rounded to the next highest whole
                           number of Restricted Share Units if such number would
                           otherwise include a fraction), and the remainder of
                           the Restricted Share Units comprising such grant
                           shall be forfeited and cancelled without any payment
                           to such Participant;

                  (ii)     upon a Participant ceasing to be an Eligible
                           Individual by reason of Retirement, the Restricted
                           Period applicable to any Restricted Share Units
                           granted to such Participant shall terminate; and

                                       12
<PAGE>

                  (iii)    upon a Participant ceasing to be an Eligible
                           Individual for any reason other than death,
                           Disability or Retirement, all of the Participant's
                           Restricted Share Units shall be forfeited without any
                           payment to such Participant.

Notwithstanding the foregoing, the Committee may, in any particular case, in its
sole discretion, but with prior approval of the Toronto Stock Exchange, and
without precedent value, suspend or vary the operation of the foregoing
provisions, upon such terms and to such extent as it may determine, but only in
a manner that is not adverse to the Participant and complies with applicable
laws, regulations and rules of any applicable jurisdiction or stock exchange.

         (g) Delivery of Shares. Upon the expiration of the Restricted Period
with respect to any Restricted Share Unit, the restrictions set forth in Section
8(d) and the Award Document shall be of no further force or effect with respect
to such Restricted Share Unit, provided that the Restricted Share Unit has not
been forfeited. Upon such expiration, the Company shall, in its sole discretion,
(i) deliver to the Participant a share certificate evidencing the Restricted
Share Units in such Participant's Account that have not been forfeited or (ii)
deliver to the Participant, cash equal to the Fair Market Value of the Shares
subject to such Restricted Share Units, or in a combination of Shares and cash.

         (h) No Stockholder Rights. The crediting of Restricted Share Units to
an Account shall not confer on the relevant Participant any rights as a
stockholder of the Company.

         9. GENERAL PROVISIONS.

         (a) Non-Transferability of Award. Unless the Committee determines
otherwise in its sole discretion and subject to regulatory approval, no Award or
amount payable under, or interest in, the Plan shall be transferable by a
Participant except by will or the laws of descent and distribution or otherwise
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; provided, however, that the Committee
may, in its sole discretion and subject to such terms and conditions as it shall
specify, permit the transfer of an Award, other than an Option, for no
consideration to a Participant's family members or to one or more personal
holding companies which are controlled or wholly-owned by the Participant,
provided such Shares underlying an Award are owned directly or indirectly by the
Participant, his or her spouse, minor children or minor grandchildren, and/or
family trusts wholly-owned (directly or indirectly) by the Participant or his or
her immediate family (collectively, "Permitted Transferees"). Any Award
transferred to a Permitted Transferee shall be further transferable only by will
or the laws of descent and distribution or, for no consideration, to another
Permitted Transferee of the Participant. The Committee may, in its sole
discretion, permit transfers of Awards (other than an Option) other than those
contemplated by this Section 9(a). During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or by a Permitted Transferee
to whom such Option has been transferred in accordance with this Section 9(a).

         (b) Rights with Respect to Shares. A Participant shall have no rights
as a stockholder with respect to Shares covered by an Award until the date the
Participant or his nominee becomes the holder of record of such Shares, and
except as herein otherwise provided

                                       13
<PAGE>

no adjustments shall be made for cash dividends or other distributions or other
rights as to which there is a record date preceding the date such person becomes
the holder of record of such shares. The Company shall not be entitled to
exercise any voting rights in respect of the Shares held by it unless the
Company has both sought and obtained instructions from a Participant, in which
case the Company shall exercise the voting rights in respect of the Shares which
are or may be transferable to such Participant upon the exercise of such
Participant's Options in accordance with the instructions of such Participant
(provided that, for greater certainty, nothing herein shall obligate the Company
to seek instructions from any or all of the Participants). Except as the
following may be varied by action taken under Section 9, the Company shall be
entitled (to the exclusion of any Participant) to all dividends and other
distributions in respect of the Shares held by it at all times prior to the
transfer of such Shares to a Participant upon the exercise of an Option.

         (c) No Right to Continued Employment. No Eligible Individual or
Participant shall have any claim or right to receive grants of Awards under the
Plan. Nothing in the Plan or in any Award or Award Document shall confer upon
any Eligible Individual any right to continued employment or service with the
Company or any Subsidiary or interfere in any way with the right of the Company
or any Subsidiary to terminate the employment or service of any Eligible
Individual any time, with or without cause. Each Participant, by accepting an
Award, agrees with the Company and its Subsidiaries that he or she will not be
entitled to any damages, payment or claim with respect to or as a result of any
forfeiture of the Award that occurs as a result of the termination of the
Participant's employment or service with the Company or any Subsidiary,
regardless of the reason for or circumstances of such termination, or whether
such termination was or was not wrongful and of whether or not the period of
notice of termination given to the Participant was sufficient.

