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EXHIBIT 4.1
  
    EMPLOYMENT AGREEMENT    
  

        THIS AGREEMENT is made as of the 27th day of March, 2001. 

BETWEEN:

PEACE
ARCH ENTERTAINMENT GROUP INC., of

3rd Floor, 1132 Hamilton Street

Vancouver, B.C.

V6B 2S2 

(the
"Company") 

AND:

JULIET
JONES, of

6463 Nelson Avenue

West Vancouver, B.C.

V7W 2A5 

(the
"Employee") 

WHEREAS:

	A.
	The
Company is engaged in the production of film, video, television, internet and multimedia products for distribution to global markets;

	B.
	The
Company has agreed to continue to employ the Employee and the Employee has agreed to continue her employment with the Company on the terms and conditions hereinafter set forth. 

        NOW THEREFORE THIS AGREEMENT WITNESSES that for and in consideration of the premises and mutual covenants and agreements hereinafter
contained, the parties hereto covenant and agree as follows: 

1.    Employment  

        1.1  The
Company hereby employs the Employee in the position of Chief Executive Officer on a full time basis. 

        1.2  The
Employee shall report to the Board of Directors of the Company (the "Board") and shall perform, observe and conform to such duties and instructions as from time to
time are lawfully assigned or communicated to her on behalf of the Company and on behalf of such affiliates or subsidiaries of the Company designated by the Company as requiring the services of the
Employee and as are consistent with her position of Chief Executive Officer, including, but not limited to, conducting the daily affairs of the business and execution of the policies of the Board
including all strategic, operational, financial and organizational aspects of the business as follows: 

	(a)
	strategic
planning and budgeting;

	(b)
	recruitment,
training and management of all employees of the Company in accordance with appropriate employment procedures;

	(c)
	performance
of or appropriate delegation of all senior administrative responsibilities pertaining to the daily operations of the Company; and

	(d)
	ensuring
the financial stability of the Company, including profit management and shareholder value. 

        1.3  Throughout
the term of this Agreement, the Employee shall: 

	(a)
	diligently,
honestly and faithfully serve the Company and shall use her best efforts to promote and advance the interests and goodwill of the Company; 

 

	(b)
	conduct
herself at all times in a manner which is not prejudicial to the Company's interests;

	(c)
	devote
substantially all of her business time to the business and affairs of the Company, its affiliates and subsidiaries;

	(d)
	not,
either directly or indirectly, be interested or concerned (whether as a proprietor, partner, member, shareholder, director, officer, agent, consultant or otherwise) in any
person, firm, company or business engaged in or interested or concerned in any business which develops, manufactures, produces, provides, markets, distributes or otherwise deals in products or
services or both which are of a type similar to the products or services which are developed, manufactured, produced, provided, marketed, distributed or otherwise dealt in by the Company, its
affiliates or subsidiaries now or at any time during the term of the Employee's employment or which in any way competes with the business of the Company, its affiliates or subsidiaries. Such
restriction shall not prevent the Employee from being the holder or beneficial owner of any class of publicly held securities of a company, partnership or other organization, provided that the
Employee alone or in partnership or in conjunction with any other person or company, shall not own directly or indirectly more than 10% of the securities of such class;

	(e)
	not
enter into any transaction on behalf of the Company, its affiliates or subsidiaries, with any person, company, firm or other entity in which the Employee or any member of her
immediate family has a financial interest without the prior written approval of the Board; and

	(f)
	not
enter into any contract on behalf of, or in the name of the Company, nor pledge the credit of the Company, except in the fulfilment of her duties hereunder. 

        1.4  The
Employee acknowledges and agrees that she is a fiduciary of the Company. 

        1.5  Without
in any way limiting the scope of the Employee's fiduciary obligations to the Company, the Employee agrees that, at all times during the term of this Agreement
and following the termination of this Agreement or the employment of the Employee with the Company, the Employee shall not engage in unfair competition with the Company, its affiliates or
subsidiaries, aid others in any unfair competition with the Company its affiliates or subsidiaries, in any way breach the confidence that the Company has placed in the Employee, misappropriate any
proprietary or confidential information of the Company, or misappropriate any corporate opportunities of the Company. 

2.    Compensation  

        2.1  During
the currency of this Agreement, the Company shall pay to the Employee a salary of $175,000 per annum ("Base Salary"). The Base Salary shall be payable
semi-monthly in equal instalments or on such other basis as mutually agreed. 

        2.2  The
Company shall have the right to deduct and withhold from the Employee's compensation and to remit to the appropriate authority any amounts required to be deducted,
withheld and remitted under the applicable provincial or federal laws of Canada. 

        2.3  The
Employee shall be eligible to participate in such executive bonus plan that is implemented by a duly constituted compensation committee of the Board ("Compensation
Committee") and may be amended from time to time as part of the executive compensation program. 

        2.4  The
Employee shall be eligible to receive grants of stock options in accordance with such executive compensation program as is implemented by the Compensation Committee
from time to time. 

        2.5  Any
stock options granted pursuant to section 2.4 herein shall be on the terms set out in the form of the stock option agreement in use by the Company at the time
of such grant and in accordance 

2

 

with the terms of the Company's Amended Share Option Plan (the "Stock Option Plan"), and subject to necessary regulatory and Board approval. 

        2.6  The
Employee's compensation hereunder shall be reviewed by the Compensation Committee on March 1, 2002 or as soon thereafter as is reasonably practicable and any
increases will be in the sole discretion of the Compensation Committee. Thereafter, compensation reviews shall be carried out annually. 

        2.7  The
Company shall reimburse the Employee in accordance with its normal policies and practices for the Employee's travel, business, entertainment and other expenses
actually and properly incurred by her in performance of her duties for the Company. The Employee shall furnish to the Company such statements, vouchers and such other particulars of expenses as the
Company may reasonably require. 

