IMAX CORPORATION
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement dated and effective as of May 9, 2001 (the
"Agreement"), is made between
IMAX CORPORATION
a corporation organized
under the laws of Ontario
(hereinafter referred to as the "Company". IMAX Corporation, together with all
its subsidiaries is hereinafter referred to as "IMAX")
OF THE FIRST PART
And
XXXXXXX X. XXXXX
of the Town of Princeton Junction in the
State of New Jersey
(hereinafter referred to as the "Executive")
OF THE SECOND PART
WHEREAS, the Company wishes to enter into this Agreement to engage the
Executive to provide services to the Company, and the Executive wishes to be so
engaged, pursuant to the terms and conditions hereinafter set forth;
AND WHEREAS the Executive is engaged to provide services to the Company
as its Chief Financial Officer;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
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1. EMPLOYMENT AND DUTIES
1.1 Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve, as Chief Financial Officer of the Company,
upon the terms and conditions herein contained. The Executive's primary
responsibilities shall be to organize and manage the financial affairs generally
of the Company and to perform such other duties commensurate with his position
with the Company as are reasonably designated by the Chief Executive Officer(s)
of the Company. The Executive agrees to serve the Company faithfully and to the
best of his ability under the direction of the Chief Executive Officer(s) of the
Company. The Executive shall report to the Chief Executive Officer(s) of the
Company on all of his activities.
1.2 Exclusive Services. Except as may otherwise be approved in advance by
the Chief Executive Officer(s)of the Company, the Executive shall devote his
full working time throughout the Employment Term (as defined in Section 1.3) to
the services required of him hereunder. The Executive shall render his services
exclusively to the Company and its subsidiaries and affiliates during the
Employment Term, and shall use his best efforts, judgment and energy to improve
and advance the business and interests of the Company in a manner consistent
with the duties of his position.
1.3 Term of Employment. The Executive's employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall terminate
on the earlier of (i) the second anniversary of the Commencement Date, or (ii)
termination of the Executive's employment pursuant to this Agreement. The period
commencing as of the Commencement Date and ending on the second anniversary of
the Commencement Date or such later date to which the term of the Executive's
employment under this Agreement shall have been extended is hereinafter referred
to as the "Employment Term". The above notwithstanding, the minimum severance
provisions of this agreement as defined in par. 4.1 along with the Termination
Payment as defined in par. 4 (a) shall survive this agreement.
1.4 Place of Employment. During the Employment Term the Executive will be
based , at the Company's offices in New York City and, as requested or as
required by circumstance, travel to the offices of the Company in Mississauga,
Los Angeles, and other parts of the world.
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1.5 Reimbursement of Expenses. The Company shall reimburse the Executive
for reasonable travel and other business expenses incurred by him in the
fulfilment of his duties hereunder in accordance with Company practices
consistently applied.
2. COMPENSATION
2.1 Base Salary. During his employment under this Agreement, the Executive
shall be paid a base salary ("Base Salary") of no less than US$ 275,000 subject
to annual review on no later than Executive's anniversary date. The Executive
shall be paid no less frequently than monthly in accordance with the Company's
payroll practices.
2.2 Bonus. In addition to the Base Salary, during the Employment Term the
Executive shall be entitled to participate in the management bonus plan of the
Company which applies to senior executives of the Company. The Executive shall
participate in that plan on the basis that the target annual bonus pool
eligibility of the Executive shall be 35% of his Base Salary (the "Target
Bonus") in any year, which will entitle the Executive to earn a bonus, according
to the terms of the bonus plan, of up to 50% of his Base Salary. Notwithstanding
the foregoing, the bonus to be paid to the Executive in respect of 2001 shall be
not less than US$ 75,000 (the "Guaranteed Bonus") , which shall be paid at the
time bonuses are scheduled to be paid to other senior managers participating in
the plan, but no later than February 28, 2002. The Executive acknowledges that
the said bonus plan may be changed from time to time by the Company without
notice to or any requirement to obtain the consent of the Executive and without
the Executive having any claim against the Company with respect to any changes
thereto, including any claims of constructive dismissal. Following any changes
to the said plan, the Executive will be given notice of the changes in the same
manner as are other executives of the Company of the Executive's stature. Any
annual bonus will be prorated for any part calendar year of employment
hereunder.
