EX-10.23 6 ex10-23.htm
PRIVATE AND CONFIDENTIAL
January 10, 2020
Keith J. McKenzie
Dear Mr. McKenzie
As you know, you do not currently have a written consultant agreement with Discovery Energy Corp. (“Discovery” or “Company”). The purpose of this letter is to provide the written terms and conditions under which your services are to be provided to Discovery. The effective date of this Agreement is March 1, 2019 (the “Effective Date”).
This Agreement shall be effective as of the Effective Date, and shall continue in full force and effect unless terminated in accordance with the “Termination” section below.
2. Duties and Responsibilities
As Chief Executive Officer, you shall perform such duties and assume such responsibilities inherent in and consonant with such position. You shall further perform such reasonable additional duties and responsibilities as requested as Discovery may require and assign to you. You shall report to the Board of Directors (the “Board”).
3. Consulting Fee
You will be provided with an annual base consulting fee in the amount of US$150,000.00 (the “Fee”). As you will not be a Company employee you are solely responsible for the payment of all deposits, fees, assessments and taxes associated with this payment. Your Fee shall be subject to review and possible increase (but not decrease) at the sole discretion of the Board.
4. Expense Reimbursement
Discovery shall reimburse you for any reasonable and customary out-of-pocket expenses incurred in the course of providing services under this Agreement. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with these reimbursements.
You shall be eligible for a discretionary bonus in cash or in equity (the “Bonus”). Unless you and Discovery expressly agree otherwise in writing, entitlement to a bonus, if any, shall be declared by the Board in its sole discretion. Alternatively, you and Discovery may agree in writing upon a criterion for your earning a stipulated Bonus upon the achievement of stipulated goals. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with each Bonus.
You shall be entitled, if not restricted by the terms of the plans, to participate in all benefits plans provided to Discovery employees in accordance with their terms and as may be amended from time to time by Discovery. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with these benefits.
7. Equity Incentive Plan
You will be allowed, if not restricted by the terms of the plan, to participate in any equity incentive plan that Discovery has established or in the future establishes (a “Plan”) in which you are eligible to participate in accordance with the terms of the Plan as they may be amended from time to time by Discovery; provided, however, you shall be entitled to participate in a Plan only at the time you meet the eligibility criteria established for the Plan. Your eligibility shall be determined separately for each Plan, and all determinations shall be made by the parties charged with responsibility for such determinations in the Plan (the “Administrator”). Unless otherwise expressly agreed upon in writing, your awards under a Plan, if any, shall be declared by the Administrator in its sole discretion. Alternatively, you and such parties may agree in writing upon a criterion for your earning a stipulated award upon the achievement of stipulated goals. Discovery is under no obligation to establish any Plan, and this Section 7 shall not be interpreted to require the establishment of any Plan. The terms of any Plan existing, established, or provided hereafter do not constitute a part of this Agreement and are not incorporated herein for any purpose. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with your participation in the Plan.
8. Confidential Information
The term “Confidential Information” means information and data not known generally outside Discovery concerning Discovery’s business and technical information, including, without limitation, information relating to Inventions, as defined below, customer lists, pricing policies, lists of suppliers, patents, trademarks, payment terms, terms of sale including special customer discounts or concessions, customer sales volumes, marketing knowledge and/or information, production knowledge and/or information and knowledge or information regarding Discovery’s competitors.
It is understood that Confidential Information does not include:
(a) information which is or becomes generally available to the public or within the industry through no act or omission on your part; or
(b) information which is required to be disclosed pursuant to any statute, regulation, order, subpoena or document discovery request, provided that you shall, as soon as practicable, give Discovery prior written notice of such required disclosure in order to afford Discovery an opportunity to seek a protective order (it being agreed that if a protective order is not sought or obtained in such circumstances, you may disclose such information without liability).