        2.8  The
Employee acknowledges and agrees that unless otherwise expressly agreed in writing between the Employee and the Company, the Employee shall not be entitled, by
reason of her employment with the Company or by reason of any termination of such employment, howsoever arising, to any remuneration, compensation or benefits other than those expressly provided for
in this Agreement. 

3.    Benefits  

        3.1  Subject
to any eligibility requirements, the Employee shall be entitled to any benefits, such as group extended health, dental, accidental death and dismemberment, life
and long-term disability insurance, which the Company offers from time to time to its senior management team ("Benefits"). 

        3.2  The
introduction and administration of the Benefits is within the Company's sole discretion, and the introduction, deletion or amendment of the Benefits will not
constitute a breach of this Agreement. 

        3.3  The
Company shall provide the Employee with an automobile allowance of $750 per month while the Employee is actively performing her duties. In the year 2001, the Company
will also provide the Employee with such automobile allowance during any statutory leave of less than two months duration. 

        3.4  The
Company acknowledges that it will benefit from the maintenance of the Employee's professional qualifications. Accordingly, the Company shall pay or reimburse the
Employee for any professional dues in respect of the Employee's CGA qualifications. 

4.    Vacation/Leaves of Absence  

        4.1  The
Employee shall be entitled to an annual vacation of four weeks per calendar year. The timing of vacations shall be in accordance with the Company's policies and
practices for senior management personnel and with the Company's needs. 

        4.2  Any
leaves of absence taken by the Employee shall be taken as an unpaid leave unless the Compensation Committee approves such leave as a paid leave. Notwithstanding the
foregoing, the Employee shall be entitled to continuation of the Benefits during any statutory leaves of absence or as otherwise permitted by the Compensation Committee and the terms of the Company's
benefits plans. 

5.    Term of Employment  

        5.1  The
term of the Employee's employment shall hereunder commence on March 27, 2001 and continue until terminated in accordance with section 6 of this
Agreement. 

3

 

6.    Termination  

        6.1  The
Company may terminate the Employee's employment without cause at any time on written notice to the Employee and the Company shall provide to the Employee: 

	(a)
	two
months notice or payment of two months Base Salary in lieu thereof; and

	(b)
	further
payment in lieu of notice of termination of the sum of $150,000 ("Termination Payment"); and

	(c)
	the
Benefits, to the extent permitted by the Company's benefit providers, for the twelve month period following the date of the notice of termination. 

        6.2  Notwithstanding
the terms of the Stock Option Plan, in the event the Employee's employment is terminated by the Company without cause: 

	(a)
	prior
to September 1, 2002, then any stock options granted to the Employee that would have vested on or before September 1, 2002 had the Employee remained in the
Company's employ shall continue to vest in accordance with the terms of the grant and such vested stock options shall be exercisable in accordance with the terms of the Stock Option Plan and remain
exercisable for ninety days following the later of September 1, 2002 and the Employee's last day of work;

	(b)
	after
September 1, 2002, then any stock options granted to the Employee shall cease to vest on the date of delivery of the notice of termination and shall be exercisable in
accordance with the terms of the Stock Option Plan and shall remain exercisable until ninety days following the later of the date of the notice of termination and the Employee's last day of work. 

        6.3  The
Company may terminate the Employee's employment at any time, with no notice, for cause. For the purposes of this Agreement, "cause" includes, but is not limited to: 

	(a)
	theft,
dishonesty, fraud or other act of moral turpitude by the Employee;

	(b)
	any
material neglect of duty or misconduct of the Employee in discharging any of the Employee's duties hereunder;

	(c)
	any
conduct of the Employee which is materially detrimental or embarrassing to the Company, including, without limitation, the Employee being convicted of an offence under the  Criminal Code of Canada or
similar statute or penal code in the jurisdictions where the Employee performs any of her duties for the Company or an
affiliate of the Company; or

	(d)
	a
breach of sections 7 or 8 of this Agreement by the Employee. 

        6.4  If
this Agreement and the Employee's employment are terminated for cause, no notice, salary, compensation, benefits, stock options, allowances or pay in lieu of notice
shall be paid or payable to
the Employee after or as a result of such termination other than the Base Salary and Benefits to the effective date of such termination. 

        6.5  If
prior to the termination of this Agreement, there is a Change in Control (as such term is defined herein) and in the next ninety days following the Change in Control
any of the following occur: 

	(a)
	the
Employee's employment is terminated without cause; or

	(b)
	the
Employee is:

	(i)
	placed
in any position of lesser stature than that of Chief Executive Officer of the Company; 

4

 

	(ii)
	assigned
duties inconsistent with such position or duties which, if performed, would result in a significant change in the nature or scope of powers,
authority, functions or duties inherent in such position immediately prior to the Change in Control; or

	(iii)
	assigned
performance requirements or working conditions which are at significant variance with the performance requirements and working conditions in
effect immediately preceding the Change in Control; or is accorded treatment on a general basis which is in derogation of her status as Chief Executive Officer, 

then,
at the Employee's election, of which the Employee shall advise the Company by notice in writing forthwith if her employment is terminated or within thirty days of any event listed in subsection
(b) above, this Agreement shall be deemed to have been terminated by the Company and within thirty days of such termination or election by the Employee the Company shall pay to the Employee two
months Base Salary and the Termination Payment and shall continue the Benefits, to the extent permitted by the Company's benefit providers, for the twelve month period following such termination or
election. Any stock options granted to the Employee that would have vested on or before September 1, 2002 had the Employee remained in the Company's employ shall continue to vest in accordance
with the terms of the grant and such vested stock options shall be exercisable in accordance with the terms of the Stock Option Plan and remain exercisable for ninety days following
September 1, 2002. 

