EXHIBIT 10.5
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of July 27, 1995, between
Xxxxxx Xxxxx, 00 Xxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 (the "Employee") and Borta,
Inc. 000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 ("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 Chief Operating Officer
("COO") of Employer, and 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 Chief Operating Officer of Employer, with such senior and
management duties, responsibilities, obligations and powers
commensurate as will be described herein and which as are assigned to
the Employee 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 the Employer's Board of Directors and all applicable policies and
rules thereof.
(c) During the Employment, Employee will with Employer's President will be
responsible for the operations and management of the business of
Employer on a day to day basis. 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 Employer's request Employee will participate in
various aspects of such businesses and with
individuals in Employee's area of expertise. As part of Employee's
duties she will participate in identifying and appointing and
overseeing executives of Employer and other staff necessary to operate
and manage Employer; the appointment of executives of Employer shall
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 her services to help oversee
Employer's business for not less than eighteen (18) months from
execution of this Employment Agreement. Should Employee fail to help
oversee the business of Employer for such period of time to the best
of her ability according to reasonable industry standards, and on an
exclusive non-compete basis, she 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 000 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxx, XX 00000 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 her duties hereunder.
(g) During the Employment, Employee shall devote on an exclusive basis her
professional time and energy, attention, skills and ability to the
performance of the Employment and shall faithfully and diligently
endeavor to promote the 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 her
relating to any aspect of her duties and responsibilities hereunder,
and shall
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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 or 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 her 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 her obligations
hereunder during the Employment, and provided that Employee performs
her obligations hereunder, the Employer shall pay the Employee a base
salary (the "Base Salary") equal to $120,000 per annum. The Employee's
Base Salary shall be payable in equal installments no less frequently
than twice each month.
(b) 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
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such rules and regulations as Employer shall adopt with respect
to paid vacation for executives of Employer.
(c) 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
(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 her 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, 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 Agree-
ment; or (C) acting solely or with others in competition to
Employer without Employer's Board of Directors prior written
consent. (D) Employee's failure to substantially perform duties
required of her
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hereunder for a period of three (3) consecutive months or for
shorter periods aggregating three months during any six (6) 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.
(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 Paragraph
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 Base Salary, and vacation pay due and owing at the
date of such termination but not yet paid . 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 a Termination
Events described in Section 3(b), (vi) or 3(vii) above, the Employee
shall be entitled to and paid on last date of employment (i) any Base
Salary, and vacation pay, due and owing at the date of such
termination but not yet paid, plus the Base Salary that would have
been payable to Employee
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through the expiration of the Initial Employment Term.
5. Ownership of Work Product and Ideas
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 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 she 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
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(a) Employee acknowledges that during the course of her employment, she
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 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 and employees and consultants of Employer , if any, who
reasonably require the same for the purposes hereof and who are bound
by a confidentiality agreement in form and substance.
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(c) Return of Documents and Materials
The Employee agrees to use her 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 the Employer, or any affiliated
company, she possesses or has under her 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") she 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 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 3(b)(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, she 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 she
solicit or assist others to solicit or divert any Proprietary
Information, Trade Secrets, business or customers from Employer or any
of it's affiliated companies or solicit or divert employees of
Employer or any of it's affiliated companies to terminate his or her
employment with Employer.
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,
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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, as
long as such businesses do not directly or indirectly compete with
Employer or any of it's affiliated companies. It is also understood
and agreed that Xxxxxx Xxxxx may during the Second and Third
Non-Compete Terms request Xxx Xxxxx to leave his employment with
Employer to work with her.
8. CONFLICTING AGREEMENTS
Employee warrants and represents that she has disclosed to Employer
any existing or proposed agreements to which Employee is a party that
may adversely affect Employee's ability to render her 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 her obligations under this Agreement or inaccuracies in her
representations or warranties under this Agreement, or any of her
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 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.
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(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 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, her, 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 her 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
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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 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
her 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.
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(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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
By: /s/ Xxxxxx Xxxxx
______________________________________
Xxxxxx Xxxxx ("Employee")
BORTA, INC. ("Employer")
By: /s/ Xxxxxx Xxxxx
______________________________________
Xxxxxx Xxxxx
Title: Chairman
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