You agree that all Confidential Information is the property of Discovery and shall remain so and that the disclosure of any Confidential Information would be highly detrimental to the best interests of Discovery and could severely damage the economic interests of Discovery. Except as otherwise herein provided, you agree that during the term of this Agreement and thereafter, you will hold in strictest confidence, and will take all necessary precautions against unauthorized disclosure of, and will not use or disclose to any person, firm or corporation, without the written authorization of Discovery, any of the Confidential Information, except as such use or disclosure may be required in connection with your work for Discovery hereunder or by applicable law. You understand that this Agreement applies to computerized and electronic, as well as written information.
Upon and following the termination of this Agreement, you agree that no Confidential Information that is in written, computerized, machine-readable, model, sample, or other form capable of physical delivery will be taken without the prior written consent of Discovery. You also agree that, upon the termination of this Agreement, you shall promptly return to Discovery all such materials, along with all other property of Discovery, in your possession, custody or control and you shall make no further use of same. Should you discover any such items after the termination of this Agreement, you agree to return them promptly to Discovery without retaining copies of any kind.
The term “Inventions” means any intellectual property of Discovery including without limitation, all technological innovations, discoveries, inventions, designs, formulae, know- how, tests, performance data, processes, production methods, software, improvements to all such property and the like, regardless of whether or not patentable, copyrightable, or subject to trademark and further includes any recorded material, notes or records defining, describing or illustrating any such intellectual property.
With respect to any and all Inventions which you, either alone or together with others, make, conceive, originate, devise, discover, develop or produce, in whole or in part, during the period of the Agreement with Discovery hereunder or during, in whole or in part, the twelve (12) months period after the termination of the Agreement hereunder, and which such Inventions arise or relate, directly or indirectly, to your performance of your obligations under this Agreement delivered hereunder, you agree:
(a) to keep notes and written records of any such work, which records shall be provided to Discovery and made available at all times for the purposes of evaluation and use in obtaining patents, trademarks or copyrights or as a protective procedure;
(b) to disclose fully and promptly to Discovery any and all such Inventions, regardless of whether or not made, conceived, originated, devised, discovered, developed or produced by you either during your working hours or in connection with the work assigned to you by Discovery; that all models, instructions, drawings, blueprints, manuals, letters, notes, notebooks, books, memoranda, reports, software code listings, or other writings made by you or which may come into your possession during the Term of this Agreement and which relate in any way to or embody any Confidential Information or relate to your Agreement hereunder or any activity or business of Discovery, shall be the exclusive property of Discovery and shall be kept at such location as Discovery shall designate, except when required elsewhere in connection with any activity of Discovery and shall be available to representatives of Discovery at all times for the purpose of evaluation and use in obtaining patents, trademarks or copyrights or other protective procedures;
(c) that Discovery is and shall be the sole owner of all intellectual and industrial property rights in any and all such Inventions and that you hereby irrevocably assign and agree to assign all right, title and interest in such Inventions to Discovery or its nominee without any additional compensation to you and that you will sign all applications for, and assignments of, patents, trademarks, copyrights or other interests therein required by Discovery and that you will sign all other writings and perform all other acts necessary or convenient to carry out the terms of this Agreement;
(d) that these obligations under this Article shall continue beyond the termination of this Agreement with respect to Inventions conceived or made by you during the period of and in connection with your service with Discovery (or any of its affiliates) and for the twelve (12) months period after the Agreement ceases, and shall be binding upon your assigns, executors, administrators and other legal representatives; and
(e) to irrevocably waive any and all of your moral rights in any such Inventions.
You hereby covenant and agree that during the term of this Agreement and for a period of six (6) months after the cessation of this Agreement, you shall not, for whatever reason, individually or in partnership or jointly or in conjunction with any person, firm, association, syndicate, company, corporation, joint venture, partnership or entity, as principal, agent, employee, shareholder, director, officer, owner, investor, partner, or any other manner whatsoever, directly or indirectly, solicit or induce or attempt to solicit or induce any person employed by or under contract with Discovery at the date of the cessation of this Agreement to terminate his, her or its employment or contractual relationship with Discovery.
