AMENDING AGREEMENT DATED AS OF MARCH 31, 2004 (re: Employment Agreement dated December 31, 1999) BETWEEN
AMENDING
AGREEMENT DATED AS OF MARCH 31, 2004
(re:
Employment Agreement dated December 31, 1999)
BETWEEN
ZI
CORPORATION, a
corporation incorporated under the laws of the Province of Alberta (the
“Corporation”)
OF
THE FIRST PART
- and
-
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, of
Calgary, Alberta (the “Employee”)
OF
THE SECOND PART
WHEREAS:
| A. |
the
Corporation and the Employee are parties to an Employment Agreement dated
the 31st
day of December, 1999 (hereafter referred to as the “Employment
Agreement”), a copy of which (without schedules) is annexed hereto as
Schedule 1; |
| B. |
the
Employment Agreement, pursuant to the provisions of Article 2.1
thereof, was automatically renewed and extended for a three year period,
namely January 1, 2003 - December 31, 2005, following the expiry
of its initial three year term; |
| C. |
during
the current term, the Corporation encountered various unexpected financial
and business uncertainties which rendered it difficult or impractical for
the Corporation to fully perform its contractual obligations to the
Employee under the Employment Agreement; |
| D. |
for
the benefit of the Corporation, the Employee extended various
accommodations (“the accommodations”) to the Corporation to assist it
during uncertain times, including but not necessarily limited to the
reduction of his remuneration, the deferral of salary, a change of his
title and responsibilities and a forbearance of certain contractual rights
available to him as a result of those
accommodations; |
| E. |
the
accommodations extended by the Employee to the Corporation have included
the following: |
| (i) |
effective
May 1, 2003, the Corporation ceased paying the Employee the salary
provided for in Article 4.1 of the Employment Agreement and commenced
paying him the equivalent of one-third of that salary, deferring payment
of the difference on terms to be agreed
upon; |
| (ii) |
effective
November 19, 2003, the Corporation appointed another individual to
serve as the Chief Executive Officer of the
Corporation; |
| (iii) |
effective
November 20, 2003, the Corporation and the Employee agreed that the
Employee’s annual base salary would be reduced to $225,000.00 ($CDN) from
$300,000.00 ($USD); |
| (iv) |
from
November 20, 2003 until the date of this Agreement, the Corporation
has continued to pay the Employee a salary amount equivalent to one-third
of his former salary rather than the agreed revised amount of $225,000.00
($CDN); |
| F. |
as
a consequence of the foregoing, the parties have agreed to formally amend
the provisions of the Employment Agreement in such manner as is fair,
reasonable or necessary to reflect the changes and accommodations that
have transpired since the expiry of the initial term of the Employment
Agreement; |
| G. |
the
employee has received legal advice respecting the matters referred to
herein and fully understands the provisions, consequences and effect of
the Employment Agreement as amended by this
Agreement. |
NOW
THEREFORE, IN
CONSIDERATION of the
mutual covenants and premises herein set forth, and for other good and valuable
consideration, including the accommodations, (the receipt and sufficiency of
which consideration are hereby acknowledged) the parties hereby agree as
follows:
| 1. |
Except
as specifically provided for herein, and as may be necessary to give force
and effect to the provisions of this Agreement, the terms and conditions
of Employment Agreement shall continue in full force and
effect. |
| 2. |
The
Employment Agreement, as amended hereby, shall have a term that expires on
December 31, 2006. The renewal and extension provisions in Article 2.1 of
the Employment Agreement shall continue to
apply. |
| 3. |
Article 1.1(o) of
the Employment Agreement is hereby amended to provide as
follows: |
“Services”
means occupying the position of Chairman of the Board of Directors and
performing such duties and having such responsibilities as may be determined
from time to time by the Board of Directors consistent with those positions in
relation to the Corporation and any of its affiliated or associated corporations
as determined by the Board of Directors.”
| 4. |
Article 4.1 of
the Employment Agreement is hereby amended to provide as
follows: |
“The
annual base salary payable to the Employee, in consideration for the provision
of the Services by the Employee hereunder, shall be $225,000.00 ($CDN) exclusive
of bonuses, benefits and other compensation. Such annual base salary shall be
payable in arrears in equal monthly instalments at the end of each month during
the term hereof.”
| 5. |
Article 4.4
of
the Employment Agreement is hereby amended to provide as
follows: |
“In
addition to the consideration set forth herein, the Corporation hereby agrees to
forthwith grant to the Employee, subject to the terms and conditions hereinafter
set forth and those set forth in the Stock Option Plan of the Corporation,
including the execution and delivery of any agreement required under such Plan
(a copy of which Plan is annexed hereto as Schedule 2);
(a) options
to purchase from the Corporation 400,000 Common Shares in the Corporation, in
addition to those options previously granted to the Employee, and;
(b) 250,000
Restricted Stock Units (“RSU’s”), in addition to those RSU’s previously granted
to the Employee.
Particulars
of the said previous grants of options and RSU’s are annexed hereto as
Schedule 3. The Employee shall enter into such agreements as may be
required by or under the Stock Option Plan in the form prescribed thereunder.