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2.3 Stock Options. Effective as soon as is practicable after the
Commencement Date, the Executive shall be granted non-qualified options (the
"Options") to purchase 100,000 shares of common stock of the Company (the
"Common Shares"), at an exercise price per Common Share equal to the Fair Market
Value, as defined in the Company's Stock Option Plan (the "Option Plan"). Thirty
three and one third percent (33.3%) of the Options shall vest and become
exercisable on each of the first three anniversary dates of the grant date. The
Options granted hereunder shall be subject to the terms and conditions of the
Option Plan and the stock option agreement to be entered into between the
Company and the Executive as of the applicable date of grant pursuant to, and in
accordance with, the terms of the Option Plan; provided, however that any of the
said Options together with all other options granted to the Executive under the
Option Plan, which are not yet exercisable shall become vested and immediately
exercisable in the event of both of (a) a change in control of the Company i.e.
any person, or group of persons acting in concert, other than Xxxxxxx X.
Xxxxxxxx and Xxxxxxx X. Xxxxxxx, acquiring greater than fifty percent (50%) of
the outstanding common shares of the Company, whether by direct or indirect
acquisition or as a result of a merger or reorganization; and (b) the occurrence
of one or more of the following: (i) Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxx
cease to be Co-Chief Executive Officers of the Company; (ii) the Executive's
termination from the Company Without Cause; (iii) the diminution of the
Executive's title and/or responsibilities;or (iv) the Executive being asked to
relocate more than 30 miles from his then current office in New York. Further,
should the Executive's employment be terminated Without Cause for reasons other
than a change in control, (as defined in Section 4 (b) below), a minimum of 75%
of the Executive's outstanding Options shall become vested and immediately
exercisable.
3. EXECUTIVE BENEFITS
3.1 General. The Executive shall, during the Employment Term, receive
Executive benefits including vacation time, medical benefits, disability and
life insurance, all at least consistent with those established by the Company
for its other key executives at a level commensurate with that of the Executive.
Without limitation, however, the Executive shall be entitled to the following
benefits:
(i) four (4) weeks' paid vacation in each year of the Employment
Term
(ii) such audio/visual, computer, fax, cellular telephone and other
like equipment as may be necessary in connection with the
performance of the Executive's responsibilities shall be made
available to the Executive; and
(iii) a monthly automobile allowance of US$ 850.00, together with
all associated operating expenses (which allowance can, in
total or a portion thereof, at Executive's option, be taken as
additional compensation);
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4. TERMINATION OF EMPLOYMENT
Definitions. As used in this Article 4, the following terms
have the following meanings:
(a) "Termination Payment" means each of the following amounts to
the extent that such amounts are due to be paid to and including the date upon
which the Executive's employment is terminated (i) Base Salary and automobile
allowance, (ii) unreimbursed business expenses as outlined in Section 1.5, (iii)
any amounts to be paid pursuant to the terms of any benefit plans of the Company
in which the Executive participates or pursuant to any policies of the Company
applicable to the Executive, and (iv) any outstanding vacation pay calculated up
to and including such date.
(b) "Without Cause" means termination of the Executive's
employment by the Company other than for Cause (as defined in Section 4.2),
death or disability (as set forth in Section 5).
4.1 Termination Without Cause
4.1.1 General. Subject to the provisions of Sections 4.1.2, 4.1.3 and 6, if,
prior to the expiration of the Employment Term, the Executive's employment is
terminated by the Company Without Cause, the Company shall pay the Termination
Payment and a pro-rata bonus based upon the Target Bonus to be paid within 30
days of the date of termination and shall continue to pay the Executive the Base
Salary and automobile allowance for the remainder of the Employment Term (such
period being referred to hereinafter as the "Severance Period"), either at such
intervals as the same would have been paid had the Executive remained in the
active service of the Company or, at the option of the Company, , by immediate
payment to the Executive, , provided however that the Severance Period shall be
a minimum of twelve months in duration Upon such termination, the Executive
shall also be entitled to continue to receive his employment benefits referred
to in Section 3.1 at the Company's expense (to the extent paid for by the
Company as at the date of termination) and subject to the consent of the
applicable insurers.
