EMPLOYMENT AGREEMENT Exhibit 6.2
EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 30th day of April,
1996, by and between MEDIA DROP-IN PRODUCTIONS, INC, a Delaware corporation (the
"Employer"), XXXXXXX XXXXXXXXXX (the "Employee") and XXXXXX X. XXXXXXX
("Saferin").
WHEREAS, Employer is engaged in the video and audio recording supply and
lottery promotion business (the "Business"); and
WHEREAS, Employee desires to offer his professional services as an Employee
of the Employer.
WHEREAS, Employer desires to hire Employee to perform those functions set
forth on Exhibit A attached hereto and made a part hereof (the "Services"), and
Employee desires to accept such employment upon the terms and conditions herein
contained.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment.
The Employer hereby hires the Employee and the Employee hereby accepts
such employment as the Chief Financial Officer of Employer to render the
Services on behalf of the Employer, subject to the supervision and direction of
the Board of Directors of the Employer. Employee additionally agrees to serve as
an officer of Employer, if so elected by the Board of Directors.
2. Term.
The term of employment shall be for the period of one (1) year
commencing on October 1, 1995 and terminating on September 30, 1996. The term of
employment shall thereafter continue from year to year accounting from October 1
of each year, unless either party gives the other sixty (60) days advance
written notice prior to the expiration of the then current annual term of its
intention to terminate employment.
3. Duties.
The Employee hereby accepts employment by the Employer for the term and
upon the conditions set forth in this Agreement, and shall:
(a) During the term of this Agreement, the Employee shall render to
the very best of the Employee's ability, on behalf of and in the best interest
of the Employer, the Services to and
for the Employer carrying on such Services in accordance with reasonable
policies and reasonable directives of the Employer from time to time
established.
(b) Devote such time, energy and skill reasonably necessary to the
performance of the Services for which the Employee is engaged, at such place or
places and during regular business days as well as the business hours during the
day necessary in order to accomplish the Services~in the Employer's best
interests, and in accordance with the ethical standards of the Employer from
time to time established.
(c) The Employee shall faithfully and industriously assume and perform
with skill, care, diligence and attention all responsibilities and duties
connected with his employment on behalf of the Employer.
(d) The Employee shall have no authority to enter into any contracts
binding upon the Employer, which would create any obligations on the part of the
Employer, except as may be specifically authorized by the Employer.
(e) During the employment with the Employer, the Employee shall not
engage in or perform services of any nature in any capacity with any business,
including, but not limited to any such business or organization competitive with
the Employer. The Employee shall work at all times during the period of
employment hereunder in the best interests of Employer and for the advancement
of the Employer and never knowingly take action against the best interests of
the Employer.
4. Compensation.
(a) Salary.
For all services to be rendered by the Employee to the Employer during
the first twelve (12) months of the term of such employment, the Employer shall
pay the Employee a salary of Ninety-Six Thousand Dollars ($96,000.00) per year
(the "Base Salary"), payable twice per month, in equal installments, during the
term of employment, with appropriate deduction therefrom for all federal, state
and local withholding taxes. The Employer shall evaluate the Employee's salary
on an annual basis. The Employer and Employee may, from time to time, reflect
increases and decreases in the Employee's compensation as may be mutually agreed
upon, in accordance with the foregoing, by evidencing such change in writing
signed by both parties.
(b) Incentive Compensation.
(i) (a) Throughout the term of employment, Employee shall be
entitled to a bonus based on the number of tickets redeemed by Employer pursuant
to contracts with state lotteries (including both U.S. and foreign lotteries) to
operate Employer's second chance lottery games (a "Direct Redemption") or the
number of tickets redeemed by related entities of Employer,
2
who pay a management fee to Employer (an "Indirect Redemption"), provided that
in no event shall any bonus be paid on any tickets redeemed which constitute an
"over-redemption". With respect to every ticket redeemed as part of a Direct
Redemption or an Indirect Redemption, Employee shall be entitled to a bonus in
the amounts provided below. Employee shall also be entitled to a bonus based on
the number of tickets redeemed by Employer or related entities of Employer
pursuant to contracts with third parties, other than lotteries, to operate
promotions and the bonus shall be in the amounts as provided below.
