WHEREAS
each
of [Smith]
and [Jones]
(each, a “Founder”) is the holder of record of certain common shares (the
“Common Shares”) in the capital of the Companyn;
AND
WHEREAS the Founders have agreed that in respect of the matters dealt with
herein, the voting of the Common Shares and any other securities of the Companyn
held or subsequently acquired by any Founder (collectively, the “Securities”)
shall be governed by this Agreement;
NOW
THEREFORE this Agreement witnesses that in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto covenant and agree as
follows:
“Board
Nominee” means the member of the Board of Directors of the Companyn
appointed by the Board of Directors to exercise the voting rights as set out in
this Agreement.
“Change of
Control” means any transaction or series of transactions which result in the
transfer of the direct or indirect ownership of more than 50% of the issued and
outstanding voting shares, or any securities convertible into voting shares, of
the Companyn, other than a change of control resulting from a financing upon such terms as the Founders, the other investors and the Companyn may
agree.
“Constructive Dismissal” shall be deemed to have occurred if there exists any
material adverse change without the consent of the Executive in the title,
status, position, job function and reporting responsibilities of the Executive
from those set out in this Agreement.
(b) in the case of
Permanent Disability, the date that the determination of Permanent Disability
is made by a court of competent jurisdiction in Canada or as otherwise
determined in accordance with the definition of Permanent Disability below;
(c) if the Founder’s
employment, services or Board of Directors position is terminated by reason of
retirement by the Founder, the date which is designated by the Founder as the
effective date of retirement which date shall be no later than the last day
that such Founder is employed by or provides services to the Companyn on a
full-time basis;
(d) if the Founder’s
employment, services or Board of Directors position is terminated by reason of
resignation by the Founder, the date which is designated by the Companyn as the
effective date of resignation;
(e) in the case of the
Insolvency of a Founder, the date any assignment for the benefit of creditors
is made by such Founder, the date any declaration of bankruptcy is made by a
court of competent jurisdiction, the date that such Founder takes the benefit
of any legislation for the benefit of bankrupt or insolvent debtors, the date
that a receiver or other officer of the court is appointed, or the date that
proceedings are commenced against a Founder by way of execution, distress,
seizure, possession, sale or foreclosure by any secured creditor or judgment creditor
of such Founder;
(f) if the Founder’s
employment or services is terminated by the Companyn without cause, the later
of:
(i) the date which is the last day of any
minimum statutory notice period, if any, applicable to the Founder pursuant to
applicable employment standards legislation; and
(ii) the date which is
designated by the Companyn as the last day of the Founder’s employment or
services; or
(g) if the Founder’s
employment or services is terminated by the Companyn for cause, the date which
is designated by the Companyn as the effective date of such termination.
(c)
the appointment of a receiver or other officer with
similar powers with respect to a Founder for a substantial part of the assets
belonging to such Founder unless such appointment is under dispute; and
(d)
the commencement of proceedings against a Founder by
way of execution, distress, seizure, possession, sale or foreclosure by any
secured creditor or judgment creditor of such Founder.
“Permanent
Disability” and “Permanently
Disabled” means a Founder who is declared mentally incompetent or incapable
of managing his or her affairs by a court of competent jurisdiction in Canada
or, if no application is brought for such a declaration, who is certified by
statutory declaration of two duly qualified medical practitioners to be
mentally incompetent.
“Remaining Founder” means the Founder or Founders, as the case may be,
which receive a Proxy and Power of Attorney in accordance with the terms of
this Agreement.
“Shareholders
Agreement” means the unanimous shareholders agreement, dated as of _____,
20__ among the Founders and the Companyn and any other person who subsequently
acquires any Securities of the Companyn, as amended from time to time.
(f)
termination of employment of such Founder, with
cause, by the Companyn, provided that such Founder is not thereafter employed
by the Companyn;
[NOTE: This agreement
contemplates founders shares vesting 25% upfront and 25% more on each
anniversary of this agreement with all founders’ shares fully vested on third
anniversary; however – founders, investors and company may want to consider a
different vesting schedule. In addition, this agreement allows for 100% vesting
in the following circumstances: death or permanent disability of founder,
termination of founder’s employment without cause and upon Founders’
resignation as a result of a Constructive Dismissal post Change of Control
event – these special conditions may or may not be applicable to your
situation.]
