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EXHIBIT 10.2
Victory Animation Studios, Inc.
1000 Universal Studios Plaza
Building 22A
Orlando, Florida 32819
As of July 12, 1999
Mr. Art David
14138 Lake Tilden Blvd.
Winter Garden, Florida 34787
Re: VICTORY ANIMATION STUDIOS, INC./EMPLOYMENT AGREEMENT
Dear Mr. David:
This letter confirms the terms of your employment by Victory Animation Studios,
Inc. (the "Company").
1. TITLE: You are being employed hereunder in the position of President of
Victory Animation Studios, Inc., a/k/a Victory F/X (the "Company").
2. DUTIES: You shall personally and diligently perform, on a full-time and
exclusive basis ("exclusive" shall apply as further defined herein in paragraph
10), such services as the Company and its Board of Directors may reasonably
require, consistent with the responsibilities and duties of comparable positions
in the industry. You shall observe all reasonable rules and regulations adopted
by the Company in connection with the operation of its business and carry out to
the best of your ability all instructions of the Company. Your services will be
rendered on behalf of the Company at its offices in Orlando, Florida, and the
Company shall not require you to work outside of the Orlando metropolitan area
without your prior consent. You shall report directly to the Chief Executive
Officer of the Company. If at any time during the term of this Agreement and any
extensions Michael Gerber ceases to be the Company CEO, and you do not approve
the replacement for Mr. Gerber, you may elect to terminate this Agreement, by
giving the Company thirty (30) days written notice, after which time the Company
shall not be obligated to pay you any severance compensation.
3. TERM: The term of your employment hereunder commences on July 12, 1999, and
expires on July 12, 2000, unless terminated prior to such date or extended as
hereunder provided. Beginning at the end of the Term, the Company shall have two
consecutive one-year options to employ you according to the terms of this
Agreement and the salary as described below. Each option shall be exercisable by
the Company not later than 60 days prior to the
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expiration of the preceding term. During the initial term, you may elect to
terminate your employment so long as you make such election prior to the
expiration of six (6) months from the effective date of this agreement. If you
make such election and terminate your employment, you shall forfeit all stock
and stock options otherwise granted to you under this Agreement and Company
shall have no further obligations to you whatsoever.
4. COMPENSATION: During the first year of the term hereof, your salary will be
$150,000.00; if the Company exercises its option for the second year hereof,
your salary will be $162,500.00; and if the Company exercises its option for the
third year hereunder your salary will be $175,000.00. Salary payments are made
twice monthly, or as may otherwise be adopted for all employees. The Company
may, at its sole discretion, award Employee an annual bonus based on performance
in addition to Employee's base salary.
Upon commencement of this Agreement and as additional consideration for your
employment hereunder, the Company shall issue to you 50,000 shares of common
stock in the Company. "Common Stock" is the only class of stock the Company has
issued. The Company also agrees to grant to you an option (the "Option") to
purchase up to 50,000 shares of common stock of the Company at an exercise price
of $0.25 per share. The Option may be exercised at any time during the period
commencing 60 calendar days after the registration statement for an initial
public offering of any of the Company's securities ("IPO") has been declared
effective and ending on the first anniversary of the 60th day after such
effective date. The Option will expire on the third anniversary of this
Agreement if an IPO registration statement has not been declared effective by
such date.
5. RESTRICTED SECURITIES: Employee understands that the common stock is
characterized as "restricted stock" under the federal securities laws since it
is being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such stock may not
be sold, transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom. Employee represents that he is
familiar with Rule 144 promulgated by the Securities and Exchange Commission, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
6. FURTHER LIMITATIONS ON DISPOSITION: Without in any way limiting the
representations set forth above, Employee further agrees not to make any
disposition of all or any portion of the common stock being purchased hereunder
except in compliance with applicable state securities laws and unless and until:
(a) a registration statement under the Securities Act is then in effect
covering such proposed disposition and such disposition is made in
accordance with such registration statement;
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(b) such disposition is made in accordance with Rule 144 under the
Securities Act; or
(c) Employee shall have notified the Company of the proposed disposition
and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and, if requested
by the Company, Employee shall have furnished the Company with an
opinion of counsel acceptable to the Company, that such disposition
will not require registration under the Securities Act and will be in
compliance with applicable state securities laws.
7. LEGENDS: Employee understands and acknowledges that each certificate, if
any, evidencing common stock acquired by him hereunder (evidencing any other
securities issued with respect thereto pursuant to any stock split, dividend,
merger or other form of reorganization or recapitalization) will bear, in
addition to any other legends which may be required by applicable state
securities laws, the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO
TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER,THE TRANSFER
IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REGISTRATION UNDER THE
ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT
AND WITH APPLICABLE STATE SECURITIES LAWS."
8. EXPENSES: To the extent you incur reasonable and necessary business
expenses, including, without limitation, travel and entertainment, cellular
telephone charges in the course of your employment, you shall be reimbursed for
such expenses, subject to the Company's then current policies regarding
reimbursement of such business expenses.
9. BENEFIT: You shall be eligible for participation in such Company employee
benefit plans which may be generally available to our employees and developed by
our Board of Directors from time to time, including, without limitation, key
employee incentive compensation plans, or any pension, profit sharing, group
insurance, 401K, retirement, hospitalization or other incentive or benefit plans
hereafter adopted by the Company. The Company may consider providing you with
disability (income protection) insurance, and life insurance. The
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Company shall observe "legal" holidays as a matter of course or you may elect to
observe up to seven (7) paid holidays per year. You shall receive during each
year of the Term of this Agreement three (3) weeks of paid vacation and no more
than ten (10) days of paid sick leave. You may elect to accumulate up to one
week of your vacation time, for up to twenty-four (24) months, but under no
circumstances shall you take more than four (4) weeks vacation in any single
year of the Term of this Agreement.
10. EXCLUSIVITY: During the term of this Agreement, Employee shall not
participate in, render services to, or become employed by any business or entity
whose business is competitive with the business and purpose of the Company.
Businesses that produce motion pictures intended to be released theatrically or
businesses that produce television commercials-shall not be considered
competitive with the business and purpose of the Company as defined in this
Agreement, unless such businesses produce programs for television and wish to
engage Employee for such programs. Employee's position with the Company shall be
considered full-time. However, Employee may render services to third parties as
a special effects producer, on up to three non-television projects per year
under three conditions: (1) that Employee first offer such work to the Company
and any such agreement shall be subject to good faith negotiation; (2) that
Employee's services for third parties shall not at any time interfere with
Employee's duties to Company; and (3) that Employee shall not render services to
any individual or entity that competes with the Company, as defined above in
this paragraph 10.
11. TERMINATION AND NONCOMPETITION: In the event your employment is terminated
for "cause", including conviction of a crime involving an element of moral
turpitude (E.G., fraud, theft, substantive felonious misrepresentation), gross
negligence in the performance of your assigned duties to the Company, or uncured
and material breach of this Agreement, all of the Company's obligations to you
regarding the continuation of your employment shall immediately cease upon the
effective date of written notification from the Board of Directors of the
Company or from your immediate supervisor. In the event of your death, this
Agreement shall terminate and the Company shall only be obligated to pay your
estate the salary earned and unpaid prior to such event. Should you be unable to
perform the services the Company requires of you due to disability and such
disability continues for more than ninety (90) consecutive days or one hundred
twenty (120) days in the aggregate, then the Company may terminate this
Agreement without further obligation to you. During any such disability, you
shall receive benefits according to the Company's disability policies then
instated, if any. If for any reason this Agreement is terminated or breached by
the Company, other than for "cause" as described herein, the Company shall pay
your full salary and applicable benefits (if any) otherwise due for the
remainder of the Term of this Agreement, or an amount equal to ninety (90) days
salary, whichever is greater.
You agree that at such time as compensation to you terminates under this
Agreement, you shall not, for a twelve-month period following the last payment
of compensation to you
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hereunder, (1) contact or solicit the customers, employees, brokers, salesmen,
or investors of the Company, regardless of where located, in any manner except
as expressly permitted in writing by the Company, (2) solicit offers to employ,
or employ, directly or indirectly, any person heretofore, now, or hereafter
employed by the Company (not to include ex-employees, not employed by the
Company at the time of Employee's termination), (3) solicit and/or bid on any
project that the Company is or has solicited and/or bid on, without the prior
written consent of the Company. Uninitiated and reasonable social contacts are
not considered within this restriction.
12. OWNERSHIP AND RIGHTS IN MATERIALS CREATED BY EMPLOYEE: All materials and
work product created or developed by you (whether alone or with any other
person) specifically within the scope of your employment hereunder, and all
rights of any and every kind whatsoever in and to the results and proceeds of
your services hereunder, shall be the sole and absolute property of the Company
for all purposes, and your services hereunder are deemed to be those of an
"employee for hire" as defined by the U.S. Copyright Laws. Notwithstanding the
foregoing, the Company agrees to attach hereto as Exhibit "A" a list of mutually
acknowledged programs or projects created or owned by Employee prior to the
effective date of this Agreement that are not subject to the "employee for hire"
provisions in this paragraph 12.
13. CONFIDENTIALITY: You acknowledge and agree that you may become privy to
certain confidential matters and the Company trade secrets, such as, but not
limited to, client information, customer lists, designs, etc. You agree not to
disclose such matters to any third parties under any circumstances without the
express written consent of the Company. You further hereby agree and confirm
that as a material inducement to employment with the Company, you will not use
or disclose to any third party any information concerning services and business
of the Company or its affiliates, or any other non-public information concerning
the Company or its affiliates, or any information proprietary to the Company or
its affiliates, that may be disclosed to you. Conversely, the Company agrees
that it may become privy to certain confidential matters and trade secrets of
Employee's company, Wavelight Productions, Inc. (sic), such as, but not limited
to, client information, customer lists, designs, etc. The Company agrees not to
disclose such matters to any third parties under any circumstances without the
express written consent of Employee.
14. NAME AND LIKENESS: In consideration of the salary paid according to this
Agreement, the Company shall always have the worldwide right to use and display
Employee's name, image and likeness for advertising, publicity and promotional
purposes. However, the Company shall not use Employee's name, image or likeness
for the endorsement of any specific product, other than programs owned, produced
and exploited by the Company, without Employee's prior consent. The Company
shall not issue any press release regarding VAS without Employee's prior
approval, which approval shall not be unreasonably withheld.
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15. REMEDIES: Any controversy or claim arising out of or relating to the
Agreement or any breach of it shall be settled by a three-person arbitration
panel according to the rules of the American Arbitration Association in the city
of Orlando, Florida and judgment upon the award rendered by the arbitration
panel may be entered in any court having jurisdiction thereof. Such arbitration
shall be conducted by three (3) arbitrators, one chosen by the Company, one
chosen by Employee and the third chosen by agreement between the first two
arbitrators. The prevailing party shall be entitled to reimbursement for costs
and reasonable attorneys' fees from the non-prevailing party. The determination
of the arbitration panel in such proceeding shall be final, binding and
non-appealable. Nothing in this clause shall preclude the Company from seeking
and obtaining equitable remedies, including injunctive relief or other
provisional remedy available in a court of law. Employee's remedies due to any
breach by the Company of the terms of this Agreement shall be limited to money
damages.
16. GENERAL TERMS: The Company may assign this Agreement to any entity that
succeeds to a substantial portion of the Company's assets or which the Company
may own substantially, control and this Agreement shall inure to the benefit of
such assignee. You represent that your employment hereunder does not conflict
with any contractual commitment to any third party. This Agreement supersedes
all prior or contemporaneous agreements and statements, whether written or oral,
concerning the terms of your employment and may not be amended or modified
except in writing signed by you and the Company. You do not expect the Company
to pay any broker for this employment. No waiver by either party of any breach
by the other party of any provision or condition of this Agreement shall be
deemed a waiver of any similar or dissimilar provision or condition at any time.
Nothing herein contained shall be construed so as to require the commission of
any act contrary to law and wherever there is any conflict between any provision
of this Agreement and any present or future statute, law, ordinance or
regulation, the provision affected shall be curtailed and limited only to the
extent necessary to bring it within legal requirements, and the remainder of
this Agreement shall remain in full force and effect. This Agreement shall be
governed by and construed under the laws of the State of Florida and venue for
any dispute arising out of the terms hereof shall be in the Courts of Orange
County, Florida. In accordance with the Immigration Reform and Control Act of
1986, employment hereunder is conditioned upon satisfactory proof of your
identity and legal ability to work in the United States.
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If the foregoing accurately reflects our mutual agreement, please sign where
indicated.
Victory Animation Studios, Inc.
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By:_________________________
Art David
14138 Lake Tilden Blvd.
Its:________________________ Winter Garden, Florida 32830
________________________
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May 8, 2000
Mr. Art David
President
Victory Animation Studios, Inc.
6355 Metro West Blvd. Suite 260
Orlando, Florida 32835
Re: EMPLOYMENT AGREEMENT
Dear Art:
Your Employment Agreement with Victory Animation Studios, Inc. ("VAS") is hereby
amended to reflect that your compensation shall be increased to the salary of
$175,000.00 in year two (2) beginning July 2000. Additionally, if VAS exercises
its option and right to extend said agreement to year three (3), your salary
shall increase to $200,000.00 for that year.
Thank you and congratulations.
Sincerely,
Edgar Millington, Jr.
Victory Animation Studios, Inc.
