EXHIBIT 10.4
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of July 27, 1995, between
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee") and Borta,
Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Employer"), a
Delaware corporation engaged in the worldwide multimedia business.
WHEREAS, the Employee's unique skills, knowledge and experience with
respect to Employer, and Employer's business, and Employee's ongoing
participation and employment by Employer are a most significant and material
inducement in Employer's decision to enter into an employment agreement with
Employee.
WHEREAS, Employer desires to employ Employee as the President of Employer,
and the Employee desires to be employed in such capacity;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the Employer and the Employee
hereby agree as follows.
1. Employment Duties and Agreements
(a) The Employer hereby agrees to employ the Employee (the "Employment")
as the President of Employer, with such senior executive and
management duties, responsibilities, obligations and powers
commensurate with such role, as will be described herein and which are
assigned to the President by the Board of Directors of Employer; and
(b) The Employee hereby accepts the Employment and agrees to serve the
Employer during the period described in Section 1(d) hereof. In
rendering service to the Employer, the Employee shall be subject to,
and agrees to act in accordance with, the instructions and directions
of Employer's Board of Directors, and all applicable policies and
rules thereof.
(c) During the Employment, Employee will be responsible for the operations
and management of the business of Employer on a day to day basis with
primary responsibility to oversee and participate in the creation of
games and other multimedia products for Employer. Additionally, should
Employer enter into agreements with individuals or with such entities
involved in the development of multimedia products, including but not
limited to electronic gaming, at the request of Employer or Employer's
affiliates Employee will participate in various aspects
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of such businesses and with individuals in Employee's area of
expertise. As part of Employee's duties he will identify and appoint
and oversee executives of Employer and other staff necessary to
operate and manage Employer; the appointment of executives of Employer
shall be to be subject to prior approval by Employer's Board of
Directors. Employee will keep the Employer's Board of Directors
updated with written reports concerning Employer on an ongoing basis
per the policies and practices of Employer. All agreements, whether
oral or written obligating Employer or it's affiliates for obligations
whether financial or otherwise (a) not contemplated in the approved
budget; or (b) in excess of one year in length; or (c) not financial
in nature, must be approved by the General Counsel of Employer.
(d) The initial employment term shall be three (3) years from the
execution of this Agreement, ("Initial Employment Term"), renewable on
terms subject to good faith negotiations and mutual approval on an
annual basis with three (3) months written notice prior to the
expiration of the initial term, and thereafter each annual term
("Subsequent Annual Employment Terms").
However, it is understood that it is the essence of this Employment
agreement that Employee will provide his services to oversee and
supervise the fulfillment and exploitation of Employer's contracts and
business for not less than eighteen (18) months from execution of this
Employment Agreement. Should Employee fail to oversee the fulfillment
and exploitation of such business of Employer for such period of time
to the best of his ability according to reasonable industry standards,
and on an exclusive non-compete basis, he will be in breach of the
employment agreement and cause irreparable damage to Employer, and be
subject to all equitable and other legal remedies available to
Employer, including Employer's right to terminate Employee pursuant to
the terms of paragraphs 3(b), 3(b)(vii) and 4(a) of this Agreement.
(e) Employee shall be elected and appointed as a member of Employer's
Board of Directors.
(f) The principal office of the Employee shall be at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or other office in the vicinity of
Employer's present office; provided, that Employee may be required to
travel and render services outside such area at such reasonable times
as may be necessary to perform his duties hereunder.
(g) During the Employment, the Employee shall devote on an exclusive basis
his professional full time and energy, attention, skills and ability
to the performance of the Employment and shall faithfully and
diligently endeavor to promote the
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business and best interests of the Employer and it's affiliates and
shall make available to the Employer and it's affiliates when and if
requested, all knowledge possessed by him relating to any aspect of
his duties and responsibilities hereunder, and shall introduce
Employer's executives and Board of Directors and executives of
Employer's affiliates to all individuals personally known to Employee
in the worldwide multimedia industry that Employer's and it's
affiliates' executives and Board of Directors wish to meet or do
business with. For the purposes of this Employment Agreement the term
worldwide multimedia industry shall be defined as "that industry
involved in computer graphics, video, film, graphics, and, audio
(individually, and in any combination thereof), for use in display on
computers, and/or film and video mediums or other distribution mediums
now known or hereinafter devised, whether used for entertainment,
information or educational purposes." Nothing in this Paragraph 1(g)
precludes Employee from making passive investments of up to 5%
interest in any entity or business which may be competitive with
Employer or it's affiliates, nor any passive investment, of any
amount, in any entity or business which is not competitive with
Employer or it's affiliates.