This Agreement is terminable:
(a) by Discovery immediately at any time for “Good Cause”. If your services are terminated for Good Cause, you shall only be entitled to receive your earned but unpaid Fee any outstanding expense reimbursements and vested benefits. Good Cause means the occurrence of any of the following events: (i) any act of fraud, misappropriation or embezzlement by you regarding any aspect of Discovery’s business; (ii) the intentional and material breach by you of any Agreement provision; (iii) the conviction of you or the entry of a nolo contendere or equivalent plea by you in a court of competent jurisdiction in connection with a felony or a crime involving moral turpitude; (iv) gross malfeasance by you in the conduct of your duties; (v) the illegal use of drugs by you during the term of the Agreement that, in the determination of the Board, substantially interferes with the performance of your duties under the Agreement; (vi) gross neglect by you in carrying out your duties; or (vii) the breach by you of your fiduciary duties to Discovery; provided, however, that Discovery will not have “Good Cause” with respect to events (ii), (iv) and (vi) unless you have received at least thirty (30) days advanced written notice and the opportunity to cure such event and you have failed to cure the event within this thirty (30) days period;
(b) immediately upon your death. If your services are terminated due to your death, your estate shall be entitled to any earned but unpaid Fee as well as any accrued or earned but unpaid Bonus;
(c) on a without Good Cause basis by Discovery upon providing you with a lump sum payment comprised of (i) all Fee and Bonus earned or accrued to the date of termination; (ii) twelve (12) months of Fee; and (iii) an amount equal to the highest declared Bonus in the three fiscal years immediately preceding the date of termination. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with this without Good Cause payment.
(d) by you upon providing a minimum of sixty (60) days advance written notice, which notice Discovery may, in its discretion, partially or fully waive; or
(e) by you within six (6) months of the occurrence of a “Good Reason” (defined below), in which case you will receive the Termination Fee (defined below) within thirty (30) days of the date upon which you gave notice of termination for Good Reason.
“Termination Fee” shall mean a lump sum payment representing twenty-four (24) months of the then-current Fee plus two (2) times the highest declared Bonus in the three fiscal years ending immediately preceding the year in which notice of termination of this Agreement is given by either you or Discovery, as applicable. You are solely responsible for the payment of all deposits, fees, assessments and taxes associated with this termination fee.
“Good Reason” means the occurrence of any of the followings events: (i) a material adverse change in any of your duties, powers, rights, discretion, prestige, or remuneration; (ii) a diminution of your title; or (iii) a material breach of this Agreement by Discovery; provided, however, that you will not have “Good Reason” with respect to events (i), (ii) and (iii) unless Discovery has received at least thirty (30) days advanced written notice and the opportunity to cure such event and Discovery has failed to cure the event within this thirty (30) days period.
12. Change of Control
“Change of Control” means any of the following events: (i) any transaction or business combination or series of transactions or series of business combinations including any share sale, merger, or amalgamation pursuant to which any one or more entities (excluding entities who are now shareholders of Discovery on the date of this Agreement (hereinafter referred to as an “Acquiror”) acquires the direct or indirect beneficial ownership of securities of Discovery representing more than 50% of the aggregate votes of Discovery’s then-issued and outstanding securities; and/or (ii) the sale of all, or substantially all, of Discovery’s assets, properties and undertakings to any Acquiror; and/or (iii) the incumbent Board members cease to represent the majority of the Board members as a result of an actual or threatened election contest with respect to the election or removal of the incumbent members or other actual or threatened solicitation of proxies or consents by or on behalf of persons other than the incumbent Board members.
(a) If a Change of Control occurs, you will have the right, within sixty (60) days of the date of the Change of Control, to provide Discovery with written notice (the date such notice is given by you is referred to as the “Notice Date”), to terminate this Agreement. Upon receipt of such written notice, Discovery shall provide you with the Termination Fee. The Termination Fee is due and payable within thirty (30) days of the Notice Date.
(b) If Discovery terminates this Agreement for any reason other than Good Cause within six (6) months of a Change of Control, Discovery shall provide you with the Termination Fee within thirty (30) days of the date upon which it gives you notice of termination.
In the event that this Agreement is terminated in accordance with Subsection 12(a) or (b) all stock options and restricted stock awards held by you as of the date upon which you give or receive notice of termination shall become immediately 100% vested and exercisable in accordance with the terms of the related Plan as may be modified by this Agreement.
Any payment to you pursuant to this Change of Control provision is not intended and will not be in the nature of a penalty, will be considered by the parties to be liquidated damages and, notwithstanding anything to the contrary contained in this Agreement you shall not be obligated to mitigate such liquidated damages.
13. Return of Property
Upon the termination of this Agreement, you will at once deliver to Discovery all documents, effects, money or other property belonging to Discovery (and any copies you may have whether electronic or otherwise) which are in your possession, charge, control or custody.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with respect to your service with Discovery. Other than any Plan and any equity award agreement between you and Discovery, any and all previous agreements, written or oral, expressed or implied between the parties hereto or on their behalf relating to the subject matter covered by this Agreement are hereby superseded and replaced by this Agreement, and each of the parties hereto hereby release and forever discharges the other of and from all manner of actions, causes of action, claims and demands whatsoever under or in respect of any such agreement.
This Agreement may be altered, modified or amended only by a prior written instrument, duly executed by both parties hereto and stating that the alteration, modification or amendment is an addition to and subject to this Agreement.
Neither this Agreement nor any rights hereunder may be assigned or obligations delegated by any party hereto without the prior written consent of the other party, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which Discovery is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of Discovery, provided that the assignee or transferee is the successor to all or substantially all of the assets of Discovery and such assignee or transferee assumes the liabilities, obligations and duties of Discovery, as contained in this Agreement, either contractually or as a matter of law. Discovery further agrees that, in the event of a sale of assets or liquidation as described in the preceding sentence, it shall take whatever actions it legally may in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of Discovery hereunder. This Agreement shall inure to the benefit of and is binding upon the successors and assigns of Discovery. As used in this Agreement, “Discovery” shall mean Discovery as previously defined and any successor thereto by operation of law or otherwise.
17. Withholdings; Right of Offset
Discovery shall not be responsible for withholding, deposits, fees, assessments and/or taxes with respect to your Fees and/or any Bonus under this Agreement.
The right to receive payments under this Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance by you, or by your dependents or beneficiaries, or to any other person or entity who is or may become entitled to receive any such payment hereunder. The right to receive payments hereunder shall not be subject to or liable for the debts, contracts, liabilities, engagements or torts of any person or entity who is or may become entitled to receive such payments, nor may the same be subject to attachment or seizure by any creditor of such person or entity under any circumstances, and any such attempted attachment or seizure shall be void and of no force and effect.
Each notice or other communication required or permitted under this Agreement shall be in writing and transmitted, delivered, or sent by personal delivery or, prepaid courier or messenger service (whether overnight or same-day), addressed (in any case) to the other party at the address for that party set forth below or under that party’s signature on this Agreement, or at such other address as the recipient has designated by notice to the other party.
|To the Company: ||At One Riverway Drive, Suite 1700, Houston, TX 77056.|
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|To You: ||As set forth below your signature on the signature page of this Agreement.|
Each notice or other communication so transmitted, delivered, or sent (a) in person, by courier or messenger service, or by certified United States mail (return receipt requested) shall be deemed given, received, and effective on the date delivered to or refused by the intended recipient (with the return receipt, or the equivalent record of the courier or messenger, being deemed conclusive evidence of delivery or refusal), or (b) by telecopy or facsimile shall be deemed given, received, and effective on the date of actual receipt (with the confirmation of transmission being deemed conclusive evidence of receipt, except where the intended recipient has promptly notified the other party that the transmission is illegible). Nevertheless, if the date of delivery or transmission is not a business day, or if the delivery or transmission is after 4:00 p.m. (local time at the recipient) on a business day, the notice or other communication shall be deemed given, received, and effective on the next business day.
