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EXHIBIT 2.3
EMPLOYMENT AGREEMENT
B E T W E E N:
VIDEOFLICKS.COM LIMITED,
a company organized pursuant to the
laws of the Province of Ontario
(hereinafter referred to as "Videoflicks")
OF THE FIRST PART;
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JOHN WADDELL, an individual
residing in the City of Toronto, in the
Province of Ontario
(hereinafter referred to as the "Employee")
OF THE SECOND PART
WHEREAS Videoflicks and the Employee are desirous of entering into an
employment relationship for their mutual benefit;
AND WHEREAS Videoflicks and the Employee wish to reduce to writing certain
obligations and rights in respect of said employment relationship;
IN CONSIDERATION of the above and in further consideration of the mutual
promises and covenants set forth, this employment agreement (the "Agreement")
witnesses that the parties agree as follows:
1. JOB TITLE
Videoflicks hereby agrees to employ the Employee and to continue to employ
the Employee as Vice-President, Information Technology, of Videoflicks, subject
to the terms in this Agreement, who shall perform such duties and exercise such
responsibilities as are assigned from time to time by the Board of Directors and
its Chairman.
2. COMPENSATION
As compensation for all services provided for herein, Videoflicks shall pay
or cause to be paid to the Employee, and the Employee shall accept a salary at
an annual rate of $125,000 to be
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paid in regular installments in accordance with Videoflicks' usual paying
practices, but not less frequently than monthly.
Salary and benefit payments hereunder shall be subject to such deductions
as Videoflicks is from time to time required to make pursuant to law, government
regulations or by consent of the Employee.
3. STOCK OPTIONS
The Employee shall be granted from time to time stock options enabling the
Employee to purchase common shares of Videoflicks in such number and on such
terms as determined by the Board of Directors with the agreement of the
Employee. The terms of such stock options shall include, without limiting the
generality of the foregoing, that one-third (1/3) of all stock options granted
shall vest on each of the first anniversary of the date of grant of such
options, the second anniversary of such date, and the third anniversary of such
date provided that if the Employee is terminated pursuant to subsection 8(b)
herein, any stock options which have not otherwise vested shall immediately vest
and become exercisable.
4. BENEFITS
The Employee shall participate in all benefit plans which Videoflicks
provides to its senior employees, including, without limitation:
a. Disability Insurance
b. Life Insurance
c. Medical Plan
d. Hospitalization Plan
e. Dental Plan
f. If, as and when Videoflicks introduces a company pension plan,
the Employee shall be entitled to participate therein to the
same extent as all other senior employees of Videoflicks.
5. EXPENSES
5.1 The Employee shall be reimbursed by Videoflicks for all reasonable business
expenses incurred in connection with the employment of the Employee provided for
hereunder. Videoflicks' obligation to so reimburse the Employee for expenses
shall be subject to the presentation to Videoflicks by the Employee of an
itemized monthly account of such expenditures together with supporting vouchers
in accordance with Videoflicks' policies as in effect from time to time.
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6. VACATION
The Employee shall be entitled to four (4) weeks' vacation with pay during
each full year of employment and to a pro-rated portion should employment
terminate for any reason or cause before the completion of the year. The
Employee agrees to take not more than two (2) weeks' vacation at any one time.
7. TERM
The term of this Agreement shall be deemed to have commenced on December 1,
1998 and shall extend for a period of one (1) year terminating, subject to the
provisions of Sections 8 and 9 hereof, on November 30, 1999 (the "Termination
Date"). The Company shall have the option of renewing this Agreement for an
additional one year period (under the same terms and conditions as herein
provided excepting the provisions contained in Section 3 hereof), by advising
the Employee in writing of its intention to renew not later than thirty (30)
days prior to the Termination Date.
8. TERMINATION
This Agreement may be terminated in the following manner in the specified
circumstances:
(a) By the Employee on giving eight (8) weeks' notice in writing to
Videoflicks. Videoflicks may waive the notice, in whole or in part. If
the Employee terminates this Agreement pursuant to this subsection
during the initial three year term of this Agreement all Videoflicks
stock options granted to the Employee which have vested as of such
date of termination may be exercised by the Employee for a period of
six (6) months following such date of termination and any such stock
options which have not so vested shall expire immediately upon such
termination.
(b) By Videoflicks, in the event there is no Just Cause (as hereinafter
defined) therefor, by paying the equivalent of two (2) year's salary
(the "Notice Period") to the Employee in accordance with its normal
employee pay procedures, such payment to be subject to the Employee's
ability in securing alternate gainful employment in which case, the
compensation earned by the Employee from such alternate employment
shall be deducted from payments due to the Employee hereunder. If this
Agreement is terminated by Videoflicks in circumstances where there is
no Just Cause all Videoflicks stock options granted to the Employee
shall immediately vest and the Employee shall be entitled to exercise
all Videoflicks stock options granted to him for a period of six (6)
months thereafter, upon the expiry of which such options shall lapse
and be cancelled.
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(c) By Videoflicks, at any time, for Just Cause. If Videoflicks terminates
this Agreement pursuant to this subsection during the initial three
year term of this Agreement all Videoflicks stock options granted to
the Employee which have vested as of such date of termination may be
exercised by the Employee for a period of six (6) months following
such date of termination and any such stock options which have not so
vested shall expire immediately upon such termination.
(d) "Just Cause" is defined to mean conduct of the Employee which
includes:
(i) a material breach of the provisions of the Agreement;
(ii) Conviction of the Employee of a criminal offence punishable by
indictment where cause is not prohibited by law; or
(iii) the absence of the Employee from the performance of his duties
for any reason other than for authorized vacation for a period in
excess of forty (40) working days in any six (6) month period.
9. CONFIDENTIALITY
The Employee acknowledges that while employed by Videoflicks he will
acquire information about certain matters which are confidential in nature and
which are, and shall remain, the property of Videoflicks. Such information
includes, but is not limited to, customer lists, customer information, training
manuals, business practices, marketing plans, pricing policies, technical
proprietary and nonproprietary information, financial information, personnel
matters and the like. The Employee agrees to treat such information as
confidential and agrees not to directly or indirectly disclose it to any third
party either during his employment except to the extent necessary to perform his
duties and without exception following the termination of this Agreement unless
it is otherwise in the public domain.
10. NON-COMPETITION AND NON-SOLICITATION
Upon the termination of the Employee's employment with Videoflicks, the
Employee shall not engage in a similar business to that of Videoflicks for a
period of three (3) months, either directly or indirectly as a principal, agent,
shareholder, partner or employee. The Employee further agrees that he shall
assist any person, firm, corporation or other entity, either directly or
indirectly, in soliciting the customers of Videoflicks following his termination
from Videoflicks. The Employee also agrees that he will not, directly or
indirectly, hire or induce any employee of Videoflicks to resign his or her
employment with Videoflicks or to assist any other person in doing so.
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11. INTELLECTUAL PROPERTY RIGHTS
The Employee acknowledges and agrees that all right, title and interest in
and to any intellectual property, including, without limitation, any copyrights,
trade secrets, trademarks and patents, made or conceived by the Employee during
his employment by Videoflicks and relating to the business of Videoflicks,
including, without limitation the Videoflicks Web Site and the computer
software, source code and enhancements thereto utilized in connection with the
operation of the Web Site, shall belong to Videoflicks. In connection with the
foregoing the Employee agrees to execute any assignments and acknowledgements as
may be reasonably requested by the board of directors of Videoflicks from time
to time.
12. DUTIES AND EVALUATION
(1) (i) The Employee's duties to Videoflicks hereunder shall include, without
limitation, acting as Videoflicks' Manager, Information Technology
(IT). The Employee agrees that he will at all times perform these
duties faithfully, industriously and to the best of his skill,
ability, experience and talents. The Employee will perform his duties
in a manner which is in the best interests of Videoflicks and in
accordance with Videoflicks' current and long-term objectives and
procedures, as such may be amended from time to time by the Board of
Directors of Videoflicks.
(ii) Videoflicks acknowledges that it is aware that the Employee has, and
may have from time to time, ongoing part-time employment commitments
to companies affiliated with Videoflicks and that the Employee shall
be at liberty to continue such employment relationships provided that,
although the Employee shall not be obligated to devote the whole of
his time and attention to the business of Videoflicks, the Employee
shall devote such portion of his time to the affairs of Videoflicks as
may be required in the discharge of the Employee's duties hereunder on
a basis which does not impair the activities and business interests of
Videoflicks.
(2) The Board of Directors of Videoflicks and the Employee shall establish a
performance appraisal process which will establish the criteria against which
the Employee will be evaluated. Evaluations of the Employee shall be conducted
either semi-annually or annually (as determined by the Videoflicks Board of
Directors) and the results of such evaluation shall be communicated in writing
or otherwise to the Employee.
13. SEVERABILITY
In the event that any provision of the Agreement is determined to be void
or unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision of the Agreement.
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14. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the Province of Ontario.
15. WHOLE AGREEMENT
The terms and conditions set out above represent the entire Agreement
between the parties. Any modification to this Agreement must be in writing and
signed by the parties hereto or it shall be void and of no effect.
16. INDEPENDENT LEGAL ADVICE
The Employee acknowledges that he has obtained or has had an opportunity to
obtain independent legal advice in connection with this Agreement and further
acknowledges that he has read, understands and agrees to be bound by all of the
terms and conditions herein contained.
17. NOTICE
Any notice or other communication required or permitted to be given under
this Agreement shall be in writing and may be delivered personally or by prepaid
registered mail, addressed in the case of Videoflicks to: Chairman of the Board
of Directors, Videoflicks.com Limited, 106 Orenda Road, Brampton, Ontario L5W
3W6; and in the case of the Employee to: John Waddell, 386 Brookdale Avenue,
Toronto, Ontario M5M 3Y3.
DATED as of the 1st day of February, 1999.
VIDEOFLICKS.COM LIMITED
Per:
/s/ MICHAEL KAVANAGH
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A.S.O.
SIGNED, SEALED AND DELIVERED )
IN THE PRESENCE OF: )
)
) /s/ JOHN WADDELL
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) JOHN WADDELL