(a) Each of the Founders hereby agrees that due to the fact that the Common
Shares were issued to each of the Founders at a nominal face value, such Common
Shares shall be subject to the following options (each a “Repurchase Option”)
in favour of the Companyn, exercisable at any time within ninety (90) days
after the Effective Date of the applicable Triggering Event.
(b) Subject
to the further provisions of this section 2.1, in the event that a Triggering
Event occurs with respect to a Founder then the Companyn may exercise the
Repurchase Option with respect to:
(i)
[75%] of the Common Shares owned by
such Founder, if the Effective Date of the Triggering Event occurs on or before
the [first]
anniversary of the date of this Agreement;
(ii)
[50%] of the Common Shares owned by
such Founder, if the Effective Date of the Triggering Event occurs after the [first]
anniversary but on or before the [second] anniversary of the date of this
Agreement; or
(iii)
[25%] of the Common Shares owned by
such Founder, if the Effective Date of the Triggering Event occurs after the [second]
anniversary but on or before the [third] anniversary of the date of this Agreement.
(c) In the event that the employment of a Founder is terminated
by the Companyn without cause under common law or the Founder resigns following a Constructive Dismissal subsequent to a
Change in Control,
the Repurchase Option with respect to such Founder shall be deemed to have
expired on the day immediately prior to the Effective Date of such termination
or resignation and the Companyn shall have no further Repurchase Option with
respect to such Founder.
(d) In the event that the Triggering Event
relates to the death or Permanent Disability of a Founder, then the Repurchase
Option shall be deemed to have expired on the day immediately prior to the
Effective Date and the Companyn shall have no further Repurchase Option with
respect to such Founder.
(e) The Repurchase Option, if exercised by
the Companyn, shall be exercised by written notice signed by an officer of the Companyn
and delivered or mailed to the Founder.
Upon exercise of the Repurchase Option by the Companyn, such Founder
shall be entitled to receive from the Companyn the price per Common Share paid
by such Shareholder appropriately adjusted for any subsequent stock split,
dividend, combination or other recapitalization (the “Repurchase Price”),
provided that in the event of the termination of the employment of the Founder
without cause or the Founder resigns following Constructive Dismissal, the
Repurchase Price shall be the then-current fair market value of the Common
Shares.
(f) The Companyn may pay for Common Shares
that it has elected to repurchase hereunder by delivering to the Shareholder in
question within twenty (20) days of delivering notice of the Companyn’s
exercise of the Repurchase Option, a cheque in the amount of the aggregate
Repurchase Price for the number of Common Shares being repurchased hereunder,
and/or in the event that such Shareholder has any outstanding loan or
indebtedness to the Companyn, by forgiving all or that proportion of any such
loan or indebtedness which may be equal to the Repurchase Price for the Common
Shares repurchased from such Shareholder.
The Founders right to sell their shares shall be governed under the
terms of the Shareholders’ Agreement dated _____, 2011.
The provisions of Section 2.1 and 2.2 shall terminate upon the entering
into of any agreement involving any distribution of treasury common shares of
the Companyn or any securities convertible into treasury common shares of the Companyn
to the public pursuant to a prospectus or equivalent document registered or
filed with applicable regulatory authorities.
(a) Each
Founder hereby agrees to execute, contemporaneously with the execution of this
Agreement, an irrevocable power of attorney, coupled with an interest, in the
form attached hereto as Schedule A (each a “Power of Attorney”) appointing the
Remaining Founder or the Board Nominee, as the case may be, as attorneys with
respect to the matters set out therein.
The Powers of Attorney will be delivered to the Companyn by each Founder
and held in escrow by the Companyn in accordance with the terms of this
Agreement.
(b) Pursuant
to the Powers of Attorney, the Remaining Founder or, in the event the Remaining
Founder has suffered a Triggering Event, the Board Nominee, as the case may be,
shall be entitled to execute on behalf of the Founder any resolution or other
instrument in writing to be executed by the shareholders of the Companyn
including, without limitation, any amendment to and/or any restatement of the
Shareholder Agreements. However, the
Powers of Attorney shall not include the power to execute any instrument
amending this Agreement, terminating this Agreement in accordance with
sub-section 5.1(a) or terminating the Shareholder Agreements.
