EXHIBIT 7.2 Employment Agreement for John A. van Arem
DIGITAL ROOSTER.COM INC.
ITEM 12. EMPLOYMENT AGREEMENT
BETWEEN:
Digital Rooster.com Inc. ("Digital Rooster"),
a corporation incorporated under the laws of the Province of Ontario,
and
John Alexander van Arem,
2649 Bloor St. West, #407, Toronto, ON M8X 1A3
Whereas Digital Rooster and its wholly-owned subsidiary Web Dream Inc. ("Web
Dream") (together referred to as the "Corporation") carry on the business of
marketing and distributing adult entertainment products (the "Business");
And whereas the Corporation wishes to employ Mr. van Arem, and Mr. van Arem
wishes to be employed by the Corporation on the terms and conditions set forth
herein;
NOW therefore, in consideration of the mutual covenants herein contained and for
other good and valuable consideration, the Corporation and Mr. van Arem hereby
agree follows:
1) EMPLOYMENT
----------
The Corporation agrees to employ Mr. van Arem and Mr. van Arem agrees to serve
the Corporation on the terms conditions set out herein, commencing as of January
1, 2000 (the "Effective Date").
Mr. van Arem is appointed subject to the overall authority of the Board of
Directors of Digital Rooster (the "Board") and the Board in its capacity as
shareholder of Web Dream, to serve as President and Chief Executive Officer of
Digital Rooster and President of Web Dream and to manage the affairs of such
companies. Mr. van Arem shall have direct responsibility for all the
Corporation's operations and perform such services as required from time to time
by the Board. Mr. van Arem shall report to the Board at such times as the Board
may require. The Corporation shall take such steps as are within its control to
cause Mr. van Arem to be appointed as a Director of each of Digital Rooster and
Web Dream during his tenure as an officer of such companies.
It is expressly understood and agreed that it shall not be a violation of this
Agreement for Mr. van Arem to: (a) serve on corporate, civic or charitable
boards or committees, with any remuneration earned there from being retained by
Mr. van Arem; and (b) manage personal investments, so long as such activities do
not adversely affect the performance by Mr. van Arem of Mr. van Arem's
responsibilities as an executive of the Corporation in accordance with a terms
of this Agreement and do not reflect adversely on the Corporation.
It is also expressly understood that Mr. van Arem has other business interests
which do not involve the distribution and marketing of adult entertainment and
which do not compete with the Business and devotes a portion of his time to
manage such interests. Mr. van Arem's involvement with his other business
interests shall not constitute a breach of his obligations under this Agreement
provided that the conflict of interest guidelines adopted by the Board from time
to time are followed by Mr. van Arem and he devotes to the Corporation the time
and attention reasonably expected of an executive in his position.
2) COMPENSATION
------------
a) Salary
------
The Corporation shall employ Mr. van Arem at an aggregate annual salary of
$110,000, plus a $900 per month car allowance, subject to any annual increase as
determined by the Board, in its discretion. Such salary shall be payable in
equal installments every two weeks subject to usual and required payroll
deductions and withholdings.
b) Bonus
-----
As additional compensation the Corporation shall pay to Mr. van Arem for each
full fiscal year of the Corporation during which Mr. van Arem is employed by the
Corporation, a discretionary bonus based on performance objectives as determined
by the Board from time to time.
c) Benefits
--------
Mr. van Arem shall be entitled to participate in the supplementary benefits made
available by the Corporation generally to its employees from time to time, and
shall be entitled to any other benefits established by the Board as being
appropriate for the offices held with the Corporation.
d) Stock Options
--------------
Mr. van Arem shall be granted 240,000 options to purchase common shares of
Digital Rooster in accordance with the resolution of the Board dated February
18, 2000. Thereafter, Mr. van Arem will be granted stock options in respect of
common shares of the Digital Rooster as a performance bonus and incentive as
determined from time to time by the Board. Mr. van Arem acknowledges that the
grant of stock options in the future is a matter in the sole discretion of the
Board. Digital Rooster confirms to Mr. van Arem its existing policy that the
question of the issuance of stock options will be considered by the Board at
least annually.
e) Expenses
--------
The Corporation shall pay all expenses actually and properly incurred by Mr. van
Arem in furtherance of or in connection with the business of the Corporation,
including, but not by way of limitation, all travel and entertainment expenses.
If Mr. van Arem pays any such expenses in the first instance, the Corporation
shall reimburse him therefore, subject to the receipt by the Corporation of
receipts in form reasonably satisfactory to it.
f) Vacation
--------
Mr. van Arem shall be entitled to an aggregate of six weeks of vacation each
year during his employment, with pay, which may be taken at times mutually
convenient to Mr. van Arem and the Corporation. Mr. van Arem shall be entitled
to carry over and use vacation time into the succeeding years.
3) NON- COMPETITION
-----------------
Mr. van Arem covenants and agrees with the Corporation that he shall not, for
the period of one year from the date on which he ceases to be employed by the
Corporation for any reason whatsoever (i) directly or a directly solicit,
interfere with or endeavor to direct or entice away from doing business with the
Corporation any customer, client or person, firm or Corporation in the habit of
dealing with the Corporation; or (ii) interfere with, entice away or otherwise
attempt to obtain the withdrawal any employee of the Company.
4) CONFIDENTIALITY
---------------
Mr. van Arem acknowledges that in the course of carrying out, performing and
fulfilling his duties hereunder, he will have access to and will be entrusted
with detailed confidential information, proprietary information, intellectual
property, technology, computer hardware and software, specifications and trade
secrets concerning the present and contemplated services and techniques evolved
and used or to be evolved by the Corporation and concerning the customers of the
Corporation, their names, addresses and preferences (collectively, the
"Information"), the disclosure of any of which Information to competitors of the
Corporation or to the general public would be highly detrimental to the
interests of the Corporation. Mr. van Arem further acknowledges and agrees that
the right to maintain confidential such Information constitutes a proprietary
right that the Corporation is entitled to protect. Accordingly, Mr. van Arem
covenants and agrees with the Corporation and he will not during the period of
his employment by the Corporation or any time thereafter, disclose any such
Information nor use the Information for purposes other than those of the
Corporation. For greater certainty, such Information shall not include
information that becomes generally known to the public other than through breach
of this Agreement by Mr. van Arem. Mr. van Arem acknowledges and agrees that
the restrictions contained in this subsection are reasonable in the
circumstances in order to protect the business of the Corporation and hereby
waives any and all defenses to the strict enforcement of them.
All records and books relating any manner whatsoever to the business, financial
information, strategies, products, customers are property rights of the
Corporation, whether prepared by Mr. van Arem or otherwise coming into his
possession, shall be the exclusive property of the Corporation. All such books
and records shall be immediately returned by Mr. van Arem to the Corporation on
any termination of his employment.
Mr. van Arem acknowledges that each and every item of work product ("Work
Product") created by him during the period of his employment by the Corporation
that relates to the Business, whether created by Mr. van Arem during office
hours or non-office hours, is and shall remain and be considered the exclusive
property of the Corporation. Work product shall include but not be limited to
trademarks, service marks, logos, trade names, copyrighted work or copyrighted
material, patents or patentable material and designs of a commercial nature
without limitation. Mr. van Arem hereby assigns to the Corporation his entire
right, title and interest in any invention or idea whether or not patentable,
hereinafter made or conceived during the term of his employment with the
Corporation that relates to the Business. Mr. van Arem shall disclose any such
item to the Corporation within five working days of conceiving or formulating
such invention or idea. Mr. van Arem agrees to execute all documents and
provide all assistance that may be required to effectuate these provisions. All
inventions, copyrightable works, and other intellectual property that Mr. van
Arem made before his employment with the Corporation are excluded from this
Agreement.
Section 4 hereof shall survive the termination of this Agreement and Mr. van
Arem's employment hereunder.
In the event of a breach or anticipated breach of any the covenants contained in
this section, it is understood that damages will not only be difficult to
ascertain but also would probably be inadequate, and the Corporation may
petition a court of competent jurisdiction or equity for injunctive relief in
addition to any other relief which the Corporation may have.
5) NON-COMPETITION
---------------
Mr. van Arem agrees that for a period of one year following the termination of
his employment for any reason, he shall not, without the prior written consent
of the Corporation, directly or indirectly, whether for compensation or not, and
whether as principal or as agent, officer, director, employee, consultant or
otherwise, alone or in association with a person, firm, corporation or other
business organization, carry on, or be engaged in any business that is directly
competitive with the business then being carried on by he Corporation (the
"Competitive Business"), or be affiliated with, render services to, own, share
in the earnings of, or invest in the shares, bonds or other securities of, any
person, firm, Corporation or business organization engaged in any Competitive
Business; provided however, that Mr. van Arem may
invest in the shares of any issuer engaged in a Competitive Business (but
without participating in such Competitive Business) if:
a) such shares are listed on any securities exchange or publicly traded
over-the-counter; and
b) his investment does not exceed, in the case of any class of the
capital stock of any one issuer, 5% of the issued and outstanding
shares of such class.
Section 5 hereof shall survive the termination of this Agreement and Mr. van
Arem's employment hereunder.
In the event of a breach or anticipated breach of any the covenants contained in
this section, it is understood that damages will not only be difficult to
ascertain but also would probably be inadequate, and the Corporation may
petition of court of competent jurisdiction or equity for injunctive relief in
addition to any other relief which the Corporation may have.
6) TERM AND TERMINATION
----------------------
The term of employment of Mr. van Arem pursuant to this Agreement shall commence
as of the Effective Date and shall continue in full force and effect for five
years from that date, subject to earlier termination in accordance with the
terms hereof.
a) Termination by Corporation
----------------------------
The Corporation may terminate the employment of Mr. van Arem for any reason by,
subject to the terms hereof, payment of an amount equivalent to Mr. van Arem's
annual salary, such payment to be made in a lump sum on the effective date of
the termination. Further, all issued and outstanding options to purchase
shares in the Corporation that have been granted to Mr. van Arem shall,
notwithstanding any terms to the contrary in the option agreement applicable to
such options, immediately vest and be exercisable for a period of thirty days
following termination pursuant to this section 6(a). In addition, until the
earlier of (i) the expiry of a period of twelve months, or (ii) the date Mr. van
Arem obtains new employment, he shall be entitled to participate in the benefits
referred to in section 2(c) above.
The parties agree that the foregoing constitutes a fair and reasonable scheme
for termination of employment of Mr. van Arem. In consideration of the rights
described in this section 6(a) and any rights available to him pursuant to
applicable legislation, Mr. van Arem hereby waives any entitlement to which a
court of competent jurisdiction might otherwise grant to him in respect of the
termination of his employment hereunder.
Notwithstanding anything to the contrary herein, the Corporation may terminate
the employment of Mr. van Arem at its option without notice and without pay in
lieu of notice:
i) for any cause which would entitle the Corporation at law to terminate
the service of Mr. Van Arem without either notice or pay in lieu of
notice;
ii) if Mr. van Arem commits theft or embezzlement against the Corporation,
is convicted of a criminal act that reflects on his ability to perform
his obligations hereunder, or is guilty of serious misconduct or
conduct prejudicial to the Corporation's business;
iii) if Mr. van Arem is in breach of any of the material terms or
conditions of this Agreement;
IV) if , through bona fide physical or mental illness, is unable to attend
on a full time basis to the affairs of the Corporation for a period of
12 weeks;
v) if Mr. van Arem displays incompetence in the performance of his duties
hereunder of such magnitude and/or frequency as to render his services
to be of limited benefit to the corporation or causes or threatens to
cause serious damage or loss to the financial well-being of the
Corporation; or
vi) in the event of the death of Mr. van Arem.
Following termination pursuant to the events described in items (i) through (vi)
above, Mr. van Arem shall receive no compensation pursuant to this Agreement
except any accrued and unpaid salary. Mr. van Arem shall have thirty days
following the effective date of his termination to exercise the vested portion
of any outstanding stock options granted to him by the Corporation.
b) Termination by Mr. van Arem
-------------------------------
Mr. van Arem may terminate his employment with the Corporation (i) for any
reason whatsoever on 90 days prior written notice, provided that in the event
Mr. van Arem terminates his employment as aforesaid, he shall cooperate and
assist, if and as requested, in the selection and appointment of his successor;
or (ii) if the Corporation is in breach of any material provision of this
Agreement and fails to cure such breach within 10 business days of receipt of
notice thereof in writing from Mr. van Arem.
c) Resignation from Board
------------------------
Following termination of this Agreement for any reason, Mr. van Arem shall be
deemed to have resigned from the board of directors of the Corporation and shall
tender his resignation there from.