Employee hereby agrees to allow Employer to use his name, bio and
likeness in connection with information dissemination concerning their
respective companies. Employee agrees not to make public
announcements, or publicity about Employer without first consulting
with Employer's Board of Directors. Employee agrees to appear and
participate with Employer and it's affiliates in the general promotion
of Employer and it's affiliates as it may reasonably request.
2. Compensation
(a) Base Salary
As compensation for the performance by the Employee of his obligations
hereunder during the Employment, and provided that Employee
satisfactorily performs his obligations hereunder, the Employer shall
pay the Employee a base salary (the "Base Salary") equal to $150,000
per annum. The Employee's Base Salary shall be payable in equal
installments no less frequently than twice each month.
(b) Additional Compensation
(i) Signing Bonus
As additional compensation Employee will be entitled to a signing
bonus of $750,000 payable $250,000 upon execution of this
Agreement; $250,000
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on November 1, 1995 and $250,000 on February 28, 1996.
(ii) Annual Bonus
As compensation for the performance by the Employee of his
obligations hereunder, the Employer shall pay the Employee within
ninety (90) days after the end of each fiscal year during the
Employment commencing from the end of the 1996 fiscal year a
bonus (the "Annual Bonus") equal to seven and one-half percent (7
1/2%) of Employer's earnings before interest and taxes
"EBIT"calculated in accordance with generally accepted accounting
principals ("GAAP"), which is defined as revenues adjusted for
returns and allowances less operating expenses, in each year with
the understanding that the first year terminates October 31,
1996. The actual amount of EBIT for each year will be determined
by independent certified public accountants appointed by
Employer's Board of Directors to audit its financial statements.
No amount of any annual bonus shall be considered earned unless
and until it is payable pursuant to the terms of this paragraph 2
(b) (ii).
(c) Other Benefits
(i) During the Employment, the Employee shall be entitled to
participate in such medical, disability, life, accident or other
insurance or welfare plans, programs or arrangements as are
offered generally to the executives of Employer and it's
affiliates.
(ii) The Employee shall be entitled to 4 weeks paid vacation with
respect to each calendar year of the Employment, which vacation
shall be subject to such rules and regulations as Employer shall
adopt with respect to paid vacation for executives of the
Employer.
(d) Payments Subject to Withholding
The compensation provided to the Employee pursuant to this Agreement
shall be subject to any required federal, state, local and other
governmental withholdings or deductions required under applicable tax
laws.
3. Termination Events
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(a) The Employment shall commence on the date hereof, and will continue
unless terminated, by a Termination Event, as defined below.
(b) For purposes of this Agreement, the following events shall constitute
"Termination Events":
(i) The expiration of the Initial Employment Term or the expiration
of any Subsequent Annual Employment Terms when there are no
provisions for automatic renewals or extensions.
(ii) the Employee's death;
(iii)the Employee's failure to substantially perform the duties
required of him hereunder for a period of 3 consecutive months or
for shorter periods aggregating 3 months during any 6-month
period on account of a physical or mental disability or
incapacity, as verified by a written statement from a physician
mutually agreeable to Employer and Employee;
(iv) the termination of the Employment by the Employer for "Cause".
For purposes of this Agreement the term Cause, when used in
connection with the termination of the Employment by the Employer
or Aristo, shall mean the Employee's (A) commission of fraudulent
or criminal acts; or (B) failure to act exclusively in the
worldwide multimedia industry as defined above in paragraph 1(g)
on behalf of Employer in breach of this Employment Agreement; or
(C) acting solely or with others in competition to Employer
without Employer's Board of Director's prior written consent. (D)
Employee's failure to substantially perform the duties required
of him hereunder for a period of three (3) consecutive months or
for shorter periods aggregating three (3) months during any six
month period. (E) material breach of this Agreement
(v) the voluntary termination of the Employment by the Employee,
other than for "Good Reason". For purposes of this Agreement, the
term Good Reason, when used in connection with the voluntary
termination of the Employment by the Employee, shall mean the
assignment to the Employee of any duties inconsistent with the
terms of this Agreement or that could result in an assertion of a
breach hereof.
(vi) The voluntary termination of the Employment by the Employee for
Good Reason.