The Executive agrees that the Company may deduct from any payment of Base Salary
to be made during the Severance Period the benefit plan contributions which are
to be made by the Executive during the Severance Period in accordance with the
terms of all benefit plans for the minimum period prescribed by law. The
Executive shall have no further right to receive any other compensation or
benefits after such termination of employment except as are necessary under the
terms of the Executive benefit plans or programs of the Company or as required
by applicable law. Payment of the Termination Payment, Base Salary, pro-rata
bonus based on the Target Bonus and automobile allowance during the Severance
Period and the continuation of the aforementioned Executive benefits during the
Severance Period as outlined above shall be deemed to include all termination
and severance pay to which the Executive is entitled pursuant to applicable
statute law and common law. The date of termination of employment Without
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Cause shall be the date specified in a written notice of termination to the
Executive and does not include the Severance Period.
4.1.2 Fair and Reasonable The parties confirm that notice and pay in lieu of
notice provisions contained in Subsection 4.1.1 are fair and reasonable and the
parties agree that upon any termination of this Agreement Without Cause, the
Executive shall have no action, cause of action, claim or demand against the
Company or IMAX or any other person as a consequence of such termination other
than to enforce Section 4.1.1.
4.1.3 Conditions Applicable to the Severance Period. If, during the Severance
Period, the Executive breaches his obligations under Article 7 of this
Agreement, the Company may, upon written notice to the Executive, terminate the
Severance Period and cease to make any further payments or provide further
benefits as described in Section 4.1.1.
4.2 Termination for Cause; Resignation. At any time prior to the expiration
of the Employment Term the Executive's employment may be terminated by the
Company immediately upon notice for Cause. If, prior to the expiration of the
Employment Term, the Executive's employment is terminated by the Company for
Cause, or the Executive resigns from his employment hereunder, the Executive
shall only be paid, within 15 days of the date of such termination or
resignation, the Termination Payment, then due to be paid. The Executive shall
have no further right to receive any other compensation or benefits after such
termination or resignation of employment, except as determined in accordance
with the terms of the Executive benefit plans or programs of the Company. The
date of termination for Cause shall be the date specified in a written notice of
termination to the Executive, which notice shall set forth the basis for the
termination. The date of resignation shall be sixty (60) days following the date
or receipt of notice of resignation from the Executive to the Company.
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4.3 Cause. Termination for "Cause" shall mean termination of the
Executive's employment because of:
(i) the cessation of the Executive's ability to work legally in
the United States or Canada other than for reasons not within
the Executive's reasonable control;
(ii) any act or omission that constitutes a material breach by the
Executive of any of his obligations under this Agreement,
which breach has not been remedied within thirty (30) days
after written notice specifying such breach has been given to
the Executive by the Company;
(iii) the continued failure or refusal of the Executive to perform
the duties reasonably required of him as Chief Financial
Officer, which failure or refusal has not been remedied within
30 days after written notice specifying such failure or
refusal has been given to the Executive;
(iv) any material violation by the Executive of any Canadian or
United States federal, provincial, state or local law or
regulation applicable to the business of the Company or IMAX,
which violation is injurious to the financial condition or
business reputation of the Company or IMAX, or the Executive's
conviction of a felony or commission of an indictable offense
for which he is not pardoned, or any perpetration by the
Executive of a common law fraud;
(v) any other action by the Executive which is materially
injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or
IMAX, or which results in a violation by the Company or IMAX
of any Canadian or United States federal, provincial, state or
local law or regulation applicable to the business of the
Company or IMAX, which violation is injurious to the financial
condition or business reputation of the Company or IMAX.
