Exhibit 10.3

IMAX CORPORATION

EMPLOYMENT AGREEMENT dated and effective as of July 1, 1998 (the “Agreement”),
between IMAX CORPORATION, a corporation organized under the laws of Canada
(“Imax”), and BRADLEY J. WECHSLER (the “Executive”).

WHEREAS, the Executive is currently the Chairman and Co-Chief Executive Officer
of Imax and is employed pursuant to an Employment Agreement dated as of
January 1, 1997, (the “1997 Agreement”); and

WHEREAS, the Imax Board of Directors (the “Board”) has approved revised terms of
employment, effective July 1, 1998, on August 26, 1998; and

WHEREAS, Imax wishes to enter into this Agreement to engage the Executive to
continue to provide services to Imax, and the Executive wishes to be so engaged,
pursuant to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:

1. Employment. (a) Imax hereby employs the Executive, and the Executive hereby
agrees to serve in accordance with the terms and conditions hereof.

(b) The Executive’s continued employment as Co-Chief Executive Officer under
this Agreement shall commence effective July 1, 1998, and shall continue until
June 30, 2001 (the “Employment Term”).

(c) During the Employment Term, the Executive shall perform such services with
respect to Imax’s business as may be reasonably requested from time to time by
the Board and which are consistent with the Executive’s status and the function
performed by individuals holding a similar position with similarly situated
companies, and agrees to act in accordance with the written instructions of the
Board. It is anticipated that such services shall be performed primarily within
the United States.

(d) The Executive shall devote that portion of his business time that is
necessary to perform the services reasonably required of him hereunder, which
portion shall constitute a significant majority of his business time. The
Executive agrees that during the Employment Term (i) he will use reasonable
efforts to resolve any conflicting engagements and (ii) he will remain actively
involved in Imax’s business.

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(e) As compensation for the services to be performed by the Executive hereunder
during the Employment Term, the Executive shall be entitled to receive a base
salary (“Base Salary”) of U.S. $500,000 per annum, payable no less frequently
than monthly in accordance with Imax’s payroll practices.

(f) In addition to the Base Salary, the Executive shall be eligible to
participate during the Employment Term in the annual incentive bonus plan
adopted by the Board. The Executive shall be paid a bonus in respect of each of
1998, 1999, 2000 and the period January 1, 2001 to June 30, 2001 at a level of
U.S. $605,000, U.S. $500,000, U.S. $500,000, and U.S. $250,000 (subject to
adjustment as described below), respectively, (the “Standard”). Based on certain
qualitative and quantitative measures determined by the CEO Advisors (as defined
in Imax’s Articles of Incorporation), for so long as Imax continues to have CEO
Advisors, and the Compensation Committee (the “Committee”) of the Board, as set
forth below, the Committee shall determine the actual bonus paid, which shall be
a multiple of the Standard ranging from 0.0x—2.0 x, provided, however, that the
multiple shall be at least 1.0x if Imax’s reported earnings per share (EPS) for
the year (excluding any extraordinary charges approved by the Board), or the six
months ended June 30, 2001, as the case may be, meet the approved budget target
(except that, if in the sole discretion of the Committee, the achievement EPS
target was at the expense of, or to the material detriment of, other(s) of the
qualitative and quantitative measures set forth below, then such minimum shall
not apply).

Among the various factors the Committee shall consider in determining the bonus
to be paid for 1998, and, subject to amendment from year to year by the
Committee, after good faith consultation with the Executive, for 1999, 2000 and
2001, are: (i) the actual financial performance of Imax versus the approved
budget for EBITDA, EPS, revenue growth, and/or other financial targets; and
(ii) the Committee shall also take into account other qualitative factors
including (in no order of importance): (A) progress in theater signings,
(B) development of an enhanced management team, (C) improved performance of the
Ridefilm division (for 1998 only), (D) further advancement of Imax’s film
strategy, (E) progress in “owned and operated” strategy (this factor to have
diminishing weighting beyond 1998, as Imax’s “owned and operated” emphasis
refocuses on theatre joint ventures with conventional cinema operators),
(F) brand development, (G) continued growth of the business, and (H) other
performance related issues including, but not limited to, other goals
established in the budget process approved by the Board.

The bonus for 1998, 1999 and 2000 shall be paid within 50 days of the applicable
year-end, and for the period January 1, 2001 to June 30, 2001 within 50 days of
June 30, 2001.