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(vii)This Agreement shall not limit the right of the Board of
Director's of Employer to terminate the Employment at any time,
whether or not for Cause.
4. Payments Upon Termination of Employment
In the event of the termination of the Employment, either by the
Employer or by the Employee, the Employee shall be entitled to receive
payments from the Employer as follows:
(a) Payments in the Event of a Termination Event Described in Paragraphs
3(b)(i)-(v)
Upon the termination of the Employment as a result of a Termination
Event described in Section 3(b) (i) - (v), above, the Employee shall
be entitled to any (i) Base Salary, vacation pay and Annual Bonus due
and owing at the date of such termination but not yet paid and (ii)
amount of Annual Bonus and/or Signing Bonus already due and payable
prior to termination pursuant to the terms of Section 2(b) above. The
Employee shall not be entitled to any other compensation or payments
hereunder after the date of, or otherwise with respect to, such
termination of the Employment.
(b) Payments Upon Termination of Employment as a Result of Events
Described in Paragraphs 3(b)(vi) or 3(b)(vii).
Upon the termination of the Employment as a result of Termination
Event described in Section 3(b), (vi) and (vii) above, the Employee
shall be entitled to and paid on last date of employment (i) any Base
Salary, vacation pay, and Annual Bonus and Signing Bonus due and owing
at the date of such termination, but not yet paid, as well as the Base
Salary and Signing Bonus that would have been payable to Employee
through the expiration of the Initial Employment Term, plus 50% of his
annual salary for an additional six (6) months after said Initial
Employment Term.
5. Ownership of Work Product and Ideas
(a) During the Employment, any discoveries, inventions, patents,
materials, licenses and ideas related to the worldwide multimedia
industry (whether or not patentable or copyrightable and whether
created and owned by Employee personally or owned by Employer prior or
after the execution of this Agreement ) ("Work Product") and all
business opportunities
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introduced to Employee during the Employment Term within the worldwide
multimedia industry, as defined in paragraph 1(d) above will be owned
by and belong exclusively to Employer, and Employee will have no
personal interest in such. Employee will, in such connection, promptly
disclose such Work Product and business opportunities to Employer and
assign to Employer upon it's Board of Director's request and without
additional compensation, all rights to such Work Product and business
opportunities. Employee will offer Employer a right of first refusal
and last negotiation on all business opportunities in the worldwide
multimedia industry which he may now own an interest in.
The Employee agrees that any process, invention, improvement,
discovery, program or system (1) described in a patent application
filed by the Employee or any third party which acquired such process,
invention, improvement, discovery, program or system from the Employee
or (2) disclosed by the Employee to any third party (whether or not
for compensation), in either case within 2 years after the termination
of the Employment, shall be deemed to be developed during the
Employment and belong to Employer unless Employee demonstrates that
such process, invention, improvement, discovery, program or system was
conceived and developed subsequent to the termination of the
Employment, and is not based on information developed by the Employer,
or any affiliated company and disclosed to Employee during the
Employment.
It is understood and agreed, however, that all inventions, and ideas,
whether or not patentable or copyrightable, owned or developed by
Employee prior to May 31, 1995 which are not related to the worldwide
multimedia industry, are the sole property and will remain the sole
property of Employee and not owned by Employer during and after the
employment term.
6. Protection of Confidential Information
(a) Employee acknowledges that during the course of his employment, he
will acquire Proprietary Information and Trade Secrets (as hereinafter
defined), of Employer and it's potential affiliated companies:
("Employer and affiliated companies"). For purposes of this Agreement:
(i) "Proprietary Information" shall mean all unpublished materials
and information created, discovered, owned or otherwise
controlled by
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Employer and affiliated companies relating to the products of
Employer and affiliated companies, including, but not limited to
financial information, data or statements, product research and
development, existing and future product plans, designs and
schematics, patents, client lists, computer data, documentation,
algorithms, processes and know-how (whether or not reduced to
writing and whether or not patentable or copyrightable), and
business and marketing plans and strategies, pricing policies,
cost and profit information, supplier identities, packaging and
the like, whether disclosed orally, in writing, or by inspection.
