Exhibit 10.5
Employment Agreement between Cool Management Inc. and Xxxxxxx X.X. Xxx
dated March 1, 1999
--------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
--------------------------------------------------------------------------------
THIS AGREEMENT (this "Agreement") is made as of the 1st day of March, 1999,
BETWEEN
COOL MANAGEMENT INC., a company incorporated under the laws of
British Columbia, having its registered office at 1000 - 000
Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Company");
AND
XXXXXXX X.X. XXX, who resides at 0000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Employee").
WHEREAS:
A. The Company is party to a management contract (the "Management
Agreement") between the Company and Cool Entertainment, Inc. ("Cool
Entertainment"), a Washington corporation which intends to carry on the business
of internet sales of audio and visual products; and
B. The Company wishes to retain the services of the Employee on
the terms and conditions contained in this Agreement.
IN CONSIDERATION OF the premises and the mutual agreements herein contained, the
parties hereto (the "Parties") agree as follows:
1. EMPLOYMENT
The Company shall employ the Employee for the Term (as defined below) upon and
subject to the terms and conditions set out in this Agreement and the Employee
accepts the employment on those terms and conditions.
- 2 -
2. TERM OF EMPLOYMENT
The term of employment (the "Term") shall commence on the day Chelsea Pacific
Financial Corp. ("Chelsea") meets the First Financing Milestone, as that term is
defined in Section 7.1(a) of the Escrow Agreement between Pacific Corporate
Trust Company, Cool Entertainment, Chelsea, Minas Novas Gold Corp. (the "U.S.
Company") and Xxxxxxx Kar Man Xxx, Xxxxxxx Xxxxx Xxxxxxx, Xxxxxxx Xxxxx Xxxx and
Xxxx Xxxxxxx Xxxxxxxx (Lau, Hadcock, Xxxx and Belcourt are herein collectively
referred to as the "Vendors") of even date herewith (the "Escrow Agreement"),
and ending on that day (the "Expiry Date") which is the earlier of:
(a) one year from the day on which Chelsea meets the Fourth
Financing Milestone (as defined in Section 7.1(d) of the
Escrow Agreement); and
(b) the day the Vendors become entitled to terminate Chelsea's
right of first refusal provided in Section 7 of the Amendment
and Restatement between Chelsea, the Vendors, Cool
Entertainment and the U.S. Company of even date herewith (the
"Amendment and Restatement") pursuant to Section 7.4(h)(i) of
the Escrow Agreement.
3. DUTIES OF EMPLOYEE
The Employee shall, on behalf of the Company, perform the following duties:
(a) oversight of management of Cool Entertainment's business;
(b) provision of operational and strategic leadership to Cool
Entertainment;
(c) keeping the directors of Cool Entertainment informed about
major strategic issues facing Cool Entertainment;
(d) monitoring and maintaining Cool Entertainment's relationship
with Chelsea Pacific Financial Corp.;
(e) oversight and development of business alliances for Cool
Entertainment; and
(d) provision of advice to the directors of Cool Entertainment
concerning the possibility and desirability of acquisitions
and divestitures by Cool Entertainment;
together with such other duties as the Company may reasonably prescribe from
time to time.
4. STANDARDS AND DEVOTION
4.1 The Employee shall at all times during the Term, except during
periods of vacation or when disabled by sickness or incapacity, faithfully and
diligently perform the Employee's duties in a professional manner. The Employee
shall use the Employee's best
- 3 -
endeavours to promote and advance the business of Cool Entertainment, and shall
devote the Employee's entire time and attention to the business and affairs of
Cool Entertainment.
4.2 The Employee acknowledges that intellectual property developed
by him in the course of provision of services to the Company hereunder will be
the property of Cool Entertainment (subject to Section 7.4(c) of the Escrow
Agreement), and the Employee will cooperate with Cool Entertainment with respect
to the making of any filings reasonably necessary to protect such intellectual
property, and will execute all documents reasonably necessary to transfer the
ownership of benefits thereof to Cool Entertainment.
4.3 The Employee will be entitled to participate in any stock
option plan established by the U.S. Company, which upon completion of the
transaction described in the Amendment and Restatement shall be the owner of all
of the issued and outstanding shares in the capital of Cool Entertainment, on a
basis at least as favourable as that of any other participant therein.
5. REMUNERATION AND BENEFITS
As the Employee's entire remuneration for all services rendered to the Company
during the Term, the Employee shall be entitled to receive from the Company:
(a) a base salary (the "Salary") of US $50,000 per year, payable
in arrears within 3 business days of the end of each month;
and
(b) employee benefits in accordance with Schedule "A" hereto.
6. VACATION
6.1 The Employee shall be entitled to an annual paid vacation of
three weeks, commencing after one year of service to the Company hereunder.
6.2 The Employee will use his reasonable best efforts to ensure
that his vacation time does not coincide with vacation time taken by the other
Vendors pursuant to their contracts of employment with the Company.
7. FACILITIES
The Company shall provide and maintain the facilities, equipment and supplies it
deems necessary for the performance of the Employee's duties and
responsibilities pursuant to this Agreement.
- 4 -
8. EXPENSES
The Employee shall incur no significant expenses in the course of performing his
duties hereunder without the prior approval of the Company. Upon itemization of
expenses for which such approval has been obtained and submission of receipts
therefor to the Company, the Company shall reimburse the Employee for such
expenses within 30 days.
9. INDEMNITY
The Employee shall protect, indemnify and hold the Company harmless from and
against any and all liabilities, costs, damages, and expenses (including legal
fees and disbursements) resulting from or attributable to any and all acts and
omissions of the Employee, provided, however, that to the extent that any
liabilities, costs, damages and expenses are compensated for by insurance
purchased or paid for by the Company, the Employee shall not be required to
reimburse the Company or the insurer for those liabilities, costs, damages or
expenses. The Company shall request that the Employee be shown as an additional
insured on all insurance policies obtained by it or shall obtain from the
insurer a waiver of subrogation in favour of the Employee.
10. ASSIGNMENT OF INCOME
If at any time during the Term, the Employee receives remuneration or any
payment for any professional services rendered by the Employee on behalf of the
Company, the Employee shall be deemed to have received such remuneration or
payment as agent for the Company, and shall forthwith assign and make a full
accounting to the Company of that remuneration or payment received.
11. CONFIDENTIALITY
The Employee acknowledges that during the Term, the Employee will:
(a) have access to and will be entrusted with detailed
confidential information, know-how and trade secrets relating
to the business and affairs of the Company, Cool Entertainment
and the U.S. Company including, without limitation, finances,
products, services, dealings and transactions of Cool
Entertainment and the U.S. Company, and the names, addresses,
preferences or other particular business requirements of Cool
Entertainment's and the U.S. Company's customers
("Confidential Information"), and that the disclosure of
Confidential Information to competitors of the Company, Cool
Entertainment or the U.S. Company or to the public would be
highly detrimental to the best interests of the Company, Cool
Entertainment and the U.S. Company;
- 5 -
(b) in the course of performing services hereunder, the Employee
will be one of the principal representatives of Cool
Entertainment and the U.S. Company and as such will be
significantly responsible for maintaining or enhancing the
goodwill of Cool Entertainment and the U.S. Company; and
(c) the rights of the Company, Cool Entertainment and the U.S.
Company to maintain the confidentiality of Confidential
Information, and to preserve its goodwill, constitute
proprietary rights of the Company, Cool Entertainment and the
U.S. Company which the Company, Cool Entertainment and the
U.S. Company are entitled to protect;
and the Employee will not, during the Term and for one year after the expiry
thereof, disclose to any person, firm or corporation any Confidential
Information for any purpose other than the purposes of Cool Entertainment and
the U.S. Company and the Employee will not disclose or use for any purpose other
than for those of Cool Entertainment or the U.S. Company any Confidential
Information, provided that the foregoing covenant shall not extend to
Confidential Information which:
(a) disclosure of is specifically consented to in writing by the
Company. Cool Entertainment and the U.S. Company;
(b) the Employee is required by applicable law or by an order of a
court of competent jurisdiction to disclose;
(c) now or subsequently becomes available to the public through no
fault of the Employee;
(d) the Employee can demonstrate to have had rightfully in its
possession prior to disclosure to the Employee by the Company,
Cool Entertainment or the U.S. Company;
(e) is independently developed by the Employee without the use of
any Confidential Information; or
(f) the Employee rightfully obtains from a third party who has the
right to transfer or disclose it.
The Employee acknowledges that the foregoing covenant is necessary and
fundamental for the protection of the businesses of Cool Entertainment and the
U.S. Company and that a breach by the Employee of such covenant would result in
damage to Cool Entertainment and the U.S. Company which would not be adequately
compensated by an award of damages to Cool Entertainment or the U.S. Company and
that, in addition to all other remedies available to Cool Entertainment or the
U.S. Company, Cool Entertainment and the U.S. Company shall be entitled to the
immediate remedy of a restraining order, injunction or other form of relief as
may be
- 6 -
decreed or issued by any court of competent jurisdiction to restrain or enjoin
the Employee from breaching such covenant.
12. NON-COMPETITION
12.1 The Employee covenants and agrees that he will not, until that
day which is the earlier of: (i) one year from the expiry of the Term; and (ii)
the day the Vendors become entitled to terminate Chelsea's right of first
refusal provided in Section 7 of the Amendment and Restatement pursuant to
Section 7.4(h)(i) of the Escrow Agreement:
(a) directly or indirectly, in any capacity whatsoever,
alone or in association with any other person, firm or corporation (other than
the Company or Cool Entertainment), as a principal, agent, shareholder,
director, guarantor, creditor, or in any other relationship whatsoever, save and
except as an employee only, engage or be concerned or interested in any business
substantially similar to the business of Cool Entertainment and which may
compete with the business of Cool Entertainment at any time during that period
in any territory in which Cool Entertainment carries on its business;
(b) directly or indirectly, use or disclose to any person,
except duly authorized officers and employees of the Company and Cool
Entertainment, any Confidential Information acquired by him by reason of his
involvement and association with the Company; or
(c) directly or indirectly, solicit any customer of Cool
Entertainment, as of the date of termination of employment, in any territory in
which Cool Entertainment carries on its business during that period.
Notwithstanding the foregoing, the Employee may invest in or have an interest in
entities traded on any public market or offered by any brokerage house, if an so
long as the interest does not exceed 5% of the voting control of such entity.
12.2 The parties recognize that irreparable damage would result
from any violation of the covenant in Section 12.1. It is therefore expressly
agreed that, in addition to any and all of the remedies available to the Company
and Cool Entertainment, they will each be entitled to the immediate remedy of
injunction or such other equitable relief as may be decreed or issued by any
court of competent jurisdiction to enforce Section 12.1 hereof.
12.3 The Employee acknowledges that the covenant in Section 12.1
hereof is given for good and valuable consideration (receipt of which is hereby
acknowledged), and that by reason of his unique knowledge of and his association
with the business of Cool Entertainment, the scope of such covenant as to time
and area is reasonable and commensurate with the protection of the legitimate
interests of Cool Management and Cool Entertainment. The covenant in
Section 12.1 shall survive termination of the Employees employment hereunder for
a period of one year, and such covenant is severable for that purpose. If any
part of such covenant is held to be unenforceable by a court of competent
jurisdiction, such part may be severed and replaced by
- 7 -
the widest term that would not be held to be void or unenforceable. The Employee
waives all defences to the strict enforcement of such covenant.
13. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with respect
to the matters referred to herein and there are no representations or
warranties, express or implied, statutory or otherwise and no agreements
collateral hereto other than as expressly set forth or referred to herein.
14. FURTHER ASSURANCES
The Parties shall execute all other documents and do all further things as may
be necessary to carry out and give effect to the intent of this Agreement.
15. SEVERABILITY
Should any part of this Agreement be declared or held invalid for any reason,
that invalidity shall not affect the validity of the remainder which shall
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion.
16. AMENDMENTS
This Agreement may be amended by an agreement in writing signed by the Parties.
17. TERMINATION
17.1 The Company may terminate the Employee's employment hereunder
as follows:
(a) at any time, by notice in writing to the Employee, for just
cause which, without limitation, shall include:
(i) if there is a repeated and demonstrated failure on
the part of the Employee to perform his material
duties provided hereunder in a competent manner and
if the Employee fails to substantially remedy such
failure within a reasonable period of time after
receipt of written notice thereof;
(ii) if the Employee is convicted of a criminal offence
involving fraud or dishonesty;
(iii) if the Employee or any member of his family makes any
personal profit arising out of or in connection with
a transaction to which the Company or
- 8 -
Cool Entertainment is a party or with which it is
associated without making disclosure to and obtaining
the prior written consent of the Company or Cool
Entertainment, as the case may be;
(iv) if the Employee fails to honour his fiduciary duties
to the Company, including the duty to act in the best
interests of the Company; or
(v) if the Employee disobeys reasonable instructions
given in the course of employment by the directors of
the Company that are not inconsistent with the
Employee's duties hereunder and are not remedied by
the Employee within a reasonable period of time after
receiving written notice thereof,
(b) at any time, upon notice in writing thereof to the Employee,
if the Company, Cool Entertainment or the Employee has a
receiving order made against it or him, goes into bankruptcy
either voluntarily or involuntarily or makes a proposal to
creditors;
(c) at any time, upon notice in writing from the Company to the
Employee, if the Company or Cool Entertainment sells all or
substantially all of its assets or proceedings are commenced
to wind-up the Company or Cool Entertainment;
(d) if the Employee, either by reason of illness or mental or
physical disability or if the Employee fails, for one hundred
and twenty (120) consecutive days or for a total of one
hundred and eighty (180) days in any period of twelve (12)
consecutive months during the Term, to perform his duties
hereunder, then by one (1) month's notice in writing from the
Company to the Employee.
17.2 If the Company terminates the engagement of the Employee as
provided under subparagraphs 17.1(a) or 17.1(b), the Employee shall be entitled
only to the accrued salary owing to him up to the effective date of termination,
less any amounts owed by the Employee to the Company.
17.3 If the Company terminates the engagement of the Employee as
provided under Section 17.1(c), the Company shall pay to the Employee as
liquidated damages and compensation in full in respect of loss of such
engagement an amount equal to the salary which the Employee would have received
hereunder during the three (3)-month period commencing on the effective date of
termination, and such amount shall be payable immediately on termination of the
engagement.
17.4 The Employee may in his sole discretion terminate his
employment hereunder if any one of the following occurs during the Term:
(a) a change of control of Cool Entertainment; or
(b) the Company materially alters the duties and responsibilities
of the Employee without his prior written consent,
- 9 -
by giving the Company 30 days notice in writing of his resignation.
17.5 For the purposes of this Agreement, "change of control"
means the occurrence of:
(a) the sale or a series of sales occurring within any twelve
(12)-month period, other than a sale to an affiliate (as that
term is defined in the British Columbia COMPANY ACT) of Cool
Entertainment, of assets of Cool Entertainment having a value
greater than 50% of the fair market value of the assets of
Cool Entertainment determined on a consolidated basis prior to
such sale or prior to the first of a series of sales occurring
within any twelve (12)-month period;
(b) the disposition of all of substantially all of the assets of
Cool Entertainment where such sale or disposition is required
by applicable law to be approved as a special resolution of
the shareholders of Cool Entertainment ; or
(c) any event or series of events pursuant to which on any date
the Vendors no longer comprise a majority of the directors of
Cool Entertainment.
18. NOTICES
All notices required or permitted to be given under this Agreement shall be in
writing and personally delivered to the intended recipient.
19. TIME
Time shall be of the essence of this Agreement.
20. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of British Columbia.
21. HEADINGS
The headings appearing in this Agreement are inserted for convenience of
reference only and shall not affect the interpretation of this Agreement.
22. ASSIGNMENT
No Party may assign or transfer either the rights or the obligations created by
this Agreement without the prior written consent of the other Party hereto.
- 10 -
23. ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective heirs, personal representatives, successors and permitted
assigns.
IN WITNESS WHEREOF this Agreement has been duly executed by the Parties as of
the day and year first above written.
COOL MANAGEMENT INC.
per: /s/ Xxxxxxx X.X. Xxx
-----------------------------------
Xxxxxxx X.X. Xxx:
Authorized Signatory
Signed, sealed and delivered )
by XXXXXXX X.X. XXX )
in the presence of: )
)
/s/ X. Xxxxxxxx Fitch )
-------------------------------------- )
X. Xxxxxxxx Xxxxx )
)
1000, 000 Xxxx Xxxxxx, Xxxxxxxxx, X.X. )
-------------------------------------- ) /s/ Xxxxxxx X.X. Xxx
Address ) ------------------------------
) XXXXXXX X.X. XXX
-------------------------------------- )
)
)
-------------------------------------- )
Occupation )