(a) Each
Founder hereby agrees to execute, contemporaneously with the execution of this
Agreement, an irrevocable proxy in the form attached hereto as Schedule B (each
a “Proxy”) in favour of the Remaining Founder or, in the event the Remaining
Founder has suffered a Triggering Event, the Board Nominee, as the case may be,
which Proxies will appoint the Remaining Founders or the Board Nominee, as the
case may be, to vote the Securities which are held by such Founder in the event
of a Triggering Event. The Proxies will be delivered to the Companyn by each
Founder and held in escrow by the Companyn in accordance with the terms of this
Agreement.
(b) Following
a Triggering Event and pursuant to the terms of this Agreement and the Proxies,
the Remaining Founder or, in the event the Remaining Founder has suffered a
Triggering Event, the Board Nominee, as the case may be, shall be entitled to
vote at any meeting of shareholders (a “Meeting”) of the Companyn, as the case
may be, in any manner whatsoever, as determined in their sole discretion. The applicable Proxy shall revoke any proxy
or proxies otherwise executed and delivered by or on behalf of the Founder or
any other registered holder of the Securities in respect of such Meeting.
(a) The
Companyn agrees to receive and hold in escrow the Powers of Attorney and the
Proxies of each of the Founders executed in connection with their respective
securities until such time as a Triggering Event occurs or until this Agreement
is terminated in accordance with Section 5.1 hereof (in respect of each such
Power of Attorney and Proxy, the “Escrow Period”).
(b) In
the event that this Agreement is terminated in accordance with Section 5.1
hereof, each Power of Attorney and Proxy held by the Companyn shall be
immediately delivered by the Companyn to the applicable Founder.
(c) During
the Escrow Period, all voting rights attached to the Securities shall at all
times be exercised by the holders of record thereof, subject to the terms of
the Shareholders Agreement.
(d) Upon
a Founder suffering a Triggering Event, the Escrow Period with respect to the
Powers of Attorney and Proxies executed by the Shareholder of such Related
Founder and the Related Founder will terminate and each such Power of Attorney
and Proxy shall be released by the Companyn and delivered to the Remaining
Founder. The Companyn hereby agrees to
release each such Power of Attorney and Proxy to the Remaining Founder on the
Effective Date and deliver same to the Remaining Founder forthwith.
(e) Upon
the occurrence of a Triggering Event in respect of the Remaining Founder, the Remaining Founder, or if
applicable, such person’s personal representative, will, on or after the
Effective Date, forthwith deliver each of the Powers of Attorney and Proxies
held by it to the Board Nominee. Upon
the occurrence of such a Triggering Event in respect of the Remaining Founder, the Companyn
will, on or after the Effective Date, forthwith deliver to the Board Nominee
the Powers of Attorney and Proxies of the Remaining Founder.
Notwithstanding
any provisions of the Shareholders Agreement or any amendment thereto and/or restatement thereof relating to permitted transfers of securities in
the capital of the Companyn, no Founder may transfer any Securities unless such
a transfer of the Securities is a permitted transfer (as such term is defined
in the Shareholders Agreement) and the transferee shall have first executed and delivered to each of the other parties hereto a
counterpart agreement to this Agreement, agreeing to be bound by the terms and
conditions hereof as though such permitted transferee had executed and
delivered a copy hereof with the other parties hereto along with delivery to
the Companyn of the applicable Powers of Attorney and Proxies. In the case of a
permitted transferee that is a companyn or an individual, such permitted
transferee shall execute an agreement which is substantially similar in form to
this Agreement, with such modifications as the context requires.
This Agreement shall
take effect on the date hereof and shall remain in full force and effect until
such time as either:
(a) this
Agreement is terminated by written agreement executed and delivered by each of
the parties hereto;
(b) the
dissolution or bankruptcy of the Companyn or the making by the Companyn of an
assignment in bankruptcy; or
(c) the entering into of any agreement
involving any distribution of treasury common shares of the Companyn or any
securities convertible into treasury common shares of the Companyn to the
public pursuant to a prospectus or equivalent document registered or filed with
applicable regulatory authorities.
Each Founder hereby
agree to sign such further documents, do and perform and cause to be done such
further and other acts and things as may be necessary or desirable in order to
give full effect to this Agreement.