d) Change of Control
If within one year following a change of control (as defined below) of the
Corporation:
i) Mr. van Arem's employment is terminated by the Corporation (or its
successor company), other than by reason of Mr. van Arem's death or
disability or pursuant to section 6(a) hereof;
ii) The nature or status of Mr. van Arem's employment responsibilities, as
such existed immediately prior to the change of control, are
substantially diminished or Mr. van Arem is assigned duties or
responsibilities inconsistent in a material respect with his status as
it existed immediately prior to the change of control;
iii) Mr. van Arem's base salary as in effect immediately prior to a change
of control is reduced or there is a failure to provide benefits at
least as favorable, in all material respects, as those benefits
currently provided to Mr. van Arem by the Corporation; or
IV) the offices of the Corporation from which Mr. van Arem is to carry out
his duties are relocated to a location more than 50 kilometers from
its then present location;
then upon termination of Mr. van Arem employment by the Corporation, as
aforesaid, or, upon the occurrence of any of the events specified in (ii), (iii)
or (iv) above and Mr. van Arem's prompt written election to terminate his
employment with the Corporation, Mr. van Arem shall be entitled to a lump sum
payment equal to the greater of (A) the amount that would then be payable
pursuant to subsection 6(a) hereof or (b) one month's salary times the number of
complete months remaining in the initial five year term of this Agreement (less
all required withholdings and deductions) as such existed immediately prior to
the change of control. Such payment shall be made within 14 days of the
termination of Mr. van Arem's employment, as aforesaid, or following receipt by
the Corporation of Mr. van Arem's written election to terminate his employment,
as aforesaid. In addition, all issued and outstanding options to purchase
shares in the Corporation shall, notwithstanding any terms in the option
agreement applicable to such options, immediately vest and be exercisable for a
period of thirty days following termination pursuant to this section 6(a).
Thereafter, the Corporation shall have no further obligation to Mr. van Arem
except to pay any accrued salary that remains unpaid as at the date of such
termination or election.
For purposes of this section 6(d), a "change of control" of the Corporation
shall be deemed to have occurred if:
i) any person or company or combination of persons or companies acquires,
whether in a single transaction or in a number of transactions,
beneficial ownership of 50 percent or more of the outstanding voting
shares of the Corporation;
ii) the Corporation sells, leases or otherwise disposes of its assets and
undertaking as an entirety or substantially as an entirety; or
iii) the Corporation enters into an amalgamation, arrangement or other
transaction, which would have the same, or a similar effect as the
transaction referred to in (i) or (ii) above.
7) INDEMNITY
---------
Subject to the provisions of the Corporation's governing corporate legislation,
the Corporation agrees to indemnify and save Mr. van Arem harmless from and
against any and all demands, claims, costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding to
which Mr. van Arem is made a party by reason of or having been a director or
officer of the Corporation or of any affiliated company, whether before or after
termination if:
i) he or she acted honestly and in good faith with a view to the best
interests of the corporation; and
ii) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he or she had reasonable grounds
for believing that his or her conduct was lawful.
8) CURRENCY
--------
All dollar amounts referred to this Agreement are expressed in Canadian dollars
unless otherwise specifically provided.
9) SEVERABILITY
------------
In the event that a court of competent jurisdiction thereof shall deem any
provision herein or part void or invalid, the remaining provisions or parts
thereof shall be and remain in full force and effect. If, in any judicial
proceeding, any provision of this Agreement is found to be so broad as to be
unenforceable, it is hereby agreed that such provision shall be interpreted to
be only so broad as to be enforceable.
10) GOVERNING LAW
--------------
This Agreement shall be governed by and interpreted under the laws of the
Province of Ontario and applicable federal laws. The parties hereto attorn to
the jurisdiction of the courts of said Province.
11) ENTIRE AGREEMENT, PERSONAL SERVICES CONTRACT AND ASSIGNABILITY
--------------------------------------------------------------------
This Agreement constitutes the entire agreement between the Corporation and Mr.
van Arem regarding his employment by the Corporation. Any and all previous
agreements between the parties in that regard are terminated and cancelled.
This Agreement is personal to Mr. van Arem and his rights and obligations
hereunder may not be assigned by him. Upon notice to Mr. van Arem, this
Agreement may be assigned to an affiliate of the Corporation, however
notwithstanding such assignment, the Corporation shall remain liable to Mr. van
Arem for breach of the terms and conditions contained in this Agreement. Except
as aforesaid, the Agreement shall inure to benefit of and be binding upon the
parties hereto and their respective successors and assigns, including, in the
case of Mr. van Arem, his heirs, executors and administrators.
12) INDEPENDENT LEGAL ADVICE
--------------------------
Mr. van Arem acknowledges that he has read and understood this Agreement and has
been given the opportunity to obtain independent legal advice in connection with
this Agreement and the provisions hereof, and has freely chosen not to obtain
such advice.
In witness whereof the parties hereto execute this Agreement.
DIGITAL ROOSTER.COM INC. JOHN ALEXANDER VAN AREM
By ____________________________
_________________________
Name: Date:
Position: Director
Date:
WEB DREAM INC.
By _____________________________
Name:
Position: Director of Digital Rooster.com Inc.,
in its capacity as sole shareholder
Date: