Still entitled to exercise share purchase option

|Canadian Employment Law Today

When Richard P. Sambrook was approached in early 1992 about an employment opportunity with Altamira, he put on hold his plan to start a new job in Vancouver. Mr. Sambrook was put in touch with Altamira’s CEO, Mr. Meade, through a bank executive. Although he had already accepted a position as chief executive officer with a government agency based in Vancouver, he agreed to meet with Mr. Meade in April 1992. During those meetings, Mr. Meade indicated that he was looking for a senior manager with CEO potential. As a result of these discussions, Mr. Sambrook was offered a position with Altamira as a senior manager.

To entice Mr. Sambrook to accept Altamira’s offer, he was given the option to purchase $500,000 to $1 million common share equity in Altamira. Mr. Meade also informed him that interest-free loans were available to senior managers, with terms of repayment including 25 per cent of any bonus received and 50 per cent of dividends paid. A letter of agreement was drawn up and signed by Mr. Sambrook. The letter laid out the terms of the option to purchase, including the price, which was to be at a favourable discount to the current market value of shares. The option to purchase was to occur within six months of the commencement of his employment.

On June 15, 1992, Mr. Sambrook began his employment with Altamira. He was introduced to the other senior managers for the first time. However, the other senior managers did not respond favourably when Mr. Meade described Mr. Sambrook to them as having the potential to become the next CEO. That day Mr. Sambrook was handed a memo which valuated Altamira shares at $42.68 per share. It was agreed that Mr. Sambrook’s share price would be $21 per share and that he would get $1 million in shares. Mr. Meade reiterated that it would take him some time to get all the shares together.