The Companyn hereby
acknowledges the terms and conditions of this Agreement. The Companyn agrees to take all necessary
steps in accordance with applicable laws to cause the Companyn to comply with
this Agreement. Furthermore, the Companyn will cause such meetings to be held,
resolutions passed and by-laws enacted and will sign such further documents, do
and perform and cause to be done such further and other acts and things as may
be necessary or desirable in order to give full effect to this Agreement.
Subject to sub-section
3.1(b), this Agreement may be amended at any time by written instrument
executed and delivered by each of the parties hereto.
All
notices, requests, demands or other communications required or permitted to be
given by one party to another hereunder shall be given in writing by personal
delivery or by registered mail, postage prepaid, or by facsimile or other
electronic means of transmission, addressed to such other party or delivered to
such other party as follows:
Address
or
at such other address of which notice is given to all parties hereto in writing
from time to time and such notices, requests, demands or other communications
shall be deemed to have been received when delivered, or, if mailed, on the
fifth business day after the mailing thereof or, if sent by facsimile or other
electronic means of transmission, on the first business day after the
transmission thereof; provided that if any such notice, request, demand or
other communications shall have been mailed and if regular mail service shall
be interrupted by strikes or other irregularities on or before the fifth
business day after the mailing thereof, such notices, requests, demands or
other communications shall be deemed to have been received on the fifth
business day following the resumption of normal mail service. In this Agreement, “business day” means any
day in which Canadian chartered banks are open for business in Toronto,
Ontario.
Time shall be of the
essence of this Agreement and of every part hereof and no extension or
variation of this Agreement shall operate as a waiver of this provision.
Any dispute,
controversy, or claim arising out of or relating to this Agreement, or the
breach, termination, or invalidity thereof, will be settled by arbitration
pursuant to the laws of the Province of Ontario in the city of Toronto,
Province of Ontario, Canada, following the arbitration and conciliation
procedures set forth in the Arbitration
Act (Ontario) or such successor legislation in force on the date of the
submission of such dispute, controversy or claim for arbitration. The parties
agree that any such arbitral hearing shall close within six (6) months from the
date of the commencement of such arbitral proceedings and the arbitral award
will be made within thirty (30) days after the close of hearings and will be
final and binding upon the parties.
This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein. Each of the
parties hereto irrevocably agrees to submit to the exclusive jurisdiction of
the courts of the Province of Ontario for and in connection with any
proceedings relating to this Agreement.
This
Agreement and the terms hereof shall constitute the entire agreement between
the parties hereto with respect to all of the matters herein and its execution
has not been induced by, nor do any of the parties hereto rely upon or regard
as material, any representations or writings whatsoever not incorporated herein
and made a part hereof. Execution of
this Agreement terminates any other agreement or agreements between or among
any of the parties hereto pertaining to the voting rights of the Securities
held by any Shareholder or Related Founder.
The parties hereto intend that this Agreement will supercede and replace
any such previous agreement or agreements.
If
any section or portion of any section of this Agreement is determined to be
unenforceable or invalid for any reason whatsoever, that unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
portions of this Agreement and such unenforceable or invalid article, section
or portion thereof shall be deemed to be severed from the remainder of this
Agreement.
The necessary
grammatical changes required to make the provisions of this Agreement apply to companyns,
trusts, partnerships and individuals, males and females, shall in all instances
be assumed as though in each case fully expressed.
This
Agreement shall enure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and permitted assigns and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which taken together shall be deemed to
constitute one and the same instrument.
Counterparts may be executed either in original or faxed form and the
parties adopt any signatures received by a receiving fax machine as original
signatures of the parties; provided, however, that any party providing its
signature in such manner shall promptly forward to the other party an original
of the signed copy of this Agreement which was so faxed.
IN
WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the day and year first above written.
WHEREAS the undersigned (the “Founder”) has
entered into an agreement dated as of _______, 20__ (the “Restricted Rights
Agreement”) among the Founders and the Companyn. All capitalized terms used herein have the
meaning attributed to such terms in the Restricted Rights Agreement;
AND WHEREAS the Founder has delivered this
Power of Attorney to the Companyn to be released from escrow by the Companyn
pursuant to the terms of the Restricted Rights Agreement, to enable the
Remaining Founder or the Board Nominee, as the case may be, to execute on
behalf of the Founder any resolution or other instrument in writing to be
executed by the shareholders of the Companyn (except any amendment to the
Restricted Rights Agreement or this power of attorney) in respect of the
Securities held by such Founder.
NOW THEREFORE, in consideration of the premises
and other valuable consideration, the Founder does hereby irrevocably
constitute and appoint the Remaining Founder or the Board Nominee, as the case
may be, as the true and lawful attorneys for the Founder, and in the name,
place and stead of the Shareholder to execute on behalf of the Founder, any
resolution or other instrument in writing to be executed by the shareholders of
the Companyn (except any amendment to the Restricted Rights Agreement or this
power of attorney). The provisions of this Power of Attorney relating to the
Securities shall apply, mutatis mutandis,
to any shares or securities into which the Securities may be converted,
exchanged, changed, reclassified, redesignated, subdivided or consolidated, any
shares or securities which entitle the holder thereof to vote at any meeting of
shareholders of the Companyn which may be distributed on the Securities as a
stock dividend or otherwise, any shares or securities of the Companyn or of any
successor companyn which may be received on or in respect of the Securities on
a reorganization, amalgamation, consolidation or merger, statutory or
otherwise.
This
Power of Attorney is granted to the Remaining Founder or in the event each
other Founder has suffered a Triggering Event the Board Nominee, as the case may
be, and, being coupled with an interest, shall not be revocable by the Founder
for any reason prior to the termination of the Restricted Rights Agreement.
Execution of this Power of Attorney terminates any other power of attorney
given by the Shareholder with respect to the matters contemplated in the
Restricted Rights Agreement.
This
Power of Attorney shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the undersigned has executed this
Power of Attorney as of the _______ day of _____, 20__.
WHEREAS the undersigned (the “Founder”) has
entered into an agreement dated as of _________________ 20__ (the “Restricted
Rights Agreement”) among the Founders and the Companyn. All capitalized terms used herein have the
meaning attributed to such terms in the Restricted Rights Agreement;
AND WHEREAS the Founder has agreed to deliver
this Proxy to the Companyn to be held in escrow by the Companyn and to be
released from escrow by the Companyn pursuant to the terms of the Restricted
Rights Agreement, to enable the Remaining Founder or the Board Nominee, as the
case may be, may vote the Securities of such Founder.
NOW THEREFORE, in consideration of the premises
and other valuable consideration, the Founder, irrevocably appoints the Remaining Founder or the Board Nominee, as the case may be, as proxy for the undersigned to attend, act and vote for and
on behalf of the undersigned in respect of any matter properly before the shareholders
of the Companyn, including the power to vote at any meeting of shareholders of the Companyn, or any
adjournments thereof.
This Proxy is executed in favour of the Remaining
Founder or the Board Nominee, as the case may be, and shall not be revocable by
the Founder for any reason prior to the termination of the Restricted Rights
Agreement. Execution of this Proxy terminates any other proxy given by the
Founder with respect to the matters contemplated in the Restricted Rights
Agreement. The undersigned acknowledges
and agrees that this Proxy will be held by the Companyn in escrow to be
released upon a Triggering Event in respect of the undersignd at which time it
will thereby become effective upon such release and delivery to Remaining
Founder or the Board Nominee, as the case may be, in accordance with the terms
of the Restricted Rights Agreement.
The provisions of this Proxy relating to the
Securities shall apply, mutatis mutandis,
to any shares or securities into which the Securities may be converted,
exchanged, changed, reclassified, redesignated, subdivided or consolidated, any
shares or securities which entitle the holder thereof to vote at any meeting of
shareholders of the Companyn which may be distributed on the Securities as a
stock dividend or otherwise, any shares or securities of the Companyn or of any
successor companyn which may be received on or in respect of the Securities on
a reorganization, amalgamation, consolidation or merger, statutory or
otherwise.
The undersigned hereby agrees to sign such further documents, do and
perform and cause to be done such further and other acts and things as may be
necessary or desirable in order to give full effect to this Proxy.
This Proxy shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
This Proxy delivered to any meeting of shareholders
of the Companyn or any adjournments thereof shall revoke any proxy otherwise
executed and delivered by or on behalf of the Related Founder with respect to
such meeting or any adjournments thereof, regardless of the respective dates
thereof.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Submit your guest articles for our website click here we will publish it Subscribe our Email updates like other 21,000 Members, Free/Easy/Comfortableway