It is the desire of the parties hereto that this Agreement be enforced to the maximum extent permitted by law, and should any provision contained herein be held unenforceable by a court of competent jurisdiction, the parties hereby agree and consent that such provision shall be reformed to create a valid and enforceable provision to the maximum extent permitted by law; provided, however, if such provision cannot be reformed, it shall be deemed ineffective and deleted here from without affecting any other provision of this Agreement. This Agreement should be construed by limiting and reducing it only to the minimum extent necessary to be enforceable under then applicable law.
21. No Third Party Beneficiaries
This Agreement shall be binding upon and inure to the benefit of the parties hereto, and to their respective successors and permitted assigns hereunder, but otherwise this Agreement shall not be for the benefit of any third parties.
22. Waiver of Breach
No waiver by either party of a breach of any provision of this Agreement by the other party, or of compliance with any condition or provision of this Agreement to be performed by the other party, will operate or be construed as a waiver of any subsequent breach by the other party or any similar or dissimilar provision or condition at the same or any subsequent time. The failure of either party to take any action by reason of any breach will not deprive such party of the right to take action at any time while such breach continues.
23. Survival of Certain Provisions
Wherever appropriate to the intention of the parties, the respective rights and obligations of the parties hereunder shall survive any termination or expiration of this Agreement or the termination of your services.
24. Interpretive Matters
In the interpretation of the Agreement, except where the context otherwise requires:
| ||(a) ||Headings. The Agreement headings are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.|
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| ||(b) ||The terms “including” and “include” do not denote or imply any limitation.|
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| ||(c) ||The conjunction “or” has the inclusive meaning “and/or”.|
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| ||(d) ||Plurals and Genders. The singular includes the plural, and vice versa, and each gender includes each of the others.|
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| ||(e) ||Months. The term “month” refers to a calendar month.|
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| ||(f) ||References to Statutes. Reference to any statute, rule, or regulation includes any amendment thereto or any statute, rule, or regulation enacted or promulgated in replacement thereof.|
| ||(g) ||The words “herein”, “hereof’, “herefrom”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement and not to any particular provision;|
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| ||(h) ||All amounts referenced herein are in U.S. dollars.|
25. Governing Law; Jurisdiction
All matters or issues relating to the interpretation, construction, validity, and enforcement of this Agreement shall be governed by the laws of the State of Texas, without giving effect to any choice-of-law principle that would cause the application of the laws of any jurisdiction other than Texas Jurisdiction and venue of any action or proceeding relating to this Agreement or any dispute shall be exclusively in the federal and state courts of competent jurisdiction in the Houston, Texas metropolitan area. The parties hereby consent to personal jurisdiction of such courts to adjudicate any dispute relating to or arising out of this Agreement.
This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by one party hereto, but together signed by both parties.
27. Independent Legal Advice
You hereby acknowledge that you have read and understand this Agreement. You also hereby acknowledge that you have had ample opportunity to obtain independent legal advice with respect to this Agreement if you should so desire.
[SIGNATURES TO FOLLOW]
IN WITNESS WHEREOF the Company has caused this Agreement to be executed by its duly authorized officer on its behalf, and the individual named below has executed this Agreement on his behalf, to be effective as of the Effective Date.
|DISCOVERY ENERGY, INC. || |
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|By: || || |
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|Signature: || || |
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|Name: || || |
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|Date: || |
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|KEITH J. MCKENZIE:|
|Signature: || || ||Signature: |
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|Name: || || ||Name: || |
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|Date: || || ||Date: || |
| || ||Address for Notices:|
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#101 – 1040 West 8th Ave
Vancouver, BC Canada