EMPLOYMENT AGREEMENT
--------------------
THIS effective as of the 4th day of January, 2001 (the "Effective Date"):
BETWEEN:
MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL, INC., a company incorporated
pursuant to the laws of the State of Nevada, of 4199 Lougheed Highway, Suites
200 and 201, Burnaby, British Columbia, Canada
(the "Company")
AND:
KEVIN O'REILLY, an individual having an address of 1212 10th Avenue #101, San
Francisco, CA 94122
(the "Employee")
WHEREAS:
A. The Company has requested the assistance of the Employee in
providing certain employment services, as described in Schedule "A" attached
hereto; and
B. The Employee has agreed to provide such assistance and services to
the Company in accordance with the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants set forth below, the parties hereto agree as follows:
1. DUTIES AND DEVOTION OF TIME
1.1 Duties. During the term of this Agreement, the Employee will be
responsible for the duties set out in Schedule "A" attached hereto (the
"Duties").
1.2 Devotion of Time. The parties hereto acknowledge and agree that the
work of the Employee is and will be of such a nature that regular hours are
insufficient and impractical and occasions may arise whereby the Employee will
be required to work more than eight (8) hours per day and/or five (5) days per
week. It is also anticipated that the Employee may be required to work during
evenings, Saturdays, Sundays and public holidays in order to properly perform
the Duties. The Employee agrees that the consideration set forth herein will be
in full and complete satisfaction for such work and services, regardless of when
and where such work and services are performed. The Employee further releases
the Company from any claims for overtime pay or other such compensation which
may accrue to the Employee by reason of any existing or future legislation or
otherwise. Notwithstanding the foregoing, the Company agrees
<PAGE>
that so long as the Employee properly discharges the Duties, the Employee may
devote the remainder of his time and attention to other non-competing business
pursuits.
1.3 Business Opportunities the Property of the Company. The Employee agrees
to communicate immediately to the Company all business opportunities, inventions
and improvements in the nature of the business of the Company which, during the
term of this Agreement, the Employee may conceive, make or discover, become
aware of, directly or indirectly, or have presented to him in any manner which
relates in any way to the Company, either as it is now or as it may develop, and
such business opportunities, inventions or improvements will become the
exclusive property of the Company without any obligation on the part of the
Company to make any payments therefor in addition to the salary and benefits
herein described to the Employee.
1.4 No Personal Use. The Employee will not use any of the work the Employee
performs for the Company for any personal purposes without first obtaining the
prior written consent of the Company.
2. SALARY, BONUSES AND BENEFITS
2.1 Salary. In consideration of the Employee providing the services
referred to herein, the Company agrees to pay the Employee a monthly base salary
(the "Monthly Base Salary") of One Hundred Twenty Thousand US Dollars ($120,000)
less applicable deductions, payable bi-weekly, plus the performance bonus and
stock options as set out below, subject to increase from time to time as
approved by the Board of Directors of the Company or as agreed to in writing
from time to time by both parties.
2.2 Benefits. The Company will provide, maintain and pay for:
(a) medical insurance for the Employee and his immediate family as is
provided by the Company's medical services plan; and
(b) such extended health and other benefits for the Employee and his
immediate family as are provided to other employees of the Company, subject to
the eligibility of the Employee.
2.3 Performance Bonus. The Company will pay to the Employee a performance
bonus for the year ended December 31, 2001 (the "Performance Bonus Year"):
(a) in the amount of ten percent (10%) of any amount of the gross margin on
all sales which exceed a gross margin on sales of $1,200,000 for the Performance
Bonus Year; and
(b) for subsequent years, in such amounts and upon such performance
objectives as is set from time to time by the Board of Directors of the Company,
or as amended in writing from time to time by the Board of Directors of the
Company.
2.4 Stock Options. The Company has agreed to grant to the Employee options
(the "Options") to purchase a total of One Hundred Twenty Thousand (120,000)
common shares in
<PAGE>
the capital stock of the Company pursuant to the terms and conditions of a stock
option agreement to be entered into between the Company and the Employee.
3. VACATION
3.1 Entitlement to Vacation. The Company acknowledges that the Employee
will be entitled to an annual vacation of three (3) weeks. The Employee will
use his best efforts to ensure that such vacation is arranged with the Company
in advance such that it does not unduly affect the operations of the Company.
3.2 Increase in Vacation. The period set out in Section 3.1 above may be
increased from time to time as agreed between the Employee and the Company.
4. REIMBURSEMENT OF EXPENSES
4.1 Reimbursement of Expenses. The Employee will be reimbursed for all
reasonable out-of-pocket expenses incurred by the Employee in or about the
execution of the Duties contained herein, including without limitation, all
reasonable travel and promotional expenses payable or incurred by the Employee
in connection with the Duties under this Agreement. All payments and
reimbursements will be made within ten (10) days of submission by the Employee
of vouchers, bills or receipts for such expenses.
5. CONFIDENTIAL INFORMATION, NON-COMPETE AND NON-SOLICITATION
5.1 Confidential Information. The Employee will not, either during the term
of this Agreement or at any time thereafter, without specific consent in
writing, disclose or reveal in any manner whatsoever to any other person, firm
or corporation, nor will he/she use, directly or indirectly, for any purpose
other than the purposes of the Company, the private affairs of the Company or
any confidential information which he/she may acquire during the term of this
Agreement with relation to the business and affairs of the directors and
shareholders of the Company, unless the Employee is ordered to do so by a court
of competent jurisdiction or unless required by any statutory or other legal
authority.
5.2 Non-Disclosure Provisions. The Employee will be subject to the further
non-disclosure provisions contained in Schedule "B" attached hereto and
incorporated hereinafter by this reference.
5.3 Non-Competition and Non-Solicitation. The Employee agrees that during
the period of the Employee's employment with the Company and for a period of
twenty-four (24) months from the last payment of compensation to the Employee by
the Company, the Employee will not engage in or participate in any business
activity that competes, directly or indirectly, with the businesses of the
Company in the United States or any other geographical location in which the
Company carries on business.
5.4 Exception. Notwithstanding anything to the contrary contained herein
the Employee may, without being deemed to compete, directly or indirectly, with
the businesses of the
<PAGE>
Company own not more than twenty percent (20%) of any class of the outstanding
securities of any corporation listed on a securities exchange or traded in the
over-the-counter market.
5.5 Non-Solicitation. The Employee agrees that for a period of twenty-four
(24) months following the termination of the Employee's employment for any
reason whatsoever, the Employee will not, whether as principal, agent, employee,
employer, director, officer, shareholder or in any other individual or
representative capacity, solicit or attempt to retain in any way whatsoever any
of the employees of the Company or its affiliates.
5.6 Provisions Survive Termination. The provisions of this Section 5 will
survive the termination of this Agreement. It is the desire and the intent of
the parties that the provisions of this Section 5 shall be enforceable to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
portion of this Section 5 is adjudicated unenforceable in any jurisdiction, such
adjudication shall apply only in that particular jurisdiction in which such
adjudication is made.
6. TERM
6.1 Term. This Agreement will remain in effect until terminated in
accordance with any of the provisions contained in this Agreement.
7. TERMINATION
7.1 Termination by Employee. Notwithstanding any other provision contained
herein, the parties hereto agree that the Employee may terminate this Agreement,
with or without cause, by giving three (3) months' written notice of such
intention to terminate.
7.2 Resignation or Cessation of Duties. In the event that the Employee
ceases to perform all of the Duties contained herein, other than by reason of
the Employee's death or disability, or if the Employee resigns unilaterally and
on his own initiative from all of his positions, this Agreement will be deemed
to be terminated by the Employee as of the date of such cessation of Duties or
such resignation, and the Company will have no further obligations under
Sections 2.1 and 2.2 hereof.
7.3 Termination by Company. The Company may terminate this Agreement at any
time for cause, but no such termination will in any way affect the obligations
of the Employee to the Company pursuant to Section 5 hereof. The parties
further agree that except for termination for cause, the Company may not
terminate this Agreement without payment to the Employee of a termination
allowance equivalent to three (3) months of the Monthly Base Salary payable by
the Company to the Employee, regardless of the date of termination. For purposes
of this Section 7.3 and of the Employee's employment with the Company, "cause"
shall include, without limitation, the following circumstances:
(a) if the Employee has committed a criminal offence involving moral
turpitude or has improperly enriched himself at the expense of the Company;
(b) if the Employee, in carrying out his duties hereunder, (i) has been
wilfully and grossly negligent, or (ii) has committed wilful or gross misconduct
or, (iii) has
<PAGE>
failed to comply with an instruction or directive from the Board of Directors
(and which is not otherwise cured within thirty (30) days);
(c) if the Employee has breached a material term of this Agreement (and
which is not otherwise cured within thirty (30) days);
(d) if the Employee becomes bankrupt or in the event a receiving order (or
any analogous order under any applicable law) is made against the Employee or in
the event the Employee makes any general disposition or assignment for the
benefit of his creditors; or
(e) if the Employee is diagnosed as being afflicted by chronic alcoholism or
drug addiction.
7.4 Death. In the event of the death of the Employee during the term of
this Agreement, this Agreement will be terminated as of the date of such death.
7.5 Disability. In the event that the Employee will during the term of this
Agreement by reason of illness or mental or physical disability or incapacity be
prevented from or incapable of performing the Duties hereunder, then the
Employee will be entitled to receive the remuneration provided for herein at the
rate specified hereinbefore for the period during which such illness, disability
or incapacity continues.
8. RIGHTS AND OBLIGATIONS UPON TERMINATION
8.1 Rights and Obligations. Upon termination of this Agreement, the
Employee will deliver up to the Company all documents, papers, plans, materials
and other property of or relating to the affairs of the Company, which may then
be in its or the Employee's possession or under his control.
9. CLOSING
9.1 Closing Date. This Agreement will be effective on the Effective Date.
9.2 Conditions of Closing. The parties hereto agree that it is a condition
of the effectiveness of this Agreement that the Company's Board of Directors
approve this Agreement.
10. NOTICES AND REQUESTS
10.1 Notices and Requests. All notices and requests in connection with this
Agreement will be deemed given as of the day they are received either by
messenger, delivery service, or mailed by registered or certified mail with
postage prepaid and return receipt requested and addressed as follows:
(a) if to the Company:
Merlin Software Technologies International, Inc.
<PAGE>
4199 Lougheed Highway
Suites 200 and 201
Burnaby, British Columbia V5C 3Y6
Canada
Attention: President
Facsimile: (604) 320-7277
with a copy to:
CLARK, WILSON
Suite 800-885 West Georgia Street
Vancouver, British Columbia V6C 3H1
Attention: Virgil Hlus
Facsimile: (604) 687-6314
(b) If to the Employee:
Kevin O'Reilly
1212 10th Avenue #101
San Francisco, CA
94122
or to such other address as the party to receive notice or request so designates
by written notice to the other.
11. INDEPENDENT PARTIES
11.1 Independent Parties. This Agreement is intended solely as an
employment services agreement and no partnership, agency, joint venture,
distributorship or other form of agreement is intended.
12. AGREEMENT VOLUNTARY AND EQUITABLE
12.1 Agreement Voluntary. Each of the parties acknowledges and declares
that such party has obtained all such professional advice (including legal
advice) as such party deems appropriate before executing this Agreement and that
such party is relying wholly on its own judgment and knowledge and has not been
influenced to any extent whatsoever by any representations or statements made by
or on behalf of the other party regarding any matters dealt with herein or
incidental thereto save as set out herein.
12.2 Agreement Equitable. The parties further acknowledge and declare that
they each have carefully considered and understand the provisions contained
herein, including, but without limiting the generality of the foregoing, the
Employee's rights upon termination and the restrictions on the Employee after
termination and agree that the said provisions are mutually fair and equitable,
and that they executed this Agreement voluntarily and of their own free will.
<PAGE>
13. CONTRACT NON-ASSIGNABLE; ENUREMENT
13.1 Contract Non-Assignable. This Agreement and all other rights, benefits
and privileges contained herein may not be assigned by the Employee without
consent.
13.2 Enurement. The rights, benefits and privileges contained herein will
enure to the benefit of and be binding upon the respective parties hereto, their
heirs, executors, administrators and successors and permitted assigns.
14. ENTIRE AGREEMENT
14.1 Entire Agreement. This Agreement represents the entire Agreement
between the parties and supersedes any and all prior agreements and
understandings, whether written or oral, between the parties.
14.2 Previous Agreements Cancelled. Save and except for the express
provisions of this Agreement, any and all previous agreements, written or oral,
between the parties hereto or on their behalf relating to the services of the
Employee for the Company are hereby terminated and cancelled and each of the
parties hereby releases and further discharges the other of and from all manner
of actions, causes of action, claims and demands whatsoever under or in respect
of any such Agreement.
15. WAIVER
15.1 Waiver. No consent or waiver, express or implied, by either party to
or of any breach or default by the other party in the performance by the other
of its obligations herein will be deemed or construed to be a consent or waiver
to or of any breach or default of the same or any other obligation of such
party. Failure on the part of any party to complain of any act or failure to
act, or to declare either party in default irrespective of how long such failure
continues, will not constitute a waiver by such party of its rights herein or of
the right to then or subsequently declare a default.
16. SEVERABILITY
16.1 Severability. If any provision contained herein is determined to be
void or enforceable in whole or in part, it is to that extent deemed omitted.
The remaining provisions will not be affected in any way.
17. AMENDMENT
17.1 Amendment. This Agreement will not be amended or otherwise modified
except by a written notice of even date herewith or subsequent hereto signed by
both parties.
18. HEADINGS
18.1 Headings. The headings of the sections and subsections herein are for
convenience only and will not control or affect the meaning or construction of
any provisions of this Agreement.
<PAGE>
19. GOVERNING LAW
19.1 Governing Law. This Agreement will be construed under and governed by
the laws of the Province of British Columbia and the federal laws of Canada
applicable therein, and each party irrevocably and unconditionally submits to
the non-exclusive jurisdiction of the courts such state and all courts competent
to hear appeals therefrom and waives, so far as is legally possible, its right
to have any legal action relating to this Agreement tried by a jury.
20. EXECUTION
20.1 Execution in Several Counterparts. This Agreement may be executed by
facsimile and in several counterparts, each of which will be deemed to be an
original and all of which will together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 4th
day of January, 2001.
MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL, INC.
Per: /s/ Trevor McConnell
Authorized Signatory
EXECUTED by KEVIN O'REILLY in the presence of: )
)
)
Signature )
)
Print Name /s/ Kevin O'Reilly
) KEVIN O'REILLY
Address )
)
)
Occupation )
<PAGE>
SCHEDULE "A"
The Employee shall have the title of Vice President of Marketing and will report
to the President of the Company.
The Employee's duties shall include, without limitation, the following:
1. assist Jim Baglot, Vice President of Sales, in the first quarter of 2001
to close revenue producing agreements with current and prospective partners;
2. for the period of time that the Employee is living outside of Seattle,
Washington, or the Vancouver, British Columbia areas; to spend a minimum of ten
(10) days per month at the Company's executive offices in Burnaby, British
Columbia;
3. after the initial six (6) month period, the Employee will relocate to
Seattle, Washington or Vancouver, British Columbia; and
4. all other duties and responsibilities that are usually and customarily
performed by a Vice President of Marketing.