        6.6  For
the purposes of this Agreement, a "Change in Control" means: 

	(a)
	the
direct or indirect sale, lease, exchange or other transfer (other than in the ordinary course of business) of all or substantially all (75% or more) of the assets of the Company
to any person or entity or group of persons or entities acting in concert as a partnership or other group (a "Group of Persons");

	(b)
	the
merger, consolidation or other business combination of the Company with or into another corporation with the effect that the shareholders of the Company immediately following the
merger, consolidation or other business combination, hold 50% or less of the combined voting power of the then outstanding securities of the surviving corporation of such merger, consolidation or
other business combination, ordinarily (and apart from rights accruing under special circumstances) having the right to vote for the election of directors; or

	(c)
	a
person or Group of Persons shall, as a result of a take-over bid, tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have
become the beneficial owner of securities of the Company representing 51% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights
accruing under special circumstances) having the right to vote for the election of directors. 

        6.7  Subject
to sections 6.5 and 6.6, in the event it is determined that the Employee has been constructively dismissed by the Company, the Employee shall be entitled to the
same notice or payment in lieu of notice and vesting of stock options as if she had been terminated without cause under sections 6.1 and 6.2. 

        6.8  The
Employee shall not be required to mitigate the amount of any payment provided for in this Agreement, or any damages resulting from a failure of the Company to make
any such payment, by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Agreement be reduced by any compensation earned by the Employee as a result of
taking employment with another employer after termination of the Employee's employment hereunder. 

        6.9  The
Employee may terminate this Agreement and the Employee's employment with the Company upon giving the Company sixty days notice of resignation of her employment. Upon
the 

5

 

effective date of the Employee's resignation, the Company shall not be obligated to make any further payments under this Agreement. On the giving of such notice by the Employee, or at any time
thereafter, the Company shall have the right to elect to terminate the Employee's employment at any
time prior to the effective date of the Employee's resignation, and upon such election, shall provide to the Employee the following: 

	(a)
	a
lump sum equal to sixty days Base Salary or to such proportion of the sixty days that remains outstanding at the time of the election; and

	(b)
	continuation
of the Benefits for the sixty day period or such proportion of the sixty days that remains outstanding at the time of the election. 

For
greater certainty, upon such election being made by the Company, the Employee shall not be entitled to any further vesting of stock options. 

        6.10    Upon
termination of employment for any reason whatsoever, the Employee shall be deemed to have resigned from all offices and directorships then held with
the Company and its affiliates or subsidiaries and agrees as a condition of receiving any payments due to her hereunder to sign any resignations or releases which may reasonably be requested of her. 

7.    Confidentiality and Company Property  

        7.1  In
the course of carrying out and performing her duties and responsibilities to the Company pursuant to this Agreement, the Employee will obtain access to and be
entrusted with Confidential and Proprietary Information (as hereinafter defined) relating to the business and affairs of the Company. For the purposes of this Agreement, any reference to "Company"
shall mean the Company and its affiliates and subsidiaries. 

        7.2  The
term "Confidential and Proprietary Information" as used in this Agreement means all trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared, conceived or developed by an employee of the Company (including the Employee) or received by the Company from an outside source
which is maintained in confidence by the Company or any of its customers. Without limiting the generality of the foregoing, Confidential and Proprietary Information includes: 

	(a)
	any
ideas, artwork, drafts, drawings, photographs, improvements, programming, experimental works, schematics, sets, research, inventions, innovations, products, services, sales,
scientific or other formulae, patterns, processes, methods, machines, models, compositions, literary or dramatic works, screenplays,
scripts, themes, plots, characters, stories, procedures, tests, treatments, outlines, developments, technical data, designs, devices, patterns, concepts, computer programs or software, records, data,
training or service manuals, plans for new or revised services or products or other plans, items or strategy methods on compilation of information, or works in process, or parts thereof, and any and
all revisions and improvements relating to any of the foregoing (in each case whether or not reduced to tangible form) that relate to the business or affairs of the Company, its subsidiaries or
affiliates or that result from their marketing, research, development, production or distribution activities;

	(b)
	any
information relating to the relationship of the Company with any clients, customers, suppliers, principals, contacts or prospects of the Company and any information relating to
the requirements, specifications, proposals, orders, contracts or transactions of or with any such clients, customers, suppliers, principals, contacts or prospects of the Company, including but not
limited to client lists; 

6

 

	(c)
	any
creative, artistic, writing, casting, advertising or merchandising plan or material, sales plan, marketing material, plan or survey, business plan, opportunity or strategy,
product or service development plan or specification or business proposal;

	(d)
	financial
information, including the Company's costs, sales, income, profits, salaries or wages; and

	(e)
	any
information relating to the present or proposed business of the Company. 

        7.3  The
Employee acknowledges and agrees that the Confidential and Proprietary Information is and will remain the exclusive property of the Company. The Employee also agrees
that the Confidential and Proprietary Information: 

	(a)
	constitutes
a proprietary right which the Company is entitled to protect; and

	(b)
	constitutes
information and knowledge not generally known to the trade. 

        7.4  The
Employee understands that the Company has from time to time in its possession information belonging to others or which is claimed by others to be confidential or
proprietary and which the Company has agreed to keep confidential. The Employee agrees that all such information shall be Confidential and Proprietary Information for the purposes of this Agreement. 

        7.5  For
purposes of the copyright laws of the United States of America, to the extent, if any, that such laws are applicable to any Confidential and Proprietary Information,
it shall be considered a work made for hire and the Company shall be considered the author thereof. 