Proprietary information shall also include all other materials
and information which have been clearly identified by Employer as
Proprietary Information, Trade Secrets or Confidential
Information. The term "Proprietary Information" shall not include
any information which is now generally known or available or
which hereafter through no act or failure on the part of Employee
becomes generally known or available;
(ii) "Trade Secrets" shall mean the whole or any portion or phase of
any scientific or technical information, design, process,
procedure, formula or improvement which is secret and is not
generally available to the public, which Employer and affiliated
companies may consider confidential, and which gives the one who
uses it an advantage over competitors who do not know of or use
the Trade Secret. The Trade Secrets may include, without
limitation, information relating to programs or products now
existing or currently under design or development.
(b) Non-Disclosure
Employee agrees to hold the Proprietary Information and Trade Secrets
of which Employee may acquire knowledge hereunder in the strictest
confidence unless ordered to disclose same subject to legal proceeding
instituted by third parties or as required to fulfill authorized
government requirements. Employee further agrees not to disclose any
Proprietary Information or Trade Secrets except to the Board of
Directors of Employer, employees and consultants of Employer and
affiliated companies, if any, who reasonably require the same for the
purposes hereof and who are bound by a confidentiality agreement in
form and substance.
(c) Return of Documents and Materials
The Employee agrees to use his best efforts to deliver promptly upon
the termination of the Employment, and at any other time as the
Employer may request, all documents, technology, software, source
codes, object codes, hardware (and all copies thereof), in whatever
medium, relating to the business of
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the Employer, or any affiliated company, he possesses or has under his
control.
7. Covenant Not to Compete and Covenant Not to Solicit
(a) Employee agrees that during the Employment Terms as such are
defined in Paragraph 1 (d) ("Initial Non-Compete Term") he will
not compete directly or indirectly with Employer or any of it's
affiliated companies within the worldwide multimedia industry;
and
(b) Upon termination of said Employment Terms, provided that such
termination occurs because of expiration or because Employee is
terminated for cause or voluntarily, as both are defined in
Paragraph 3(b)(i)-(v) above, and for two (2) years after such
termination, ("Second Non-Compete Term"), Employee will not
compete directly or indirectly with Employer or any of it's
affiliated companies, within the worldwide multimedia industry;
and
(c) Should Employee be terminated by Employer's Board of Directors
other than for cause prior to the expiration of any Employment
Term, or Employee leaves for Good Reason as both are defined in
paragraphs 3(b)(vi) and(vii), Employee will not compete directly
or indirectly with Employer or any of it's affiliated companies
for a period of one (1) year from such involuntary termination
("Third Non-Compete Term"); and
(d) Employee agrees that during any or all of the Non-Compete Terms
set forth in this paragraph 7, he will not directly or
indirectly, either as a principal, agent, employee, employer,
consultant, 5% or more stockholder, partner, or in any other
personal representative capacity whatsoever whether through a
corporation, partnership, trust, sole proprietorship or any other
organization, engage in, or assist any person to engage in,
businesses directly or indirectly competitive with Employer and
any of it's affiliated companies, nor will he solicit or assist
others to solicit or divert any Proprietary Information, Trade
Secrets, business or customers from Employer and any of it's
affiliated companies, or solicit or divert employees of Employer
to terminate his or her employment with Employer and any of it's
affiliated companies.
However, it is understood and agreed that during the Second and
Third Non-Compete Terms as defined above, Employee may engage in
or induce others, who are not employees of Employer or any of
it's affiliated companies, to engage in business opportunities in
the multimedia industry offered to Employer or any of it's
affiliated companies during the Initial Non-Compete Term, but
which Employer or any of it's affiliated companies refused to
pursue during such Initial Non-Compete Term. It is also
understood and agreed that Employee may during the Second and
Third Non-Compete Terms request ▇▇▇▇▇▇ ▇▇▇▇▇ to leave her
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employment with Employer to work with him.
8. CONFLICTING AGREEMENTS
Employee warrants and represents that he has disclosed to Employer any
existing or proposed agreements to which Employee is a party that may
adversely affect Employee's ability to render his services to Employer
hereunder.
9. INDEMNIFICATION
Employee hereby indemnifies and holds harmless Employer and it's
affiliated companies, and their directors, officers, agents and
employees from and against all claims, demands and causes of action
(including without limitation, reasonable attorneys fees, court costs
and other liabilities) arising out of or in connection with Employee's
breach of his obligations under this Agreement or inaccuracies in his
representations or warranties under this Agreement, or any of his
activities prior to the execution of this Agreement. Nothing in this
section imposes on Employee the obligation to indemnify the Employer
or it's affiliated companies with respect to any damages resulting
from Employer's or any of it's affiliated companies intentional torts
or acts of negligence.