 

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(g) Pursuant to the 1997 Agreement, at the beginning of each of 1997 and 1998,
Imax granted the Executive the right to receive 30,000 common shares (on a
post-split basis) of Imax (the “Restricted Stock”), or, if such Restricted Stock
may not be issued without shareholder approval, the 1997 Agreement provided it
shall be issued as “phantom stock”. The Executive has the right to request the
Restricted Stock granted on January 1, 1997 and January 1, 1998 be issued to him
(or, if “phantom stock” is utilized, have payment made to him in an amount equal
to the fair market value of such number of common shares of Imax on the date of
such request), at any time after January 1, 1998 and January 1, 1999,
respectively. It is hereby agreed that one half (i.e. 15,000) of such Restricted
Stock / “phantom stock” for 1998 shall be cancelled forthwith, and that the
Executive shall continue to have the right to the 30,000 Restricted Stock /
“phantom stock” that have vested, and the remaining 15,000 Restricted Stock /
“phantom stock” that shall vest on January 1, 1999. The Restricted Stock /
“phantom stock” shall be adjusted for stock splits and other similar events.
Imax agrees to indemnify the Executive, on an after-tax basis, for any income
taxes imposed by any taxing authority and resulting from any taxable benefits to
the Executive with respect to the Restricted Stock / “phantom stock” which
arises prior to the date of any such request (it being understood that this
indemnity relates to the timing of the payment of such taxes and not the
ultimate tax payable). Any request for payment with respect to “phantom stock”
must be made on or before December 31, 2009, after which date such “phantom
stock” shall lapse. The provisions of this Section 1(g) shall survive any
termination of this Agreement.

(h) Stock Options – Grant & Vesting. The Executive has been granted effective
August 26, 1998, in accordance with the terms of the Imax Stock Option Plan (the
“SOP”), 378,000 options to purchase common shares, and effective January 1, 1999
shall be granted a further 400,000 options, as follows:

 

Number of Options

   Grant Date    Exercise Price    Vesting Date

111,333

   August 26, 1998    $22.38    August 26, 1998

100,000

   August 26, 1998    $22.38    January 1, 1999

166,667*

   August 26, 1998    $22.38    January 1, 1999

266,667*

   January 1, 2000    to be determined    January 1, 2000

133,333*

   January 1, 2000    to be determined    January 1, 2001

 

        

778,000

        

 

* These options are subject to Imax obtaining any required regulatory and
shareholder approvals.

The exercise price of all options granted on August 26, 1998 in accordance with
the SOP is U.S. $22.38, and all such options shall expire on August 25, 2008.
The exercise price of all options to be granted on January 1, 2000 shall be
determined in accordance with the SOP, and all such options shall expire on
December 31, 2009. Should any required

 

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regulatory or shareholder approvals with respect to the granting of the 566,667
options subject thereto not be obtained by Imax, Imax shall make such
adjustments to the Executive’s compensation hereunder as will put the Executive
in the same after-tax financial position as he would have been if such approvals
had been received. The provisions of this Section 1(h) shall survive any
termination of this Agreement.

All of the Executive’s stock options shall be adjusted for stock splits and
other similar events after the effective date hereof and shall contain other
terms no less favorable to the Executive than the management stock options of
Imax’s other senior level executives.

Resignation / Termination. If the Executive shall voluntarily resign prior to
the end of the Employment Term, (i) all unvested options (including those
granted pursuant to previous employment agreements between Imax and the
Executive) shall be cancelled immediately upon such resignation, and (ii) all
vested options shall remain exercisable for the duration of their original term.

If (i) the employment of the Executive is not continued after the end of the
Employment Term, (ii) the Executive is terminated by Imax without “Cause” (as
defined below), or (iii) the Executive suffers a “Permanent Disability” (as
defined in the SOP), or dies: all options granted on or before August 26, 1998
shall remain exercisable for the duration of their original term.