        7.6  The
Employee agrees to maintain securely and hold in strict confidence all Confidential and Proprietary Information received, acquired or developed by her or disclosed
to her as a result of or in connection with her employment with the Company. The Employee agrees to continue to hold the Confidential and Proprietary Information in strict confidence at all times
after the termination of her employment for whatever reason. The Employee will not: 

	(a)
	without
the express written consent of the Board disclose any of the Confidential and Proprietary Information to any person, firm or corporation;

	(b)
	use
any of the Confidential and Proprietary Information for any purpose other than in the normal and proper course of her duties either during the term of her employment with the
Company or at any time afterwards; or

	(c)
	duplicate
or transfer or allow any person to duplicate or transfer any of the Confidential and Proprietary Information. The Employee will use her best efforts to protect and safeguard
Confidential and Proprietary Information from, without limitation, loss, theft, destruction, seizure, or use by unauthorized persons. 

        7.7  The
Employee agrees that documents, copies, records and other materials made or received by her that pertain to the business and affairs of the Company or its
subsidiaries or affiliates, including all Confidential and Proprietary Information which are in the Employee's possession or control, are the property of the Company and that she will return same and
any copies of them to the Company forthwith upon the termination of her employment or at any time immediately upon the request of the Company. 

        7.8  The
Employee acknowledges and agrees that disclosure, failure to maintain securely, or the appropriation or collection for future use of any of the Confidential and
Proprietary Information to or for herself or other persons or entities will be detrimental to the best interests of the Company and will cause irreparable damage to the Company which could not be
adequately compensated for by damages. The Employee agrees that, in addition to claiming damages, the Company will be entitled to any 

7

 

appropriate legal, equitable, or other remedy, including injunctive relief, in respect of any failure by the Employee to comply with the provisions of this Agreement. 

        7.9  The
Employee agrees that all restrictions contained in this Agreement are reasonable and valid and all defences to the strict enforcement thereof by the Company are
waived by the Employee. 

        7.10    The
restrictive obligations set forth above shall not apply to the disclosure or use of any information which: 

	(a)
	is
or later becomes publicly known under circumstances involving no breach of this Agreement by the Employee;

	(b)
	is
already known to the Employee at the time of receipt of the Confidential Information;

	(c)
	is
lawfully made available to the Employee by a third party; or

	(d)
	is
independently developed by an employee of the Employee who has not been privy to the Confidential Information provided by the Company. 

8.    Representations and Warranties  

        8.1  The
Employee represents and warrants to the Company that the execution and performance of this Agreement will not result in or constitute a default, breach, or
violation, or an event that, with notice or lapse of time or both, would be a default, breach, or violation, of any understanding, agreement or commitment, written or oral, express or implied, to
which the Employee is a party or by which the Employee or the Employee's property is bound. The Employee shall defend, indemnify and hold the Company harmless from any liability, expense or claim
(including solicitor's fees incurred in respect thereof) by any person in any way arising out of, relating to, or in connection with any incorrectness or breach of the representations and warranties
in this section. 

        8.2  The
Employee further warrants that she has not signed or committed to any employment or consultant duties or other obligations which would divert her attention from the
duties assigned to her by the Company under this Agreement. 

        8.3  The
Employee acknowledges that a material breach of this section 8 by the Employee shall entitle the Company to terminate the Employee's employment for cause. 

9.    Indemnity  

        9.1  To
the fullest extent permitted by law and excluding any representation, warranty or indemnity given in the Employee's personal capacity, the company will indemnify the
Employee to the extent that the Employee exercises her rights, powers, duties and liabilities as an officer of the company and the Employee's heirs and personal representatives, against all costs
charges and expenses, including an amount paid to settle any action or satisfy a judgment, actually and reasonably incurred by the Employee, including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action or proceeding to which the Employee is made a party by reason of being or having been an officer of the Company, including an action brought by
the Company if: 

	(a)
	The
Employee acted honestly an in good faith and with appropriate authority with a view to the best interests of the Company; and

	(b)
	In
the case of a criminal or administrative action or proceeding the Employee had reasonable grounds for believing that her conduct was lawful. 

8

 

10.  Employment Standards  

        10.1    In
the event that the minimum standards in the Employment Standards Act, R.S.B.C. 1996, c. 113, as it
exists from time to time, are more favourable to the Employee in any respect, including but not limited to the provisions herein in respect to notice of termination or vacation entitlement, the
provisions of the Employment Standards Act shall apply. 

11.  Entire Agreement and Release  

        11.1    This
Agreement constitutes the entire agreement between the Company and the Employee. Any and all prior employment agreements or understandings, oral or
written, between the Company and the Employee are hereby terminated and cancelled. In consideration of the Company entering into this Agreement, the Employee hereby remises, releases and forever
discharges the Company from any and all claims, liability, actions or causes of action arising or which may arise now or hereafter in connection with any claim by the Employee in respect of any prior
written or oral employment contracts or arrangements between the Company and the Employee. 

12.  General Provisions  

        12.1    In
this Agreement, unless context otherwise requires, words importing the singular include the plural and vice versa, and words importing gender include
all genders. 

        12.2    The
headings and the clauses of this Agreement have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge
the scope of meaning of this Agreement or any of its provisions 

        12.3    The
parties hereto shall not be deemed to have waived any of their respective rights hereunder unless the waiver is in writing and signed by the waiving
party. The waiver by any party shall not be held or deemed to be a waiver of any subsequent or continuing failure to observe or perform the same or any other term of this Agreement or of any breach
thereof on the part of such party. The failure of any party to this Agreement to assert any claim in a timely fashion for any of its rights or remedies under this Agreement shall not be construed as a
waiver of any such claim and shall not serve to modify, alter or restrict any such party's right to assert such claim at any time thereafter. 