         (d) Consent to Plan. By accepting any Award or other benefit under the
Plan, each Participant and each person claiming under or through such
Participant shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.

         (e) Wage and Tax Withholding. The Company or any Subsidiary is
authorized to withhold from any Award or any compensation or other payment to a
Participant amounts of withholding and other taxes with respect to the payment
of any federal, state, provincial or local taxes of any kind required by law to
be withheld in connection with any Award, and to take such other action as the
Committee may deem necessary or advisable to enable the Company and the
Participants to satisfy obligations for the payment of the minimum required
withholding obligations relating to any Award. This authority shall include
authority for the Company to withhold or receive Common Stock or other property
and to make cash payments in respect thereof in satisfaction of a Participant's
minimum required tax withholding obligations, either on a mandatory or elective
basis in the sole discretion of the Committee.

         (f) Compliance with Laws. An Award may not be exercised, and no Shares
may be issued in connection with an Award, unless and until the Company has
determined that (i) the Company and the Participant have taken all actions under
the securities laws of both the United States and Canada and including any
applicable requirements of any stock exchange in

                                       14
<PAGE>

which the Common Stock is listed, (ii) the consideration for the Shares is fully
paid in money, property or past service that is not less in value than the fair
equivalent of the money that the Company would have received if the Shares had
been issued for money (as determined by the Board in its sole discretion) and
(iii) the issuance of such Shares complies with any other applicable laws.

         (g) Unfunded Plan. The Plan is intended to constitute an "unfunded"
plan for incentive compensation. Nothing contained in the Plan (or in any Award
Documents or other documentation related thereto) shall give any Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts and
deposit therein cash, Shares or other property or make other arrangements to
meet the Company's obligations under the Plan. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the Committee
determines otherwise. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify.

         (h) Other Employee Benefit Plans. Payments received by a Participant
under any Award made pursuant to the Plan shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan
or similar arrangement provided by the Company, unless otherwise specifically
provided for under the terms of such plan or arrangement or by the Committee.

         (i) Compliance with Rule 16b-3. Notwithstanding anything contained in
the Plan or in any Award Document to the contrary, if the consummation of any
transaction under the Plan would result in the possible imposition of liability
on a Participant pursuant to Section 16(b) of the Exchange Act, the Committee
shall have the right, in its sole discretion, but shall not be obligated, to
defer such transaction or the effectiveness of such action to the extent
necessary to avoid such liability, but in no event for a period longer than six
months.

         (j) Expenses. The costs and expenses of administering and implementing
the Plan shall be borne by the Company.

         (k) Liability and Indemnification.

                  (i)      Neither the Company nor any Subsidiary shall be
                           responsible in any way for any action or omission of
                           the Committee or any other fiduciaries in the
                           performance of their duties and obligations as set
                           forth in the Plan. Furthermore, neither the Company,
                           any Subsidiary nor the Committee shall be responsible
                           for any act or omission of any of their agents, or
                           with respect to reliance upon the advice of their
                           counsel, provided that the Company, the appropriate
                           Subsidiary or the Committee, as the case may be,
                           relied in good faith upon the action of such agent or
                           the advice of such counsel.

                  (ii)     Neither the Company, any Subsidiary, the Committee,
                           nor any agent, employee, officer, director,
                           stockholder or member of any of

                                       15
<PAGE>

                           them, nor any other person shall have any liability
                           or responsibility to any Participant or otherwise
                           with respect to the Plan, except with respect to
                           fraud, bad faith or willful misconduct on their part
                           or as otherwise expressly provided herein.

         (l) Cooperation of Parties. All parties to the Plan and any person
claiming any interest hereunder agree to perform any and all acts and execute
any and all documents and papers which are necessary or desirable for carrying
out the Plan or any of its provisions.

         (m) Notices. Each notice relating to the Plan shall be in writing and
delivered by recognized overnight courier or certified mail to the proper
address or, optionally, to any individual personally. Except as otherwise
provided in any Award Document, all notices to the Company or the Committee
shall be addressed to it c/o the Company at its registered office, Attn:
Corporate Secretary. All notices to Participants, former Participants,
beneficiaries or other persons acting for or on behalf of such persons which are
not delivered personally to an individual shall be addressed to such person at
the last address for such person maintained in the records of the Committee or
the Company.

         (n) Financial Assistance. The Committee shall determine, in its sole
discretion, the terms and conditions of any financial assistance that shall be
provided by the Company to a Participant in order to permit such Participant to
exercise an Option or to purchase Shares under the Plan; provided, however, that
such financial assistance shall not extend beyond the term of the Option or the
right to purchase Shares in respect of which the financial assistance is being
provided. The terms and conditions on which financial assistance may be provided
to a Participant, including any security for such financial assistance and
whether the Company shall have any recourse against such Participant for the
outstanding balance of the financial assistance after realization on such
security, shall be set forth in the Award Document.

         10. RECAPITALIZATION OR REORGANIZATION.

         (a) Authority of the Company and Shareholders. The existence of the
Plan, the Award Documents and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Company or the Shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any dividend or other distribution, any issue of
stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

         (b) Change in Capitalization. Notwithstanding any provision of the Plan
or any Award Document, if there is any change in the outstanding Shares by
reason of a stock dividend or split, a recapitalization, or a consolidation,
combination or exchange of shares, or if there is any other change (including,
possibly, an extraordinary dividend) which the Committee in its sole discretion
determines is a sufficiently fundamental change to warrant the action
hereinafter described, the Committee shall make, subject to any prior approval
required of

                                       16
<PAGE>

relevant stock exchanges or other applicable regulatory authorities, if any, an
appropriate substitution or adjustment in (i) the exercise price of any
unexercised Options under the Plan; and/or (ii) the number and kind of shares or
other securities subject to unexercised Options under the Plan; provided,
however, that no substitution or adjustment will obligate the Company to
transfer fractional Shares. In the event of the reorganization or the
amalgamation, merger or consolidation of the Company with another corporation,
the Committee may make such provision for the protection of the rights of
Eligible Individuals and Participants as the Committee in its discretion deems
appropriate. The determination of the Committee, as to any such substitution or
adjustment or as to there being no need for the same, will be final and binding
on all parties.

         11. EFFECTIVE DATE. The Plan shall become effective on the Effective
Date, subject to subsequent approval thereof by the Company's stockholders, and
shall remain in effect until it has been terminated pursuant to Section 12. If
the Plan is not approved by the stockholders, the Plan and all interests in the
Plan awarded to Participants shall be void ab initio and of no further force and
effect.

         12. AMENDMENT; SUSPENSION AND TERMINATION.

         Notwithstanding anything herein to the contrary, the Board or the
Committee may, at any time, terminate or, from time to time, amend, modify or
suspend the Plan; provided, however, that no amendment or modification which (i)
increases the Plan Limit or (ii) otherwise must be approved by stockholders
pursuant to applicable rules of an exchange or any requirements or any
requirements of the Code and the regulations promulgated thereunder, shall be
effective without stockholder approval. However, except as otherwise expressly
provided herein, no amendment, modification, suspension or termination of the
Plan shall alter the rights of any Participant existing at such time with
respect to an Award, except with the express written consent of such
Participant. The Plan shall continue until earlier terminated by the Company
pursuant to this Section 12. If the Plan is terminated, the provisions of the
Plan, and any administrative guidelines, regulations and other rules adopted by
the Committee with respect to the Plan which are in force at the time of such
termination, will continue in effect in respect of any Awards which are
outstanding at such time and any rights pursuant to any such Awards. However,
notwithstanding the termination of the Plan, the Committee may make any
amendments to the Plan or the Awards which it would have been entitled to make
if the Plan were still in effect.

         With the consent of any applicable regulatory authorities, as may be
required, the Committee may, in its sole discretion and without precedent value,
amend or modify any particular outstanding Award(s) or, in circumstances which
the Committee deems appropriate (such a circumstance may, for instance, be a
change of control of the Company), all outstanding Awards, so as to:

                  (i)      accelerate the Award's vesting or exercisability;

                  (ii)     reduce any restrictions on the transferability,
                           vesting or exercisability of the Award; or

                                       17
<PAGE>

                  (iii)    if the Company ceases to be subject to the terms of
                           the Exchange Act or there is a contemplated
                           transaction which would result in the Company ceasing
                           to be subject to the terms of the Exchange Act,
                           abbreviate the exercise period of all outstanding
                           Awards;

upon not less than 30 days' notice to all affected Participants and upon such
terms (including the possible reinstatement of Awards) as the Committee
determines.

         13. GOVERNING LAW. The validity, construction and effect of the Plan,
any rules and regulations relating to the Plan, and any Award shall be
determined in accordance with the laws of the province of Ontario applicable to
contracts to be performed entirely within such state and without giving effect
to principles of conflicts of laws.

                                       18

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