Change of Control. Upon a “change of control” of Imax (i.e. any person or
persons acting in concert acquiring greater than 50% of the outstanding common
shares of Imax, whether by direct or indirect acquisition or as a result of a
merger or reorganization), the vesting of the options granted on August 26, 1998
and/or January 1, 1999 shall be accelerated as follows:

 

Change of Control Period

   % of Options Subject to Accelerated Vesting   On or Prior to December 31,
1998      12.5% of options scheduled to vest on January 1, 1999    January 1,
1999 to June 30, 1999      25% of options scheduled to vest on January 1, 2000
 *  July 1, 1999 to December 31, 1999      50% of options scheduled to vest on
January 1, 2000  *  January 1, 2000 to June 30, 2000      25% of options
scheduled to vest on January 1, 2001    July 1, 2000 to December 31, 2000     
50% of options scheduled to vest on January 1, 2001   

 

*

If a “change of control” occurs prior to the grant of such options on January 1,
2000, stock appreciation rights (“SARs”) equivalent in number to the options
subject to accelerated vesting shall be granted, with a reference price of U.S.
$22.38, and an expiry date of December 31, 2009. The SARs shall be treated, in
connection with a “change of control”, in the same manner as if they were
options (i.e. a cash offer for all shares and options would trigger a payout of
the SARs; a “rollover” of options would result in the

 

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  continuation of the SARs, reflecting the relevant exchange ratio and with
reference to the price of the substituted shares).

Miscellaneous. If the Executive is terminated with “Cause”, the Executive’s
unvested options (including those granted pursuant to previous employment
agreements between Imax and the Executive) shall be cancelled immediately, and
all of the Executive’s vested options must be exercised within 90 days of
termination, after which date they shall be cancelled. “Cause” for purposes of
this Section 1(g) only means any willful and material violation by the Executive
of any law or regulation applicable to the business of Imax or one of its
subsidiaries, or the Executive’s conviction of a felony, or any willful
perpetration by the Executive of a common law fraud. Imax’s remedy for a “breach
of restrictive covenants” shall be the specific enforcement thereof, and not the
application of Section 14 of the SOP; and Imax shall be entitled to seek any
other legal and equitable remedies it may have against the Executive. In the
event of any conflict between the provisions of this Agreement and the
provisions of the SOP, the provisions of this Agreement shall prevail.

(i) The Executive shall, during the Employment Term, be eligible to receive
employee benefits at a level not less than those established by Imax for, or
made available to, its other key employees.

(j) Imax agrees to reimburse the Executive for all reasonable out-of-pocket
expenses incurred by the Executive in the performance of his obligations under
this Agreement for which documentation reasonably satisfactory to Imax is
provided, including expenses relating to the Executive’s travel to, and
performance of duties in, Toronto, Canada.

(k) Any amounts payable to the Executive under this Agreement shall be subject
to applicable withholding taxes, and such other deductions as may be required
under applicable law.

2. Restrictions on Competitive Employment. During the term of the Executive’s
employment hereunder, absent Imax’s prior written approval, the Executive shall
not (as principal, agent, employee, consultant or otherwise), directly or
indirectly, engage in activities with, or render services to, any business
engaged or about to become engaged in the business of producing or distributing
projection and sound systems or films for large screen theaters or designing or
supplying motion simulation theaters or producing or distributing films for
movie rides (collectively, “Competitive Business”); provided, however, that,
notwithstanding the foregoing, the Executive may (i) have equity interests in
companies engaged in a Competitive Business so long as he is not employed by and
does not consult with such companies in areas related to the Competitive
Business, (ii) render consulting services to or be employed by a company

 

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engaged in a Competitive Business so long as he is not employed in, or rendering
services related to, the Competitive Business of such company or (iii) perform
usual investment banking services for a company engaged in a Competitive
Business.

3. Confidentiality. The Executive covenants and agrees with Imax that he will
not at any time, except in performance of his obligations to Imax hereunder or
with the prior written consent of Imax, directly or indirectly, disclose any
secret or confidential information that he may learn or has learned by reason of
his association with Imax or any of its subsidiaries. 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 or any of its subsidiaries’ 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 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 the
subpoena or other process of law.

4. Assignment. Neither this Agreement nor any right, interest or obligation
hereunder shall be assignable by the Executive without the prior written consent
of Imax. Neither this Agreement nor any right, interest or obligation hereunder
shall be assignable by Imax without the prior written consent of the Executive,
except that Imax may assign this Agreement or any such right, interest or
obligation to an affiliate of Imax without consent of the Executive; provided,
however, that no such assignment shall relieve Imax of any of its obligations
hereunder.