        12.4    The
provisions of sections 1.4 - 1.5, 7 and 9 shall survive the termination of this Agreement. 

        12.5    This
Agreement shall not be modified or amended except in writing signed by both parties. 

        12.6    If
any provision of this Agreement is unenforceable or invalid for any reason it shall be severable from the remainder of this Agreement and, in its
application at that time, this Agreement shall be construed as though such provision was not contained herein and the remainder shall continue in full
force and effect and be construed as if this Agreement had been executed without the invalid or unenforceable provision. 

        12.7    The
Employee shall, upon the reasonable request of the Company, make, do, execute or cause to be made, done or executed, all such further and lawful acts,
deeds, things, documents and assurances of whatsoever nature and kind for the better or more perfect or absolute performance of the terms, conditions and intent of this Agreement. 

        12.8    The
provisions of this Agreement shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the applicable
laws of Canada therein which shall be deemed to be the proper law hereof. 

        12.9    All
sums of money which are referred to in this Agreement are expressed in lawful money of Canada. 

9

 

        12.10    All
notices provided for herein shall be in writing and shall be personally delivered, telefaxed or mailed by registered mail, postage prepaid to the
address set out on the first page of this Agreement. Any notice shall be deemed to have been given when delivered personally or telefaxed, and if mailed, on the fifth business day after the mailing
thereof. If normal mail service is interrupted, the parties shall personally deliver such notice to ensure prompt receipt thereof. A party may change its address for service by notice in writing to
the other party in the manner provided for in this subsection. 

13.  Assignment  

        13.1    This
Agreement may not be assigned by the Employee. 

        13.2    Without
in any way limiting the rights of the Company to assign this Agreement, it is expressly understood and agreed that the Company shall have the
right to assign this Agreement to any other entity to which the business of the Company is transferred, in whole or in part, whether or not it results in a Change of Control, and which thereafter
carries on the business of the Company. This Agreement shall enure to the benefit of and be binding upon the parties and their heirs, executors, administrators, successors and permitted assigns. 

14.  Independent Legal Advice  

        14.1    The
Employee acknowledges that this Agreement has been prepared by the Company's solicitors and acknowledges that the Employee has had sufficient time to
review this Agreement thoroughly, that she has read and understood the terms of this Agreement and that the Employee has been given the opportunity to obtain independent legal advice concerning the
interpretation and effect of this Agreement prior to its execution. 

        IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the day and year first above written. 

	 	 	PEACE ARCH ENTERTAINMENT GROUP INC.
	

 	
 	

By:	

/S/TIMOTHY GAMBLE
 Authorized Signatory

	 	 	 	 	 
	
 Witness	 	)

)

)

)	 	

/S/JULIET JONES
JULIET JONES
	
 Name	 	)

)

)	 	 
	
 Address	 	)

)

)	 	 
	
	 	)

)	 	 

10

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EXHIBIT 4.1 EMPLOYMENT AGREEMENTQuickLinks
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EXHIBIT 4.2
  
    AGREEMENT    
  

        THIS AGREEMENT made as at the 3rd day of April, 2001 

BETWEEN: 

Garth R. Albright, an individual residing at 4397 Cheviot Road, North Vancouver, B.C., V7R 3T3 

(hereinafter
referred to as the "Employee") 

OF
THE FIRST PART, 

AND: 

Peace Arch Entertainment Group Inc., a corporation incorporated under the laws of the Province of British Columbia and having its head office at #302,
1132 Hamilton Street, Vancouver, B.C., V6B 2S2 

(hereinafter
referred to as the "Employer") 

OF
THE SECOND PART. 

        WHEREAS the Employee is presently employed, or is about to be employed, by the Employer in a position of confidence and trust and under
conditions where he has or may have access to technical, confidential and secret information regarding the existing or contemplated business of the Employer; 

        AND WHEREAS the Employee recognizes that as part of the duties of his employment, all ideas and suggestions of interest to the Employer,
conceived or made by him while he is employed by the Employer shall be made available to the Employer; 

        AND WHEREAS the Employer is associated as subsidiary, affiliate, associate or parent with corporations and unincorporated business
enterprises, the number of which varies from time to time but all of which during all pertinent times have common business interests either through ownership or agreement (hereinafter all of such
corporations and incorporated business enterprises are referred to collectively as the "Employer"); 

        AND WHEREAS the Employer is desirous of employing the Employee to provide the services outlined and described in Schedule "A" hereto in
connection with the business carried on by the Employer, consisting principally of the production and/or distribution of film and video programming and including certain other business activities
relating thereto (the "Business"); 

        AND WHEREAS during the course of the Employee's employment with the Employer, the Employee will be introduced to, have contact with, and
his services may be solicited by, one or more of the clients of the Employer; 

        AND WHEREAS the Employee may be trained by the Employer to perform services in connection with the Business and through such training the
Employee will acquire knowledge, experience and expertise, as well as detailed knowledge of the Employer's confidential customer and supplier lists and information, marketing techniques, price lists,
trade secrets and other property which is and shall be the property of the Employer, and the disclosure, loss or, unauthorized use of which would substantially harm the Business; 

        NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective covenants and agreements of the parties contained herein,
the sum of one dollar paid by each party 

 

hereto each of the other parties hereto and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto), it is agreed as follows: 

ARTICLE ONE—AGREEMENT  

        1.1  Termination of Prior Agreements. This Employment Agreement, from and
after the date hereof, supersedes and takes the place of any other contracts of the same nature heretofore existing between the parties hereto. 

ARTICLE TWO—EMPLOYMENT  

        2.1  Employment. Subject to the terms and conditions contained herein, the
Employer agrees to employ the Employee and the Employee agrees to be employed by the Employer in its Business and will have the title of "Chief Financial Officer." The Employee is subject to a six
month probationary period, commencing the effective date of this contract. 

        2.2  Conform with Directions and Policies. During his employment with the
Employer, the Employee shall in all respects conform to and comply with the directions and policies of the Employer communicated to the Employee, perform each of the duties assigned from time to time
by the Employer to the best of his skill and ability, faithfully and diligently serve the Employer, use his best efforts to promote the interests and reputation of the Employer and devote his full
working time, attention and energies to the Business of the Employer. Without restricting the generality of the foregoing, the Employee's duties and other conditions of employment shall initially be
as set out in Schedule "A" attached hereto. 

        2.3  Termination of Employment. The Employee's employment may be terminated: 

	(a)
	by
the Employer,

	(i)
	for
just cause at any time by the Employer without notice and without any payment in lieu of notice. The effective date of termination may be the date
that such cause occurred. "Just Cause" includes, but is not limited to:

	a)
	theft,
dishonesty, fraud or other act of moral turpitude by the Employee;

	b)
	any
material neglect of duty or misconduct of the Employee in discharging any of the Employee's duties hereunder;

	c)
	any
conduct of the Employee which is materially detrimental or embarrassing to the Employer, including, without limitation, the Employee being convicted of an offence under the  Criminal Code of Canada or
similar statute or penal code in the jurisdictions where the Employee performs any of his duties for the Employer or an
affiliate of the Employer; or

	d)
	any
willful breach or non-observance by him of any of the conditions or obligations of this agreement. 

	(ii)
	without
cause, within the first six (6) months of employment; after the first three (3) months of employment the Employee is entitled to
three (3) months notice or three (3) months payment of base salary in lieu of notice;

	(iii)
	without
cause after the first six (6) months of employment and within three years of the effective date of this contract the Employee is
entitled to three (3) months notice or three (3) months payment of base salary in lieu of notice; or 

2

 

	(iv)
	without
cause after three (3) years employment the Employee is entitled to such notice period or payment of base salary in lieu of notice as may
be negotiated by the parties in good faith. 

and
the Employee hereby waives any claim to further notice or compensation and the Employee agrees that the foregoing notice period(s) are deemed conclusively to be reasonable notice of termination. 

	(b)
	by
the Employee, upon the Employee giving the Employer one (1) month written notice. Upon the effective dated of the Employee's resignation, the Employer shall not be obligated
to make any further payments under this Agreement. On the giving of such notice by the Employee, or at any time thereafter, the Employer shall have the right to elect to terminate the Employee's
employment at any time prior to the effective date of the Employee's resignation, and upon such election, shall provide the Employee the following:

	i)
	a
lump sum equal to one (1) month base salary or to such proportion of the one (1) month that remains outstanding at the time of the
election; and

	ii)
	continuation
of the benefits for the one (1) month period of such proportion of the one (1) month that remains outstanding at the time of
the election. 

	(c)
	if
there is a Change in Control (as such term is defined herein) and in the next ninety days following the Change in Control any of the following occur:

	(ii)
	the
Employee's employment is terminated without cause or notice of termination without cause is received by the Employee; or

	(iii)
	the
Employee is:

	a)
	placed
in any position of lesser stature than that of Chief Financial Officer of the Employer;

	b)
	assigned
duties inconsistent with such position or duties which, if performed, would result in a significant change in the nature of scope of powers, authority, functions or duties
inherent in such position immediately prior to the Change in Control; or

	c)
	assigned
performance requirements or working conditions which are at significant variance with the performance requirements and working conditions in effect immediately preceding the
Change in Control; or is accorded treatment on a general basis which is in derogation of his status of Chief Financial Officer, 

then,
at the Employee's election, of which the Employee shall advise the Employer by notice in writing forthwith if his employment is terminated or within thirty days of any event listed in subsection
(b) above, this Agreement shall be deemed to have been terminated by the Employer and within thirty (30) days of such termination or election by the Employee the Employer shall pay to
the Employee three (3) months base salary in addition to any amounts or notice required under 2.3 (a) (ii) above. 

        2.4  For the purposes of this Agreement, a "Change in Control" means:

	(a)
	the
direct or indirect sale, lease, exchange or other transfer (other than in the ordinary course of business) of all or substantially all (75% or more) of the assets of the Company
to any person or entity or group of persons or entities acting in concert as a partnership or other group (a "Group of Persons");

	(b)
	the
merger, consolidation or other business combination of the Company with or into another corporation with the effect that the shareholders of the Company immediately following the
merger, consolidation or other business combination, hold 50% or less of the combined voting power of the then outstanding securities of the surviving corporation of such merger, consolidation or
other business combination, ordinarily (and apart from 

3

 

rights
accruing under special circumstances) having the right to vote for the election of directors; or 

	(c)
	a
person or Group of Persons shall, as a result of a take-over bid, tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have
become the beneficial owner of securities of the Company representing 51% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights
accruing under special circumstances) having the right to vote for the election of directors. 

        2.5  Employee not to Engage in Other Employment. The Employee agrees not to
engage or be interested, directly or indirectly, in any other business or employment during the term of this employment, except with the specific permission of the Employer, given in writing. 

        Without
in any way limiting the scope of the Employee's fiduciary obligations to the Employer, the Employee agrees that, at all times during the term of this Agreement and following the
termination of this Agreement or the employment of the Employee with the with the Employer, the Employee shall not engage in unfair competition with the Employer, its affiliates or subsidiaries, aid
others in any unfair competition with the Employer its affiliates or subsidiaries, in any way breach the confidence that the Employer has placed in the Employee, misappropriate any proprietary or
confidential information of the Employer, or misappropriate any corporate opportunities of the Employer. 

ARTICLE THREE—REMUNERATION AND BENEFITS  

        3.1  Remuneration. During the Employee's employment with the Employer the
Employee shall be entitled to receive the following remuneration: 

	(a)
	a
base salary of $120,000 per annum worked, payable semi-monthly; and

	(b)
	such
remuneration as the Employee and the Employer may agree to in writing from time to time. 

        3.2  No Right to Sue. The Employee shall have no further right to sue the
Employer for damages or additional wages or benefits other than as set out herein. 

        3.3  Adjustment of Remuneration. The Employer and the Employee may from time
to time, by mutual written agreement, adjust the amount of the salary referred to in Section 3.1 hereof without changing the interpretation of any of the other provisions of this Agreement. 

        3.4  Redefinition of Employment. The Employer and the Employee may from time
to time by mutual written agreement redefine the job title, description, place of employment, functions and/or responsibilities of the Employee without changing any of the rights or obligations of the
parties hereto. 

        3.5  Reimbursement of Expenses. The Employee shall be reimbursed by the
Employer for all business expenses actually and properly incurred by the Employee in connection with his duties under this Agreement in accordance with the normal policy of the Employer. The
reimbursement of expenses shall be subject to the provision by the Employee to the Employer of receipts, statements and vouchers to the satisfaction of the Employer. 

        3.6  Benefits. The Employer shall, in its sole discretion, make available to
the Employee the benefits it makes available to other Employees from time to time. For greater certainty, such benefits shall include health care, life and disability insurance and sick leave,
provided that such participation shall be subject to the terms and limitations established from time by the Employer. 

        3.7  Bonus. In addition to the remuneration described in Paragraph 3.1
above, the Employee shall be entitled to receive bonuses in the form of participation in such profit sharing, stock purchase and stock option plans as may be instituted by the Employer from time to
time. The Employee understands 

4

 

and agrees that the amount of such bonus, entitlement to and payment of any bonuses is entirely within the sole and arbitrary discretion of the Employer. The Employer shall instate a bonus plan, that
may be amended from time to time, which the Employee shall be entitled to participate in at the discretion of management and the Board of Directors up to an amount equal to 50% of base salary. 

ARTICLE FOUR—VACATION  

        4.1  Vacation Entitlement. The Employee shall be entitled to vacation period
of three (3) weeks with pay, at the end of each twelve-month period of employment of the Employee, to be taken as per company policy as communicated to the employee. After two years employment,
the Employee's vacation entitlement will increase by one (1) week. 

ARTICLE FIVE—EMPLOYEE COVENANTS  

        5.1  Covenants of the Employee. The Employee covenants both during and after
employment with the Employer as follows: 

	(a)
	that,
except in fulfillment of his duties hereunder, he shall not enter into any contract on behalf of, or in the name of, the Employer, and shall not pledge the credit of the
Employer;

	(b)
	that
he shall not at any time be guilty of any act or conduct causing or calculated to cause damage or discredit to the reputation or business of the Employer;

	(c)
	that
as soon as notice of termination of employment has been given by either party and or his employment with the Employer shall terminate, whichever is the earlier, he shall deliver
up to the Employer all books, records, printouts, lists, notes and other documents or copies thereof relating to the business of the Employer which may be in his possession or directly or indirectly
under his control;

	(d)
	that
he shall not at any time during and/or after employment use for his own interest and shall not release directly or indirectly to anyone any information concerning the Employer's
business practices, operations, procedures, policies, budget, products, financial information, client names, suppliers, etc., which the Employer shall deem confidential or against its business
interests; and

	(e)
	the
Employee further acknowledges that the information found in the Employer's books, records, printouts, lists, notes, or any other documents or copies thereof relating to the
business of the Employer is the exclusive property of the Employer and can only be used for the benefit of the Employer. 

ARTICLE SIX—INCAPACITY  

        6.1  Incapacity of Employees. Notwithstanding any other provision in this
Agreement, where during the term of this Agreement the Employee by reason of his mental or physical condition (an "Incapacity") is unable, in the sole opinion of the Employer (acting reasonably), to
perform his duties hereunder and such Incapacity shall continue for a period of more than two (2), consecutive or non-consecutive months within a twelve (12) month period, the
Employer shall hereafter have the right, on not less than three (3) months written notice to the Employee, to terminate this Agreement and the Employee's employment. In such case the Employee
shall have no claim for wages or damages against the Employer, except for the payment of his base salary for days worked to the date of termination. If the Employee's incapacity commences during the
first three (3) months of employment, the employment may be terminated without notice. 

5

 
ARTICLE SEVEN—GENERAL CONTRACT PROVISIONS  

        7.1  Governing Law. The terms of this Agreement are governed under the laws of
the Province of British Columbia and as such it is considered a contract of employment. 

        7.2  No Related Party Dealings. The Employee shall not be allowed to deal on
behalf of the Employer with any company in which he or his immediate family has an undisclosed financial interest. 

        7.3  Notice. Any notice to be given by either party hereunder may be validly
given if sent by registered mail, postage prepaid, addressed to the other at the respective addresses given below: 

	if to the Employer:	 	#302, 1132 Hamilton Street

Vancouver, B.C. V6B 2S2
	

if to the Employee:	
 	

4397 Cheviot Road

North Vancouver, B.C. V7R 3T3

        7.4  Language. The parties acknowledge that they have required this agreement
to be drawn in the English language. 

        (Les
parties reconnaissent qu'ils ont exigé que la présente entente soit rédigée en langue anglaise). 

        7.5  Survival. The representations, warranties and covenants of the Employee
contained in this Agreement shall survive any termination of the Employee's employment with the Employer. 

        7.6  Severability. If any covenant or provision contained herein is determined
to be void, invalid or unenforceable in whole or in part for any reason whatsoever, it shall not be deemed to affect or impair the validity or enforceability of any other covenant or provisions
hereof, and such unenforceable covenant or provisions or part thereof shall be treated as severable from the remainder of this Agreement. 