(b) The terms under this subparagraph (i) shall be in the amounts in
accordance with the following schedule:
CONTRACT YEAR BONUS PER TICKET
------------- ----------------
October 1, 1995 - September 30, 1996 .015 (1 1/2 cents)
October 1, 1996 - September 30, 1997 .02 (2 cents)
October 1, 1997 - September 30, 1998 .025 (2 1/2cents)
October 1, 1998 - September 30, 1999 .03 (3 cents)
and each year thereafter commencing October 1.
For tickets redeemed by Employer other than for U.S. State lotteries, the bonus
per ticket above will be based on each Three Dollars ($3.00) earned from tickets
redeemed, expressed in U.S. Currency, as the case may be. In calculating the
amount of bonus payable under this subparagraph (i), the following examples are
used: During the period of October 1, 1995 -September 30, 1996, Employer redeems
100,000 tickets in U.S. Lotteries and Employee's bonus shall be $1,500.00;
during the same time period, Employee's gross revenues from other than U.S.
Lotteries is $100,000.00, as expressed in U.S. currency, Employee's bonus shall
be $500.00.
(c) The bonus under this subparagraph (i) shall be paid within thirty
(30) days after the end of each fiscal quarter that Employee remains employed
hereunder based on the number of tickets redeemed during that quarter. Related
entity as used in this subparagraph (i) shall include any subsidiary or
affiliated company of Employer.
(ii) (a) In the event that during the term of employment, there
occurs (A) a sale of all or substantially all of the assets of the Employer (an
"Asset Sale"), (B) the sale by Xxxxxx X. Xxxxxxx ("Xxxxxxx") of more than
one-half (1/2) of all of the capital stock owned by Saferin in Employer or (C) a
merger or consolidation to which the Employer is a party with a party other than
another entity controlled by Saferin, then Employee shall be entitled to an
additional bonus in an amount equal to either (X) five percent (5%) of the gross
cash consideration received by the Employer in any Asset Sale or (Y) in the
event of a transaction described in (B) or (C) above, five percent (5%) of the
cash consideration received by Saferin in connection with the transaction. The
3
bonus under this subparagraph (ii) shall be paid within thirty (30) days
after closing of the transaction giving rise to the bonus, provided that any
part of the bonus attributable to cash consideration to be paid in installments
shall be paid within thirty (30) days of receipt of the installment. Employee
shall not have to continue to remain employed in order to receive any such
installment payment.
(a) The provisions of this subparagraph (ii) shall be applicable for a
period of one year following the termination of employment of Employee under
Section 9(b) or (d) below and Section 9(a) below if Employer is the party giving
written notice to Employee of its intention to terminate employment.
(b) Saferin agrees to pay Employee's bonus for the transaction
described in (B) or (C) above by retaining Employee as a consultant pursuant to
the terms of an agreement to be in the form attached hereto as Exhibit C.
(c) Saferin joins in as a party to this Agreement for the sole purpose
of obligating himself to the terms and conditions of this subparagraph (ii) as
they may apply to Saferin.
5. Fringe Benefits.
The Employer only shall provide and furnish to the Employee, all fringe
benefits which Employer may from time to time generally make available to other
employees of the Employer, as determined by the Employer in its discretion,
including by way of example, health insurance comparable to the health insurance
being maintained for Employee's benefit prior to the date hereof, group
disability insurance and profit sharing plan. Employee shall additionally be
entitled to those fringe benefits listed on Exhibit B, attached hereto and made
a part hereof. Nothing herein contained shall create a contractual obligation on
the part of Employer to provide any particular fringe benefit to employees of
Employer holding comparable positions to that of Employee.
6. Records of the Employer.
The Employee, during the course of his employment with the Employer may
work on and be consulted with respect to matters for clients of the Employer.
All such matters are highly confidential. The Employee understands and agrees
that the Employee shall acquire no rights to any of this information. All
records, notes, memoranda, files, financial statements, client and client lists,
brochures, documents and all other similar material relating to the Employer or
the business of the Employer or those of its clients (hereinafter referred to as
the "Records") which shall come into the possession of the Employee, shall
remain and be deemed to be the property of the Employer. The Employee shall
promptly return any originals and all copies of the Records to the Employer upon
request. Upon cessation of employment for whatever reason, the Employee shall
promptly deliver to the Employer the Records in his possession or delivered to
or otherwise acquired by the Employee concerning the Employer or its clients.
4
7. Non-Disclosure.
Except with the prior written consent of the Employer, which consent is
within the sole discretion of the Employer, the-Employee agrees that he will not
directly or indirectly, during or after the term of his employment, disclose or
reveal (except as Employee is required to disclose by court order, summons,
subpoena or similar process of law or to Employer's attorney in connection with
the foregoing) to or use for the Employee or others, the confidential
information of the Employer or its clients including, but not limited to
proprietary information, secrets, the lists of the Employer's clients, the lists
of employees of the Employer, any secret or confidential information or data
regarding the business of the Employer, any secret or confidential information
or data concerning the clients or prospective clients of the Employer. Such
business methods and secrets shall include but are not limited to programs, data
systems, processes, computer programs, computer systems, equipment and
configurations, financial information, pricing policies, names of employees,
names of clients, any information contained on any Records and all other
business knowledge and techniques of the Employer.
8. Non-Competition.
(a) Employee agrees that, during the term of this Agreement and for
the period of eighteen (18) months following the expiration of this Agreement,
the voluntary termination by Employee or the termination under paragraphs 9(e)
through (i), inclusive, hereinbelow of Employee's employment, Employee will not
(i) solicit any North American lottery customers of Employer; (ii) directly or
indirectly request or advise any of such Employer's customers to withdraw,
cancel or curtail such party's business with Employer; (iii) directly or
indirectly induce any of such customers to patronize any business which is
competitive with Employer; or (iv) be engaged in, render service to or compete
in the lottery promotion business in connection with any lottery in North
America (the "Geographic Territory").
(b) Employee agrees that his promises herein made so to refrain from
engaging in the activities stated herein means that he will not, directly or
indirectly, either individual on his own account or as partner, employee, agent,
consultant, or salesperson of or for any person, firm, association or
corporation, or as officer, director or stockholder of any corporation, engage
in the activities described in subparagraph (a) hereof in the Geographic
Territory for the period provided.
9. Termination.
The employment of the Employee shall terminate upon the occurrence of
any one of the following conditions or events:
(a) At any time by written notice from either party to the other at
least sixty (60) days prior to the date that such termination is to be
effective;
(b) By the dissolution or liquidation of the Employer;
5
(c) At the election of the Employer, upon a sale of all or
substantially all of the assets of Employer, or a change of the majority
ownership of the Employer from the ownership as of the date of this Agreement;
(d) By the death or disability of the Employee;
(e) In the event the Employee shall fail or refuse to faithfully or
diligently perform the provisions of this Agreement or the usual customary
duties of his employment and such failure is not corrected within ten (10) days
of written notice from Employer;
(f) In the event that the Employee conducts himself in an
unprofessional, unethical, immoral or fraudulent manner, and such conduct is not
corrected with ten (10) days of written notice from the Employer;
(g) In the event that the Employee is convicted of a felony;
(h) The withholding by Employee of any fees or income rightfully
belonging to Employer.
With the exception of subsection (a) set forth above, no prior notice is
required for the termination of the Employee's employment to become effective.
For the purposes of subparagraph (d) hereof, "disability" shall mean a physical
or mental illness, which results in Employee not being able to carry out his
duties under this Agreement for a period of six (6) consecutive months. As of
the date of termination, Employer shall be responsible to pay to Employee only
such salary and incentive compensation as has been earned by Employee prior to
the date of termination and Employer shall have no further obligations to
Employee. Notwithstanding the foregoing, in the event that Employee is
terminated under subparagraph (d) hereof or under subparagraph (a) hereof if
Employer is the party giving written notice to Employee of its intention to
terminate employment, then Employee shall be entitled to receive as severance
pay an amount equal to three (3) months of then current Base Salary for each
full year and one (1) month of such Base Salary for each four (4) months of a
partial year that Employee was employed by Employer prior to such termination,
provided that the maximum amount of severance pay shall equal one (1) year of
Employee's then current Base Salary. Severance pay shall be paid in equal
bi-monthly installments commencing with Employer's next pay period immediately
after termination of employment for a period equal to the number of months of
Base Salary that Employee is to receive as severance pay.
10. Death of Employee.
In the event that Employee shall die before receipt of any salary and
incentive compensation due hereunder, such salary and incentive compensation
shall be paid to the estate or heirs of Employee, as the case may be.
6
11. Indemnification.
The Employee agrees to indemnify, save and hold the Employer and its
officers, directors and stockholders harmless from any and all claims and
damages which may arise out of or result from or in connection with arty breach
by the Employee of the provisions herein, including, but not limited to
reasonable attorney's fees and litigation and legal expenses, if Employer shall
prevail in such litigation, provided that if Employee shall prevail in such
litigation, then Employer shall pay Employee's reasonable attorney's fees and
litigation and legal expenses. For purposes of the obligations of Employee set
forth in paragraphs 1, 3(a), 3(b), and 3(c) hereof, Employee shall not be deemed
to be in breach of such obligations unless Employer shall have given Employee
written notice of the nature of such breach, and Employee shall have failed to
cure the breach within fifteen (15) days after receipt of such written notice.
12. Enforceability.
The Employee acknowledges that the restrictions contained herein,
including those contained in Sections 6, 7, 8 and 10 hereof, are reasonable, but
agrees that if any court of competent jurisdiction shall hold any such
restrictions unreasonable as to time, activities, or otherwise, such restriction
shall be deemed to be reduced to the extent necessary in the opinion of the
court to make it reasonable.
The covenants of the Employee set forth herein are the essence of this
Agreement; they shall be construed as independent of any other provisions in
this Agreement; and the existence of any claim or cause of action of the
Employee against the Employer, whether predicated on this Agreement or not,
shall not constitute a defense to the enforcement by the Employer.
13. Remedies.
The Employee acknowledges that a violation of any of the agreements or
covenants contained herein could cause irreparable injury to the Employer and
there may be no adequate remedy at law for such violation. In the event of a
breach or a threatened breach by the Employee of the provisions of this
Agreement, the Employer shall have the right, in addition to any other remedies
available to it at law or in equity, to enjoin the Employee or any Employee
representatives, agents, employees of the Employee or employer of the Employee,
in a court of equity from violating any of the provisions hereof.
This subsection shall not be construed to limit in any manner
whatsoever any other rights and remedies an aggrieved party may have by virtue
of any breach of this Agreement.
14. Construction.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of
Connecticut.
7
15. Notices.
All notices under this Agreement shall be in writing and shall be
deemed to have been duly given when mailed by certified mail, return receipt
requested to the Employer at its principal place of business and to the Employee
at his residence address then listed in the Employer's Records, or to such other
addresses as either of them, by written notice to the other, may from time to
time designate. Time shall be counted from the date of mailing.
16. Entire Agreement.
This instrument contains the entire Agreement among the parties and
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided forth herein and no modifications shall be
binding upon the party affected unless set forth in writing and duly executed by
each party affected.
17. Severability.
In the event that one or more of the provisions of this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
18. Headings.
The descriptive headings of the several sections and paragraphs of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
19. Singular, Plural and Gender.
Unless the context otherwise requires, whenever used in this Agreement,
the singular shall include the plural, the plural shall include the singular and
the masculine gender shall include the neuter and feminine gender, and vice
versa.
20. Survival.
The provisions of Sections 6 through 12 inclusive shall survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties do hereby sign, seal and deliver this
Employment Agreement.
WITNESS:
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxxxxxx
8
--------------------------- ---------------------------(SEAL)
XXXXXXX XXXXXXXXXX
EMPLOYEE
MEDIA DROP-IN PRODUCTIONS, INC.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
--------------------------- ---------------------------(SEAL)
, President
EMPLOYER
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
--------------------------- ---------------------------(SEAL)
XXXXXX X. XXXXXXX
SAFERIN
9
ADDENDUM
Reference: Section 4 (b) (ii) Incentive Compensation portion of Employment
Agreement Between Media Drop-In Productions, Inc. and Xxxxxxx
Xxxxxxxxxx dated April 30, 1996
It is agreed that consideration, as discussed in this section, includes
stock or stock options that may be granted to Xxxxxx Xxxxxxx in addition to or
in lieu of cash. As such, the Employee is entitled to 5% of the stock or stock
options as well. However, stock options conveyed to the Employee, if exercised
and no longer with the Company, will be revalued as of the last day of the
Employee's employment. Therefore the Employee will realize no greater gain then
he would if exercised his last day of employment (i.e. Option at $1.00 per
share, stock value as of last employment date is $3.00, stock price at option
date $6.00; therefore revised option price would be original option price of
$1.00 Plus spread between $3.00 and $6.00 or $4.00). Such gain shall be payable
on a pro rata basis as Xxxxxx Xxxxxxx sells his stock.
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxxxxxx
----------------------- ------------------------------
Xxxxxxx Xxxxxxxxxx
Employee
Media Drop-In Productions, Inc.
/s/ Xxxxx X. Xxxxxxx
------------------------ By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx, President
Employer
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
----------------------- --------------------------------
Xxxxxx X. Xxxxxxx
Saferin
1
Addendum
Date: April 2, 1998
To: Xxxxx Xxxxxxx
From: Xxxxxxx Xxxxxxxxxx
Re: Addendum to Employment Agreement dated April 30, 1996
The following changes are made to Sections 4(a),4(b),4(c) and 4(c)(ii)(a):
4(a) Salary
Effective June 1, 1998 base compensation will change to One Hundred
Thirty Six Thousand Dollars ($136,000) per year.
4(b) Incentive Compensation subparagraph is deleted and replaced by the
following::
Effective June 1, 1998 a bonus will be calculated at one half percent
(.5%) of all trade revenue of MDI Entertainment and all wholly-owned
entities of MDI Entertainment. In the event MDI Entertainment owns less
than 100% of an entity such bonus shall be reduced proportionately to
reflect MDI's ownership interest. Example: Consolidated trade revenue
of wholly owned entities equals $3 million. Bonus would be $15,000.
Trade revenue of entities 50% owned by MDI equals $3 million. Bonus
would be $7,500.
4(c) This section is deleted and replaced by the following:
The bonus under this subparagraph 4(b) shall be paid within thirty (30)
days after the end of each fiscal quarter that Employee remains
employed hereunder.
4(c)(ii)(a) The first line of this section shall be changed to read:
In the event that during the term of employment "after the date of the
Addendum dated April 2, 1998" there occurs......
1
All other provisions of this agreement remain in effect.
/s/ Xxxxxxx Xxxxxxxxxx 4/9/98
--------------------------------
Xxxxxxx Xxxxxxxxxx
Employee
MDI Entertainment, Inc.
By:/s/ Xxxxxx X. Xxxxxxx 4/9/98
---------------------------------
Xxxxxx X. Xxxxxxx, President
Employer
/s/ Xxxxxx X. Xxxxxxx 4/9/98
---------------------------------
Xxxxxx X. Xxxxxxx
Saferin
2