5. Indemnification. (a) Imax shall hold the Executive harmless and indemnify the
Executive, to the fullest extent permitted by applicable law, against any and
all liabilities (and all expenses related thereto) incurred by the Executive as
a result of, or in connection with, the services provided under this Agreement;
provided, however, that such indemnification shall not apply with respect to any
action taken by the Executive that (i) is contrary to the written instructions
of the Board or (ii) constitutes gross negligence or willful misconduct. Imax
shall maintain a director and officer’s liability insurance policy covering the
Executive and containing customary terms and conditions.

(b) Imax shall hold the Executive harmless and indemnify the Executive, on an
after-tax basis, against the amount of any income taxes imposed by Revenue
Canada, the United States Federal government or any state or local taxing

 

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authority in Canada or the United States (collectively, “Taxes”) with respect to
any amounts payable to the Executive under Section 1 of this Agreement, to the
extent such Taxes exceed the amount of Taxes that would have been imposed on
such amounts had all of the services performed by the Executive under this
Agreement been performed within the United States. Imax shall hold the Executive
harmless and indemnify the Executive, on an after-tax basis, against the amount
of any penalties or interest that are imposed on the Executive by Revenue
Canada, the United States Federal government or any state or local taxing
authority in Canada or the United States as a result of Imax’s failure to
properly withhold any tax with respect to any amounts payable to the Executive
under Section 1 of this Agreement, to the extent such penalties or interest are
not attributable to the failure of the Executive to file any required tax
returns or pay any required taxes or any other willful act or omission of the
Executive.

6. Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto, any successors to or permitted assigns of the parties
hereto.

7. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and either delivered in person or sent by
first class certified or registered mail, postage prepaid, to the parties at the
following address (or to such other address or addresses as either party shall
have designated in writing to the other party hereto:)

 

  (a) if to Imax:

2525 Speakman Drive

Mississauga, Ontario, Canada

L5K 1B1

Attention: General Counsel

 

  (b) if to the Executive:

784 Park Avenue, Apt 7B

New York, NY, 10028

 

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8. Severability; Waiver. If any provision of this Agreement shall be determined
to be invalid, illegal or unenforceable in whole or in part, neither the
validity of the remaining part of such provision nor the validity of any other
provision of this Agreement shall in any way be affected thereby. Failure to
insist upon strict compliance with any term, covenant or condition hereof shall
not be deemed a waiver of such term, covenant or condition, nor shall any waiver
or relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.

9. Injunctive Relief. Without intending to limit the remedies available to Imax
or the Executive, as the case may be, in the event of a breach or threatened
breach of any of the covenants contained in this Agreement, Imax or the
Executive, as the case my be, shall be entitled to seek such injunctive relief
as may be required specifically to enforce any such covenant.

10. Miscellaneous. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and, from the effective date
hereof, supersedes and terminates all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof.
Notwithstanding the preceding sentence, nothing in this Agreement shall abrogate
the Executive’s entitlement to (i) the 45,000 (post-split) Restricted Stock /
“phantom stock” granted pursuant to Section 1(g) of the 1997 Agreement, as
reduced from 60,000 (post-split) pursuant to Section 1(g) of this Agreement,
(ii) the 40,000 options (for 80,000 post-split shares) granted January 2, 1997
and the 80,000 options (for 80,000 post-split shares) granted January 2, 1998,
or (iii) the Special Bonus (as defined in Section 1(g) of the Employment
Agreement between Imax and the Executive dated as of March 1, 1994) payable
after a sale of Imax or upon the exercise of the Executive’s liquidation rights.
Further, for so long as the Executive is the Co-CEO, Imax shall continue to use
its best efforts to cause the Executive to be elected to the Board and, for so
long as Imax continues to have CEO Advisors, to the designation as a CEO Advisor
under Imax’s by-laws, provided that nothing in this sentence shall abrogate any
rights the Executive may have pursuant to any other agreement. This Agreement
may be modified or amended only by an instrument in writing signed by both
parties hereto. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

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11. 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, Imax and the Executive have duly executed and delivered this
Agreement, as of the day and year first above written, on this 3rd day of
November, 1998.

 

IMAX CORPORATION By:   “Garth M. Girvan”   Garth M. Girvan   Director

By:   “John M. Davison”   John M. Davison  

Executive Vice President, Operations and

Chief Financial Officer

 

EXECUTIVE “Bradley J. Wechsler l.s. BRADLEY J. WECHSLER

 

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