EXHIBIT 10.3
June 11, 0000
Xxxxxx Xxxxxxxx
XX # 0
Xxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Dear Graeme:
Re: Consulting Agreement
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The letter will confirm the agreement between you (the "Consultant") and
Imax Corporation (the "Corporation") relating to your services as consultant and
filmmaker to the Corporation.
1. Consulting Services The Corporation shall retain the Consultant to
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render the following services as consultant and filmmaker to the Corporation,
under the guidance and direction of the Corporation's Chief Executive
Officer(s): (a) producing film projects for the Corporation; (b) overseeing the
production and post-production activities on film projects developed by the
Consultant; (c) meeting with the Corporation's employees and/or with third
parties to discuss IMAX production and/or direction techniques; (d) providing
general business advice and counsel to the Corporation; (e) making appropriate
introductions to boards, institutions and individuals necessary or useful in the
furtherance of the Corporation's businesses; and (f) such other consultative and
independent producer services as may from time to time be agreed upon between
the parties.
2. Previous Film Projects During the term of a Consulting Agreement between
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the Consultant and the Corporation dated December 31, 1993 (the "1993
Agreement"), the Consultant produced or co-produced two "Designated Pictures":
"Destiny in Space" and "Into the Deep" (The Last Wilderness) as well as the
"Subsequent Pictures": "Cosmic City", "L-5 - First City in Space", and "Mission
to Mir" (released in May 1997).
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3. Performance The Consultant shall render performance of the services
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hereunder to the best of his ability and in a competent and professional manner.
The Consultant shall devote one half of his time, attention and ability to the
businesses of the Corporation, and in particular all services of the Consultant
relating to film-making shall be exclusively rendered to the Corporation during
the term of this Agreement; provided that the parties contemplate that they may
in good faith agree in the future that the Consultant will spend either more or
less than 50% of his time on the businesses of the Corporation, in which event
the fees payable to the Consultant under this Agreement shall be renegotiated in
good faith, but in any event the Consultant's services relating to film-making
shall continue to be rendered exclusively to the Corporation.
4. Term The provision of services by the Consultant to the Corporation
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hereunder shall commence on the date hereof and shall continue until 1 year from
such date; provided that the term of this Agreement shall be renewable by the
parties by mutual written consent. Upon completion of this contract, the terms
of Paragraph 6 "Incentive Compensation", shall survive.
5. Fee for Services The Corporation shall pay to the Consultant for all
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services provided by the Consultant under this Agreement a fee at the rate of
Cdn$137,500 per year. The Consultant specifically acknowledges that the
Corporation shall be entitled to receive or retain all amounts payable pursuant
to the production budgets for the Designated Pictures (as defined in Paragraph 2
above), or the Subsequent Pictures (as defined in Paragraph 2 above), or any
future film projects that are set up during the term of this Agreement, in
respect of the services or expenses of the Consultant, as well as an overhead
and profit allowance.
6. Incentive Compensation In addition to the basic fee set out in
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Paragraph 5, the Corporation shall have an ongoing obligation to pay to the
Consultant 7-1/2% of the "Sponsor Overages" of the Subsequent Pictures (as
defined in Paragraph 2 above) and 12- 1/2% of the "Imax Distribution Profits" of
the Designated Pictures and the Subsequent Pictures. In addition, the
Corporation shall pay to the Consultant 7 1/2% of the "Sponsor Overages" and 12
1/2% of the "Imax Distribution Profits" of any future film projects developed
and produced by the Consultant pursuant to this Agreement. "Sponsor Overages"
means the amount, if any, by which contributions by third party sponsors to a
particular film project exceed the production costs of the film project
(including overhead and interest as described in (iv) below); and "Imax
Distribution Profits" means all revenue received by the Corporation, other than
Sponsor Overages (and, with respect to the Designated Pictures and the
Subsequent Pictures, excluding merchandising receipts), derived from the
distribution and exploitation of the respective film project, after deduction
and repayment of (i) all distribution, promotion and marketing fees and
expenses, including but not limited to a 15% distribution fee to the
Corporation; (ii) all taxes deducted at source; (iii) all residual and royalty
payments required pursuant to any collective agreements or otherwise; (iv) the
audited costs of production of the film project plus an overhead allowance of
10%, together with interest on the amount of the foregoing covered by the
Corporation at the greater of (1) the prime commercial lending rate set from
time to time by the Corporation's principal bankers for Canadian dollar loans in
Canada, or (2) the actual borrowing rate payable by the Corporation for covering
such amount;
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and (v) all shares of revenue payable to third parties advancing funds or
deferring fees or providing services in connection with the respective film
project; provided that, notwithstanding the foregoing, the Consultant's share of
Imax Distribution Profits from (A) any one of the Designated Pictures and the
Subsequent Pictures will first offset (a) losses, if any, from any other of the
Designated Pictures or the Subsequent Pictures where Imax Distribution Profits
would otherwise be payable, and (b) amounts, if any, that film funding payments
have not been sufficient for the Corporation to recover payments made by it
pursuant to Xxxxxxxxxx 0, 0, 0 xxx Xxxxxxxx A of the 1993 Agreement; and (B) any
one of the future film projects developed pursuant to this Agreement will first
offset (a) losses, if any, from any other of such future films where Imax
Distribution Profits would otherwise be payable, and (b) amounts, if any, that
film funding payments have not been sufficient for the Corporation to recover
payments made by it pursuant to Paragraphs 5 and 7 (and, to the extent any such
future films are produced in conjunction with the Corporation's subsidiary, Imax
Space Ltd., a reasonable allocation of the general expenses and overhead of Imax
Space Ltd. attributed to such films, as determined after consultation with the
Consultant) provided further that in the case of any particular future film
project which is produced with the primary intention of generating profits in
the projection division of the Corporation rather than the film-making division,
the parties agree to discuss in good faith the extent to which losses from such
film project will be subject to the foregoing proviso. The Corporation shall
provide quarterly reports to the Consultant commencing with the quarter ended
June 30, 1997 and make payments when due. The Consultant shall have the right to
a reasonable audit annually.
7. General Expenses and Overhead The Corporation shall reimburse the
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Consultant for all reasonable expenses actually and properly incurred by the
Consultant (including continuing one half the current auto allowance) in the
performance of the services hereunder, to a maximum amount mutually agreed upon
by the Corporation and the Consultant in advance of each year, provided that all
such expenses shall be paid in accordance with the normal practices of the
Corporation in force from time to time. In addition, the Corporation agrees to
reimburse the Consultant for up to Cdn$3,750.00 annually in direct out-of-pocket
expenses actually incurred by the Consultant for the Consultant's personal
business and tax planning advice. The Consultant's principal office shall be at
his home. In addition, the Corporation shall provide the Consultant with a
private office in Toronto or at its Sheridan Park offices in Mississauga. The
Consultant shall be entitled to at least business class air travel, subject to
availability.
8. Development Expenses With respect to new film projects developed for
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the Corporation by the Consultant, the Consultant agrees to seek approval for
the development of each such project from the Corporation's Chief Executive
Officer(s). The Corporation shall reimburse the Consultant for reasonable,
direct, out-of-pocket expenses actually expended by the Consultant for the
development of such approved film projects under this Agreement, provided that
such expenses receive the prior approval of the Corporation. Reimbursement shall
be made either (a) to the Consultant monthly following receipt by the
Corporation of proper invoices and vouchers together with reasonably detailed
report setting out the progress of the various film projects and the application
of expenses, or (b) directly to the third parties respectively entitled to
payment, upon approval by the Consultant. There are no projects currently in
development for which the Consultant is responsible.
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9. Benefits The Corporation shall use all reasonable efforts to ensure
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that the Consultant shall be entitled to participate in all of the Corporation's
insured benefit plans generally available to its employees from time to time, in
accordance with the terms thereof. The Consultant acknowledges receiving a
written summary of the terms of such benefit plans. In addition, the
Corporation shall use all reasonable efforts to ensure that the Consultant shall
be entitled to participate in the Corporation's existing retirement benefits, as
set out in Schedule A, upon ceasing to be a consultant.
10. Vacation During the period that the Consultant is rendering services
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under this Agreement, the Corporation acknowledges that the Consultant shall be
entitled to 5 weeks vacation per annum, on a one-half time basis. Such vacation
shall be taken at a time or times acceptable to the Corporation having regard to
its operations.
11. Funding Film Projects All financing arrangements for film projects are
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expressly subject to the Corporation's approval. Nothing in this Agreement
shall obligate the Corporation to produce, raise production financing for, or
otherwise use or exploit any film project developed or otherwise contributed to
by the Consultant under this Agreement.
12. Termination Rights If:
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(a) the Corporation is sold or merged, or if control of the Corporation
changes, or
(b) the Corporation has approved a particular film project or course of
action with respect to a film project, and the Consultant and third parties
with whom the Consultant has interacted on behalf of the Corporation have
relied upon such approval or course of action, but the Corporation
subsequently rescinds such approval or materially changes its course of action
with respect to such project,
the Consultant shall have the right within 30 days following the occurrence of
either such event to terminate the term of this Agreement by 90 days written
notice to the Corporation, subject to his ongoing obligations to deliver, in a
professional and workmanlike fashion, projects then currently underway other
than the disputed project, so long as the Corporation continues to duly provide
production funding for such projects. Upon such termination, all obligations of
the parties, except those set out in Paragraph 6 and Paragraphs 13 to 17
inclusive, shall cease; provided that so long as the Consultant is duly
providing services with respect to projects then currently underway other than
the disputed project, the Consultant shall be entitled to compensation for such
services to be negotiated in good faith by the parties as a pro-rated percentage
of the basic fee set out in Paragraph 5.
13. Indemnity The Consultant shall indemnify and save the Corporation
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harmless from and against all claims, actions, losses, expenses, costs or
damages of every nature and kind whatsoever which the Corporation or its
officers, employees or agents may suffer as a result of the breach by the
Consultant of the provisions of Paragraph 16 of this Agreement. As and from the
date of commencement of the term of the Agreement, except as otherwise
specifically provided in this Agreement, the Consultant waives all rights to
future
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compensation from the Corporation and its subsidiaries and associate companies,
and releases and forever discharges the Corporation from any and all liability
in connection therewith.
14. Non-disclosure The Consultant undertakes that the Consultant shall not
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(either during the term of this Agreement or at any time thereafter) use or
disclose to any third party any information relating to the private or
confidential affairs of the Corporation or relating to any secrets of the
Corporation, other than for the Corporation's purposes.
15. Grant of Rights The Consultant hereby: (a) grants to the Corporation all
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copyrights, patent rights and other rights in all work furnished or created by
the Consultant pursuant to this Agreement; (b) agrees to sign all documents
which may be required to confirm the Corporation's absolute ownership of such
work; (c) waives the moral rights associated with such work within the meaning
of the Canadian Copyright Act; and (d) grants to the Corporation the rights to
and to license others to use the name, likeness, biography and other
identifications of the Consultant in connection with any and all uses and
promotions of such work and derivatives thereof. Without limiting the
generality of the foregoing, all rights of whatsoever nature and kind (now or
hereafter known) in the Designated Pictures, the Subsequent Pictures, and any
and all other film projects developed or contributed to by the Consultant
pursuant to this Agreement shall be, from the inception of the creation thereof,
the exclusive property of the Corporation, and for the purposes of the United
States Copyright Act same shall be deemed to constitute "works-made-for-hire";
provided that in the event that for whatever reason the Consultant retains any
rights in any such film projects, the Consultant hereby assigns same exclusively
to the Corporation and free, clear and unencumbered.