<PAGE>
SCHEDULE "B"
NON-DISCLOSURE PROVISIONS
-------------------------
1. CONFIDENTIAL INFORMATION AND MATERIALS
(a) "Confidential Information" will mean, for the purposes of this
Agreement, non-public information which the Company designates as being
confidential or which, under the circumstances surrounding disclosure ought
reasonably to be treated as confidential. Confidential Information includes,
without limitation, information, whether written, oral or communicated by any
other means, relating to the Company's released or unreleased software or
hardware products, the marketing or promotion of any product of the Company, the
Company's business policies or practices, and information received from others
which the Company is obliged to treat as confidential. Confidential Information
disclosed to the Employee by any subsidiary and/or agents of the Company is
covered by this Agreement.
(b) Confidential Information will not include that information defined as
Confidential Information hereinabove which the Employee can exclusively
establish:
(i) is or subsequently becomes publicly available without breach of any
obligation of confidentiality owed by the Company;
(ii) became known to the Employee prior to disclosure by the Company to the
Employee;
(iii) became known to the Employee from a source other than the Company
other than by the breach of any obligations of confidentiality owed to the
Company; or
(iv) is independently developed by the Employee.
(c) Confidential Materials will include all tangible materials containing
Confidential Information, including, without limitation, written or printed
documents and computer disks or tapes, whether machine or user readable.
2. RESTRICTIONS
(a) The Employee will not disclose any Confidential Information to third
parties for a period of one (1) year following the termination of this
Agreement, except as provided herein. However, the Employee may disclose
Confidential Information during bona fide execution of the Duties or in
accordance with judicial or other governmental order, provided that the Employee
will give reasonable notice to the Company prior to such disclosure and will
comply with any applicable protective order or equivalent.
(b) The Employee will take reasonable security precautions, at least as
great as the precautions it takes to protect its own confidential information,
to keep confidential the Confidential Information, as defined hereinabove.
<PAGE>
(c) Confidential Information and Materials may be disclosed, reproduced,
summarized or distributed only in pursuance of the business relationship of the
Employee with the Company, and only as provided hereunder. The Employee agrees
to segregate all such Confidential Materials from the materials of others in
order to prevent co-mingling.
3. RIGHTS AND REMEDIES
(a) The Employee will notify the Company immediately upon discovery of any
unauthorized use or disclosure of Confidential Information or Materials, or any
other breach of this Agreement by the Employee, and will co-operate with the
Company in every reasonable manner to aid the Company to regain possession of
said Confidential Information or Materials and prevent all such further
unauthorized use.
(b) The Employee will return all originals, copies, reproductions and
summaries of or relating to the Confidential Information at the request of the
Company or, at the option of the Company, certify destruction of the same.
(c) The parties hereto recognize that a breach by the Employee of any of the
provisions contained herein would result in damages to the Company and that the
Company could not be compensated adequately for such damages by monetary award.
Accordingly, the Employee agrees that in the event of any such breach, in
addition to all other remedies available to the Company at law or in equity, the
Company will be entitled as a matter of right to apply to a court of competent
jurisdiction for such relief by way of restraining order, injunction, decree or
otherwise, as may be appropriate to ensure compliance with the provisions of
this Agreement.
4. MISCELLANEOUS
(a) All Confidential Information and Materials are and will remain the
property of the Company. By disclosing information to the Employee, the Company
does not grant any express or implied right to the Employee to or under any and
all patents, copyrights, trademarks, or trade secret information belonging to
the Company.
(b) All obligations created herein will survive change or termination of any
and all business relationships between the parties.
(c) The Company may from time to time request suggestions, feedback or other
information from the Employee on Confidential Information or on released or
unreleased software belonging to the Company. Any suggestions, feedback or
other disclosures made by the Employee are and will be entirely voluntary on the
party of said Employee and will not create any obligations on the part of the
<PAGE>
Company or a confidential agreement between the Employee and the Company.
Instead, the Company will be free to disclose and use any suggestions, feedback
or other information from the Employee as the Company sees fit, entirely without
obligation of any kind whatsoever to the Employee.