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5. DEATH OR DISABILITY
In the event of termination of employment by reason of death
or Permanent Disability (as hereinafter defined), the Executive (or his estate,
as applicable) shall be paid the Termination Payment then due to be paid within
30 days of the date of such termination of employment. Both the employment of
the Executive and the entitlement of the Executive to be paid amounts under
Section 4.1.1, in respect of the Severance Period, shall terminate immediately
and without notice upon his death or upon his Permanent Disability (as
hereinafter defined). Any benefits thereafter shall be determined in accordance
with the benefit plans maintained by the Company, and the Company shall have no
further obligation hereunder. For purposes of this Agreement, "Permanent
Disability" means a physical or mental disability or infirmity of the Executive
that prevents the normal performance of substantially all his duties under this
Agreement as an Executive of the Company, which disability or infirmity shall
exist for any continuous period of 180 days. The parties agree that such
Permanent Disability cannot be accommodated short of undue hardship.
6. MITIGATION
Subject to Section 7.1 and 7.2, the Executive shall notbe
required to mitigate the amount of any payment provided for in Section 4.1.1 by
seeking other employment or remunerative activity reasonably comparable to his
duties hereunder, however , upon the date of the Executive's obtaining such
other employment or remunerative activity any payment of the remaining portion
of the Executive's Base Salary to be made by the Company under Section 4.1.1
will be reduced by a total of one quarter (1/4). The Executive shall be required
as a condition of any payment under Section 4.1.1 (other than the Termination
Payment) promptly to disclose to the Company any such mitigation compensation.
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7. NON-SOLICITATION, CONFIDENTIALITY, NON-COMPETITION
7.1 Non-solicitation. For so long as the Executive is employed by the
Company and continuing for one year thereafter, notwithstanding whether the
Executive's employment is terminated with or Without Cause or whether the
Executive resigns, the Executive shall not, without the prior written consent of
the Company, directly or indirectly, for the Executive's own benefit or the
benefit of any other person, whether as a sole proprietor, member of a
partnership, stockholder or investor (other than a stockholder or investor
owning not more than a 5% interest), officer or director of a corporation, or as
a trustee, executive, associate, consultant, principal or agent of any person,
partnership, corporation or other business organization or entity other than the
IMAX: (x) solicit or endeavour to entice away from IMAX, any person or entity
who is, or, during the then most recent 12-month period, was employed by, or had
served as an agent or consultant of, IMAX; or (y) solicit, endeavour to entice
away or gain the custom of, canvass or interfere in IMAX's relationship with any
person or entity who is, or was within the then most recent 12-month period, a
supplier, customer or client (or reasonably anticipated to become a supplier,
customer or client IMAX and with whom the Executive had dealings during his
employment with the Company. The Executive confirms that all restrictions in
this Section are reasonable and valid and waives all defences to the strict
enforcement thereof.
7.2 Non-Competition For so long as the Executive is employed by the Company
and continuing for a period of one year after the date of the termination of the
employment of the Executive with the Company, notwithstanding whether the
Executive's employment is terminated with or Without Cause or whether the
Executive resigns, the Executive shall not, without the prior written consent of
the Company, directly or indirectly anywhere within Canada, the United States,
Europe or Asia, as a sole proprietor, member of a partnership, stockholder or
investor (other than a stockholder or investor owning not more than a 5%
interest), officer or director of a corporation, or as a trustee, Executive,
associate, consultant, principal or agent of any person, partnership,
corporation or other business organization or entity other than IMAX, render any
service to or in any way be affiliated with a competitor (or any person or
entity that is, at the time the Executive would otherwise commence rendering
services to or become, affiliated with such person or entity, reasonably
anticipated to become a competitor) of IMAX (a "Competitor"), which is engaged
or reasonably anticipated to become engaged in designing or supplying large
format theatres, designing or distributing projection or sound systems for large
format theatres, designing or supplying digital or other electronic film,
projection systems (regardless of image delivery system used) or sound
technology, designing or supplying motion simulation attractions or producing or
distributing films specifically for theatres or motion simulation attractions
which use the technology or competitive technology to that referred to above.
The Executive confirms that all restrictions in this Section are reasonable and
valid and waives all defenses to the strict enforcement thereof.
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7.3 Confidentiality. The Executive covenants and agrees that he will not at
any time during employment hereunder or thereafter, except in performance of his
obligations to the Company hereunder or with the prior written consent of the
senior operating officer of the Company, directly or indirectly, disclose or use
any secret or confidential information that he may learn or has learned by
reason of his association with IMAX. The term "confidential information"
includes information not previously disclosed to the public or to the trade by
IMAX's management, or otherwise in the public domain, with respect to IMAX's
products, facilities, applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, technical information, financial
information, business plans, prospects or opportunities, but shall exclude any
information which (i) is or becomes available to the public or is generally
known in the industry or industries in which IMAX operates other than as a
result of disclosure by the Executive in violation of his agreements under this
Section 7.3 or (ii) the Executive is required to disclose under any applicable
laws, regulations or directives of any government agency, tribunal or authority
having jurisdiction in the matter or under subpoena or other process of law. The
Executive confirms that all restrictions in this Section 7.3 are reasonable and
valid and waives all defences to the strict enforcement thereof.
7.4 Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of IMAX. All business
records, papers and documents regardless of the form of their records kept or
made by Executive relating to the business of IMAX shall be and remain the
property of IMAX, and shall be promptly returned by the Executive to IMAX upon
any termination of employment.
7.5 Injunctive Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that a material breach of any of the
covenants contained in Article 7 will result in material and irreparable injury
to IMAX for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to seek a
temporary restraining order and/or a preliminary, interim or permanent
injunction restraining the Executive from engaging in activities prohibited by
Article 7 or such other relief as may be required specifically to enforce any of
the covenants in Article 7. The Executive waives any defences to the strict
enforcement by IMAX of the covenants contained in Article 7. If for any reason
it is held that the restrictions under Article 7 are not reasonable or that
consideration therefor is inadequate, such restrictions shall be interpreted or
modified to include as much of the duration and scope identified in Article 7 as
will render such restrictions valid and enforceable.
7.6 Representation. The Executive represents and warrants that he is not
subject to any non-competition covenant or any other agreement with any party
which would in any manner restrict or limit his ability to render the services
required of him hereunder.
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8. MISCELLANEOUS
8.1 Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company: Imax Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Telecopier No: (000) 000-0000
Attention: Legal Department
To the Executive:
Xxxxxxx X. Xxxxx
00 Xxxxxx Xxx
Xxxxxxxxx Xxxxxxxx, Xxx Xxxxxx
00000
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery, upon receipt or (ii) if sent by
registered or certified mail, on the fifth day after the day on which such
notice is mailed.
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8.2 Severability. Each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. The parties agree that Sections
4, 5, 6 and 7 shall survive the termination of this Agreement.
8.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, if any are permitted by law and provided that the
Company and its assignee shall each remain liable to the Executive in the event
of any assignment, but neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive. The Executive
expressly agrees that the Company may assign any of its rights, interest or
obligations hereunder to any affiliate without the consent of the Executive;
provided, however, that no such assignment shall relieve the assignor of any of
its obligations hereunder.
8.4 Entire Agreement: Amendment. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive. This
Agreement may only be amended at any time by mutual written agreement of the
parties hereto.
8.5 Withholding. The payment of any amount pursuant to this Agreement shall
be subject to any applicable withholding and payroll taxes, and such other
deductions as may be required under applicable law or the Company's Executive
benefit plans, if any.
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8.6 Governing Law. 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 without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the Company and the Executive have duly executed
and delivered this Agreement as of the 9th day of May, 2001.
IMAX CORPORATION:
By: "Xxxxxxx X. Xxxxxxx"
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Name: Xxxxxxx X. Xxxxxxx
Title: Co-Chairman &
Co-Chief Executive Officer
EXECUTIVE:
"Xxxxxxx X. Xxxxx"
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Xxxxxxx X. Xxxxx