        7.7  Entire Agreement. This Agreement and any schedules attached hereto
constitutes the whole of the agreement between the parties. There are no collateral representations, agreements or conditions not specifically set forth herein. The Employee acknowledges that any
express representations not contained in this Agreement, made negligently, innocently or otherwise to the Employee, by the officers, directors, employees or agents of the Employer, whether acting with
actual or ostensible authority or otherwise, and whether such representations are made prior to, on or subsequent to the date hereof, have been, are or shall be so made without responsibility on the
part of the Employer, its officers, directors, employees or agents, for any tortious liability, economic losses, non-pecuniary losses or other damages. The Employee also further
acknowledges and agrees that any representations that may by implication arise as a result of the past, present or future interactions of the Employer and the Employee, shall not attribute or import
any tortious liability to the Employer, its officers, directors, employees or agents. 

        7.8  Amendments. No modification, amendment or variation hereof shall be of
effect or binding upon the parties hereto unless agreed to in writing by each of them and thereafter such modification, amendment or variation shall have the same effect as if it had originally formed
part of this Agreement. 

        8.0  Employee's Acknowledgment. The Employee acknowledges that he has read and
understands the foregoing and that the Employer has advised him that this Agreement substantially alters and supersedes the Employee's rights at common law. The Employee specifically acknowledges that
the Employer has advised him to seek independent legal advice prior to executing this Agreement. 

6

 

        IN WITNESS WHEREOF the parties have duly executed this Employment Agreement this 3rd day of April 2001 to have effect as and from
the date first above written. 

	SIGNED, SEALED AND DELIVERED by	 	)	 	 
	Garth R. Albright in the presence of:	 	)	 	 
	 	 	)	 	 
	 	 	)	 	/S/GARTH ALBRIGHT
	
 Name	 	)

)

)	 	
Garth R. Albright
	
 Address	 	)

)

)	 	 
	
	 	)

)	 	 
	
 Occupation	 	)

)	 	 
	

THE COMMON SEAL OF Peace Arch Entertainment Group Inc. was hereunto affixed in the presence of:	
 	

)

)	
 	

 
	

/S/JULIET JONES
 Authorized Signatory	
 	

)

)

)

)	
 	

C/S
	 	 	)	 	 
	/S/TIMOTHY GAMBLE
 Authorized Signatory	 	)

)	 	 

7

   Schedule "A"

JOB DESCRIPTION

"Chief Financial Officer"  

RELATIONSHIPS  

	Reports to	 	Chief Executive Officer
	Supervises	 	Corporate Controller

Head of Production Finance
	Internal	 	Corporate offices, production offices, audit committee
	External	 	Banks, funding agencies, auditors, analysts, shareholders, debtors

PERSON REQUIREMENTS  

	Knowledge	 	Knowledge of accounting systems and procedures.

Knowledge of public markets

Knowledge of Canadian GAAP and US GAAP at it applies to Peace Arch

Knowledge of financial reporting requirements

Knowledge of tax credit requirements and treaty co-production requirements

Knowledge of film industry procedures, accounting and funding.
	Behaviors/Skills	 	Superior organizational skills

Effective interpersonal skills, internally and externally

Good presentation skills

Self motivated, team player

Ability to supervise and motivate subordinates

High level of accuracy

Professional integrity
	Education	 	Designated accountant

8

 

PRIMARY ACCOUNTABILITIES  

JOB SUMMARY  

	1.
	Oversee
all accounting and audit functions

	•
	Manage
the accounting staff including the Head of Production Finance and the Corporate Controller

	•
	Manage
audit process including relationship with audit partner

	•
	Drive
tax planning initiatives

	•
	Liaise
with audit committee 

	2.
	Cash
management

	•
	Regular
reporting of cash flow projections to management

	•
	Planning
of cash flows and directing the accounting department with respect to cash collections and disbursements

	•
	Currency
management 

	3.
	Financial
Reporting

	•
	Oversee
quarterly financial statement preparation

	•
	Oversee
year end financial statement preparation

	•
	Ensure
timely mailing to shareholders and filing with authorities

	•
	Ensure
timely filing of other regulatory documents, including but not limited to 20F, AIF, 6K, Information Circular and Proxy, etc.

	•
	Ensure
debt covenant reporting requirements are being met 

	4.
	Capital/operating
budgets

	•
	Prepare
and maintain capital and operating budgets with input from management and the Board of Directors 

	5.
	Project
Financing

	•
	Evaluate
projects for potential green-light

	•
	Secure
project specific financing

	•
	Seek
out new, creative sources of project financing 

	6.
	Corporate
Finance

	•
	Maintain
existing and develop new banking relationships

	•
	Correspond
with securities analysts and investment bankers as required

	•
	Work
with the management team to secure financing as required

	•
	Quarterly
conference calls

	•
	Participate
in presentations (road-shows)

	•
	Actively
participate in merger and acquisition transactions, from deal negotiation to due diligence. 

9

 

	7.
	Management

	•
	Participate
in the day to day management of the Company

	•
	Oversee
financial and operational controls, both at head office and for productions

	•
	Participate
in overseeing productions

	•
	Perform
regular and frequent analysis of project budget status

	•
	Participate
in operational procedures, policies and controls

	•
	Participate
in financial evaluation and decision making 

PRIMARY OBJECTIVES  

	•
	Assist
in raising adequate capital for the Company's growth requirements

	•
	Participate
in growing the Company's profitability 

        This
job description was prepared April 2, 2001. The above job description may be amended periodically as determined necessary by management and through discussions with the
incumbent, to reflect the dynamic nature of the position. 

10

QuickLinks

EXHIBIT 4.2 AGREEMENT

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