16. Not Employee The Consultant will receive payments under this Agreement
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on the basis of a consultant on payroll, but the Consultant warrants and
represents to the Corporation and agrees that he is not an employee of the
Corporation.
17. Non-Competition and Confidentiality The Consultant shall not, without
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the prior written consent of the Corporation, within North America at any time
for a period of 18 months following the date of termination of this Agreement,
for whatever reason and with or without cause, either directly or indirectly
carry on or be engaged in the business of (i) creating, distributing or
exhibiting large-screen large format audio-visual and related sound systems, or
(ii) directing, producing or distributing large format films, unless the
Corporationhas been provided with the opportunity to participate in such project
and declined, and such films are not being produced for or on behalf of direct
competitors of the Corporation in the large format theatre business ("direct
competitors"). Nothing herein shall be construed as preventing the Consultant
from producing or directing large format films where the Corporation has
declined to participate and the film is not being produced for or on behalf of a
direct competitor, or from producing or directing 35mm format films, following
the end of the term of this Agreement.
The Consultant shall not, without the prior written consent of the
Corporation, directly or indirectly, disclose or use any secret or confidential
information that he may learn or has learned by reason of his association with
the Corporation or any of its subsidiaries or affiliates.
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18. Severability If any provision of this Agreement is determined to be
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invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provisions or part thereof and the
remaining part of such provision and all other provisions hereof shall continue
in full force and effect.
19. General This Agreement shall enure to the benefit of and be binding
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upon the heirs, executors, administrators and legal personal representatives of
the Consultant and the successors and assigns of the Corporation, respectively.
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof and cancels and supersedes any prior understandings
and agreement between the parties hereto with respect thereto, including the
1993 Agreement (which is agreed to have been extended from its original term to
and until the date of this Agreement), except that this Agreement does not
cancel Paragraph 6A, in the 1993 Agreement: "Incentive Compensation" with
respect to the Designated Pictures and the Subsequent Pictures which are
specifically carried forward in Paragraph 6 hereof. There are no
representations, warranties, forms, conditions, undertakings or collateral
agreements, express implied or statutory between the parties other than as
expressly set forth in this Agreement. No amendment to this Agreement shall be
valid or binding unless set forth in writing and duly executed by both of the
parties hereto. No waiver of any breach of any term or provision of this
Agreement shall be effective or binding unless made in writing and signed by the
party purporting to give the same and, unless otherwise provided in the written
waiver, shall be limited to the specific breach waived.
20. Governing Law This Agreement shall be governed by and construed in
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accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
If the foregoing correctly sets forth your understanding of the
agreement, kindly so confirm by signing in the appropriate space below, so as to
make this letter a valid, binding and enforceable agreement between us.
Yours sincerely,
Imax Corporation
Per: /s/ Xxxxxxx X. Xxxxxxxx
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Agreed and Accepted:
/s/ I. Xxxxxx Xxxxxxxx Date: 6/18/97
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I. Xxxxxx Xxxxxxxx
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SCHEDULE A
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RETIREMENT PLAN II
ELIGIBILITY
. Employees age 60 years or older with 12 years continuous service whose final
position was that of Founder, Principal, CEO, Vice President, or member of
the Management Group (or comparable position), are eligible for this plan.
. All employees who were members of the Management Group on September 1, 1993,
will remain eligible for this plan when they retire, regardless of a change
in their position or role.
LIFE INSURANCE
. AMOUNT - $8,000
DENTAL
. Retirement dental benefits are the same as dental benefits for non-retired
employees.
EXTENDED HEALTH
. Lifetime coverage is provided for eligible retirees and their dependents
subject to an annual maximum of $10,000 per person.
. Travel Assistance benefits are not included.
. The vision and hearing care and professional services are the same as for
non-retired employees subject to the $10K annual maximum.
LONG TERM DISABILITY
. Long term disability benefits are not available to retired employees.
ACCIDENTAL DEATH AND DISMEMBERMENT
. Accidental Death and Dismemberment benefits are not available to retired
employees.