Appropriate adjustments shall be made to such number of shares to give effect to
adjustments in the number of shares of the Corporation, the payment of stock
dividends by the Corporation or other relevant changes in the capital of the
Corporation.”
| 6. |
Article 4 of
the Employment Agreement is further amended to include an Article 4.5
which shall provide as follows: |
“The
Corporation acknowledges that it is indebted to the Employee in the amount of
$240,340.05 ($CDN) (the “Deferred Compensation”) representing base salary that
accrued to but was not paid to the Employee during the periods May 1 -
November 19, 2003 and November 20 - March 31, 2004. The Deferred
Compensation represents a debt from the Corporation to the Employee which shall
be repaid (without interest) in full, without set-off, deduction or abatement
whatsoever except lawfully required statutory deductions, on the earlier of:
(a) ten days
following the termination of the Employee’s employment with the Corporation for
any reason whatsoever; or
(b) December 31,
2005.
Nothing
herein shall preclude the parties from agreeing to different repayment terms
respecting the Deferred Compensation following the execution of this Agreement,
but any such agreement shall be ineffective unless in writing executed by both
parties.”
| 7. |
Article 10 of
the Employment Agreement shall be amended to include an Article 10.3 which
shall provide as follows: |
“In the
event of termination of the Employee’s employment with the Corporation for any
reason whatsoever, including but not necessarily limited to those specified
herein, the Employee acknowledges and agrees that, notwithstanding any
provisions of the Stock Option Plan of the Corporation and any Stock Option or
like agreements between the Employee and the Corporation that could be construed
or interpreted to the contrary, the following provisions shall apply in respect
of all options or restricted stock units that have been granted by the
Corporation to the Employee at any time:
|
(a) |
the
Employee shall not be entitled to pursue or maintain any claims, actions,
rights or remedies based on or arising from the premise that he is
entitled to receive reasonable notice of termination of his employment, or
that the wording of the Corporation’s Stock Option Plan can or should be
interpreted to provide that any cessation or termination provisions
contained therein apply only in the event of a lawful or proper cessation
or termination; |
|
(b) |
the
Employee shall not be entitled to claim any damages or other relief of any
nature or description whatsoever in respect of any options or restricted
stock units granted but not vested as at the Date of Termination;
|
|
(c) |
this
Agreement provides completely and exclusively for any and all claims,
recourse, remedies, payments or rights available to the Employee in the
event of the termination of his employment for any reason whatsoever,
including but not limited to an unlawful termination, and the Employee is
prohibited, barred and estopped from advancing any other claims in the
event of a termination of his employment for any reason, lawful or
unlawful; |
|
(d) |
the
Employee acknowledges and agrees that he is familiar with and understands
the provisions of the Corporation’s Stock Option Plan, including but not
limited to the following current provision:
|
|
‘If
a Participant shall cease to be a director, officer, employee or
consultant of the Corporation or any of its subsidiaries or affiliates for
any reason (other than death), the Participant may, but only within
90 days next succeeding the Participant’s ceasing to be a director,
officer, employee or consultant and subject to the ten year maximum period
provided in section 10(a) hereof, exercise the Participant’s Option
and/or RSU to the extent that the Participant was entitled to exercise
them at the date of such cessation.’ |
| 8. |
Article 12.1(c) of
the Employment Agreement is hereby amended to provide as
follows: |
“Termination
by the Corporation for Just Cause. If the
Employee’s employment is terminated by the Corporation for Just Cause the
Corporation shall pay to the Employee, if not theretofore paid, the fraction of
the Annual Salary earned by or payable to the Employee by the Corporation or its
subsidiaries during the then current fiscal year of the Corporation for the
period to and including the Date of Termination, and neither the Corporation nor
its subsidiaries shall have any further obligations to the Employee under this
Article 12.”
| 9. |
Article 12.1 of
the Employment Agreement shall be amended to include an Article 12.1 (e)
which shall provide as follows: |
“Termination
by the Employee Arising from Control Change Other than for Qualifying
Reason. Upon a
Control Change, the Employee may, within sixty (60) days following the Control
Change, at his complete and unfettered discretion, acting reasonably or
unreasonably, terminate this Agreement by notifying the Corporation in writing
that he has elected to terminate this Agreement. Within ten (10) days of the
provision of such notice to the Corporation, the Corporation shall pay to the
Employee an amount equal to three (3) times the Annual Salary at the rate in
effect at the Date of Termination. The payment provided for in this
Article 12.1(e) is the only severance payment the Employee will receive in
the event of the termination of this Agreement for reasons contemplated in this
Article 12.1(e).”
| 10. |
Article 19.6 of
the Employment Agreement is hereby amended to provide as
follows: |
“All
references herein to currency shall be to United States dollars, except as
otherwise specifically provided herein.”
| 11. |
Article
19 of
the Employment Agreement shall be amended to include an Article 19.7 which
shall provide as follows: |
“The
Corporation shall be obliged to pay interest to the Employee at a rate of 10%
per annum on any overdue amounts that it becomes obliged to pay the Employee
hereunder arising from the termination of the Employee’s employment for any
reason whatsoever.”
IN
WITNESS WHEREOF the
Corporation has executed this Agreement by its proper officers acting in that
behalf and the Employee has hereunto executed this Agreement, all as of March
31, 2004.
| Witness | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Name of Witness (Printed) | ||
|
Per: |
||
|
Per: |
||
| Zi Corporation |