10. GENERAL PROVISIONS
(a) No Waiver. No provision of this Agreement shall be deemed to have been
waived unless such waiver is in writing signed by the waiving party.
No failure by any party to insist upon the strict performance of any
provision of this Agreement, or to exercise any right or remedy
consequent upon a breach thereof, shall constitute a waiver of any
such breach, of such provision or any other provision. No waiver of
any provision of this Agreement shall be deemed a waiver of any other
provision of this Agreement or waiver of such provision with respect
to any subsequent breach, unless expressly provided in writing.
(b) Notices. All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be served by certified
or registered mail, postage pre-paid with return receipt
requested, by private courier, prepaid; by facsimile or other
telecommunication device capable of transmitting or creating a
written record with copy sent by U.S. mail or by personal
delivery three days after initial fax transmission; or
personally. Mailed notices shall be deemed delivered three days
after mailing, properly addressed, return receipt signed.
Couriered notices shall be deemed
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delivered on the date the courier warrants a delivery has
occurred. Fax notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or
acknowledged by the addressee or its office. Personal delivery
shall be effective when accomplished upon signature of receipt.
All notices shall be given to the parties at the addresses first
given above unless a party changes his or it's address by giving
notice to the other party as provided herein.
(c) Integration; Amendment. This Agreement constitutes the entire
Agreement of the parties relating to the subject matter hereof.
There are no terms, conditions or obligations other than those
contained in this Agreement. This Agreement supersedes all prior
communications, representations or agreements between the parties
relating to the subject matter hereof. This Agreement may not be
amended except in writing executed by the parties.
(d) Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not effect the other
provisions hereof, all of which shall remain enforceable in
accordance with their terms. Should any of the obligations
hereunder be found illegal or unenforceable, such obligations
shall be enforceable within whatever terms a court of competent
jurisdiction shall deem allowable by law. Employee may not
assign, sell, subcontract, delegate or otherwise transfer his
obligations under this Agreement, without the prior written
consent of Employer's Board of Directors, and any attempted
assignment or delegation shall be void and without effect.
(e) Successors. This Agreement shall inure to the benefit of the
successors and assigns of the Employer or affiliated companies as
if such Agreement had been originally negotiated and entered into
by and between Employee and any such successor or assign,
provided such assignee undertakes in writing to perform all of
Employer's obligations hereunder.
(f) Governing Law. The parties hereto intend that this Agreement
shall be governed by and construed in accordance with the laws of
the State of New York for agreements wholly negotiated, entered
into and performed within the State of New York. The parties
hereto each consent to the jurisdictions of the State and Federal
courts located in the City and County of New York. Each party
agrees that it hereby waives any objection to such jurisdiction
as a forum non-conveniens.
(g) Injunctive Relief. Employee acknowledges that Employer and it's
affiliated companies, are new and evolving companies in the
worldwide multimedia
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industry and that protection of Proprietary Information, Trade
Secrets, and compliance with non-compete covenants provided in
Paragraph 7 are important to future prospects for growth and
business development of Employer and it's affiliated companies.
Employee acknowledges that the Employer and it's affiliated
companies may not have an adequate remedy at law in the event of
any breach or threatened breach by Employee of any provision of
Paragraph 6 and 7, and that Employer or it's affiliated companies
may suffer irreparable damage and injury as a result.
Accordingly, in the event of any such breach or threatened
breach, Employee hereby consents to Employer's or it's affiliated
companies application for injunctive relief against him by any
court of competent jurisdiction without the posting of any bond
or security therefor.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement binding on all the parties, notwithstanding that all
parties are not signatories to the same counterpart. All exhibits
referenced and attached to this Agreement are by this reference
incorporated into and made part of this Agreement. The section
headings in this Agreement are included for convenience only;
they do not give full notice of the terms of any portion of this
Agreement, and are not relevant to the interpretation of any
provision of this Agreement.
(i) Survival. All rights and obligations shall cease upon termination
of this Agreement, except for the rights and obligations set
forth in or arising out of paragraphs 6,7, and 10(g), which shall
survive the termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
By: /s/ ▇▇▇ ▇▇▇▇▇
______________________________________
▇▇▇ ▇▇▇▇▇ ("Employee")
BORTA, INC. ("Employer")
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
______________________________________
▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman