EMPLOYMENT AGREEMENT
This Agreement is made as of the 27th day of June, 1996 between
Microleague Multimedia, Inc., a Delaware corporation (the "Company"), and Edward
Ringler (the "Employee).
RECITALS
The Company desires to employ the Employee, and the Employee desires to
provide services to the Company, upon the terms and conditions hereinafter set
forth.
WITNESSETH
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment.
(a) The Company hereby employs the Employee and Employee hereby accepts
such employment. During the term of Employee's employment under this Agreement
(the "Employment Term") the Employee shall be an Executive Vice President for
New Business and Product Development of the Company and shall perform such
duties as are assigned by the CEO or President. Employee shall not be required
to perform his primary duties hereunder outside of a 35 mile radius of Orange
County, California, provided that Employee will respond to such requests for
travel as may from to time be made of him in performance of his duties.
(b) Employee represents to the Company that he is not subject or a
party to any employment agreement, non-competition covenant, non-disclosure
agreement or any other agreement, covenant, understanding or restriction of any
nature which would prohibit Employee from executing this Agreement and
performing fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which are now or in the future be assigned to Employee by the
Company.
2. Performance.
The Employee shall devote his entire business efforts to the
performance of his duties hereunder. Employee represents that Employee has
significant experience in development of multimedia computer software titles for
retail sale and acknowledges that the Company has hired Employee to manage
development of new software titles as evidenced in Appendix A. Employee also
represents that he has significant experience in successfully negotiating
licensing of software titles and content for software to be developed, and
acknowledges that the Company is relying on that experience and Employee's
industry contacts in entering into this Agreement.
3. Term.
The Employment Term shall begin on the date hereof and shall continue
until June 27, 1999 unless terminated prior thereto in accordance with Sections
5 or 6.
4. Compensation for Employment.
(a) The basic annual rate of compensation of the Employee for his
employment service to the Company during the Employment Term shall be $97,500
(such amount, as adjusted in accordance with this Section 4, is referred to
herein as the "Salary"), which the Company shall pay to the Employee in equal
installments in accordance with the normal payroll policies of the Company.
(b) The Employee shall be eligible to receive a bonus in an amount
equal to at least $40,000 (the "Bonus) upon the achievement of the performance
milestone set forth in Exhibit A hereto.
(c) During the Employment Term, the Company shall provide the Employee
with such fringe benefits, including but not limited to medical and dental and
401K Plan contributions as are provided to other senior officers of the Company.
(d) The Company shall reimburse Employee for all expenses reasonably
incurred by Employee in performance of his duties, including but not limited to
any reasonable expenses incurred in connection with office space, phone, fax
lines, utility expenses, automobile and reasonable automobile expenses including
car telephone, Internet/On-Line accounts, subscriptions, office supplies, air
travel, hotel and car rental expenses. Employee shall be paid on the first day
of each month hereunder an expense advance of $2,000, and expenditures in any
month in excess of such advance shall be subject to the approval of the Company,
which approval will not unreasonably be withheld.
(e) Employee shall be granted upon inception of employment hereunder
options to purchase 25,000 shares of the Common Stock of the Company exercisable
at the market price of the Company's Common Stock the first day of employment
hereunder. Options to purchase 25,000 shares of the Common Stock of the
Company's shall vest immediately on the beginning date of the Employment Term,
and options to purchase 50,000 shares of the Common Stock of the Company shall
vest at the earlier of completion of products as discussed in Exhibit A, or,
after four (4) full years of the beginning date of the Employment Term, or
immediately upon any termination of the Employment term without Cause. Said
option shall be granted pursuant to the terms of the Company's 1996 Equity
Compensation Plan, shall be granted as incentive stock options under said Plan
within the meaning of Section 422 of the Internal Revenue Code, and shall be
subject to the terms and conditions of said Plan and the Company's standard
option agreement to be executed by all employees eligible to participate.
5. Termination Without Compensation.
(a) Total Disability. If the Employee becomes totally disabled (as
defined below), the Company may terminate the Employment Term by notice to the
Employee, and as of the termination date, the Company shall have no further
liability or obligation to the Employee hereunder except as follows: the
Employee shall receive (i) any unpaid Salary and Fringe Benefits and Bonus, if
any, that have accrued through the date of termination; and (ii) whatever
benefits that he may be entitled to receive under any then existing disability
benefit plans of the Company, including any such plans included in the Fringe
Benefits. For the purposes hereof, the Employee shall be deemed to be "totally
disabled" if the Employee is considered totally disabled under any group
disability plan maintained by the Company and in effect at that time, or in the
absence of any such plan, under applicable Social Security regulations. In the
event of any dispute under this Section 5(a), the Employee shall submit to a
physical examination by a licensed physician mutually satisfactory to the
Company and the Employee, the cost of such examination to be paid by the
Company, and the determination of such physician shall be determinative.
(b) Death. If the Employee dies, this Employment Agreement shall
terminate on the date of death, and thereafter the Company shall not have any
further liability or obligation to the Employee, his executors, administrators,
heirs, assigns or any other person claiming under or through him except that the
Employee's estate shall receive any unpaid Salary and Fringe Benefits and Bonus,
if any, that have accrued through the date of termination.
(c) Cause. The Company may terminate the Employment Term for "cause" by
giving the Employee 30 days' notice of the termination date, and as of the
termination date, the Company shall not have any further liability or obligation
to the Employee, except that the Employee shall receive any unpaid Salary and
Fringe Benefits and Bonus, if any, that have accrued through the date of
termination, net of any liabilities that the Employee may have to the Company.
For purposes of this Agreement, "cause" shall mean the failure of the Employee
to (i) observe or perform (other than by reason of illness, injury or
incapacity) any of the material terms or provisions of this Agreement, (ii) the
failure to comply fully with the lawful directives of the Board or the
President, (iii) dishonesty, (iv) willful misconduct, (v) material neglect of
the Company's business, (vi) conviction of a felony or other crime involving
moral turpitude, (vii) misappropriation of funds or (viii) habitual insobriety.
In the case of a termination for "cause," the notice of termination shall
specify the basis for the Company's determination of "cause"; provided, however,
the in the case of conduct described in clauses (i), (ii) and (v) above, such
conduct shall constitute "cause" for the purposes of this paragraph (c) unless
(A) the CEO or President shall have given the Employee notice setting forth with
specificity (i) the conduct deemed to constitute "cause," (2) reasonable action
that would remedy the objectionable conduct, and (3) a reasonable time (not less
than 5 days) within which the Employee may take such remedial action and (B) the
Employee shall not have taken such specified remedial action within such
specified reasonable time.
6. Termination With Compensation.
The Company shall have the right to terminate the Employment Term
without cause at any time by giving the Employee 30 days' notice of the
termination date. Under such circumstances, the Company shall continue to pay to
the Employee the Salary through the end of the Employment Term, unvested stock
options granted pursuant to Section 4(c) hereof shall vest, and as of the
termination date, the Company shall not have any further liability or obligation
to the Employee. The Salary to be paid under Section 6 and the unvested options
which vest hereunder are referred to herein as the "Termination Compensation."
The Employee shall not be entitled to any Termination Compensation unless the
Employee executes and delivers to the Company after a notice of termination a
release in a form satisfactory to the Company in its sole discretion by which
the Employee releases the Company from all obligations and liabilities of any
type whatsoever, except for the Company's obligations with respect to the
Termination Compensation. The parties hereto acknowledge that the Termination
Compensation to be provided under this Section 6 is to be provided in
consideration for the above-specified release. The Company's obligations under
the Section 6 shall be reduced by and to the extent of any non-passive earnings
from a source other than the Company that are received by or accrued for the
benefit of the Employee during the remainder of the Employment Term; provided,
however, that such obligations shall only be so reduced by any such earnings
if the Company, upon written request from the Employee, grants a waiver of its
rights under Section 6 hereunder.
7. Agreement Not to Compete.
(a) The Employee covenants that for the period beginning on the
termination of Employee's employment hereunder, or beginning at the end of the
term hereof in the event of a termination under Section 6 hereof, and ending on
the first anniversary of the date of such termination of employment or
employment term (the "Restricted Period"), he will not, directly or indirectly,
own, manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as a partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with any business or enterprise engaged
directly or indirectly in competition with the business conducted by the Company
at any time in the development of sports or entertainment multi-media products
(the "Business"). It is recognized by the Employee and the Company that the
Business is and is expected to continue to be conducted throughout the world and
that more narrow geographical limitations of any nature on this non-competition
covenant (and the non-solicitation covenants set forth in Section 7(b) are
therefore not appropriate. The foregoing restriction shall not be construed to
prohibit the ownership by Employee as a passive investment of not more than five
percent (5%) of any class of securities of any corporation which is engaged in
any of the foregoing businesses having a class of securities registered pursuant
to the Securities Exchange Act of 1934.
(b) The Employee covenants that during the Restricted Period he will
not, either directly or indirectly, (i) solicit the business of any person who
or which is an exclusive customer of the Company; or (ii) solicit the employment
of any person who is employed by the Company on a full or part-time basis at the
time of termination of Employees's employment hereunder.
(c) The Employee recognizes and acknowledges that by reason of his
employment by the Company, he has had access to Confidential Information
relating to the Business. The Employee acknowledges that such Confidential
Information is a valuable and unique asset and covenants that he will not
disclose any such Confidential Information after the date hereof to any person
for any reason whatsoever, unless such information (i) is in the public domain
through no wrongful act of Employee, (ii) has been rightfully received from a
third party without restriction and without breach of this Agreement or (iii)
except as may be required by law.
(d) The Employee acknowledges that the restrictions contained in this
Sections 7 are reasonable and necessary to protect the legitimate interests of
the Parent and the Company, and that any violation will result in irreparable
injury to the Parent and the Company.
(e) The Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 7, which rights shall
be cumulative and in addition to any other rights or remedies to which the
Company may be entitled. In the event that any of the provisions of this Section
7 should ever be indicated to exceed the time, geographic, product or service,
or other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(f) The covenants set forth in this Section 7 shall be in addition to
not in limitation of any similar covenants set forth in the Purchase Agreement.
8. Inventions, Designs and Product Developments.
All inventions, innovations, designs, ideas and product developments,
developed or conceived by the Employee, solely or jointly with others, whether
or not patentable or copyrightable, at any time during the Employment Term or
during his employment by the Company prior to the commencement of the Employment
Term and that relate to the actual or planned business activities of the Company
(collectively, the "Developments") and all of the Employee's right, title and
interest therein, shall be the exclusive property of the Company. The Employee
hereby assigns, transfers and conveys to the Company all of his right, title and
interest in and to any and all such Developments. The Employee shall disclose
fully, as soon as practicable and in writing, all Developments to the Board. At
any time and from time to time, upon the request of the Company, the Employee
shall execute and deliver to the Company any and all instruments, documents and
papers, give evidence and do any and all other acts that, in the opinion of
counsel for the Company, are or may be necessary or desirable to document such
transfer or to enable the Company to file and prosecute applications for and to
acquire, maintain and enforce any and all patents, trademark registrations or
copyrights under United States or foreign law with respect to any such
Developments or to obtain any extension, validation, reissue, continuance or
renewal of any such patent, trademark or copyright. The Company will be
responsible for the preparation of any such instruments, documents and papers
and for the prosecution of any such proceedings and will reimburse the Employee
for all reasonable expenses incurred by him in compliance with the provisions of
this Section 8.
9. Confidential Information.
(a) The Employee has had and will have possession of or access to
confidential information relating to the business of the Company, including
writings, equipment, processes, drawings, reports, manuals, invention records,
financial information, business plans, customer lists, the identity of or other
facts relating to prospective customers, inventory lists, arrangements with
suppliers and customers, computer programs, or other material embodying trade
secrets, customer or product information or technical or business information of
the Company. All such information, other than any information that is in the
public domain through no act or omission of the Employee or which he is
authorized to disclose, is referred to collectively as the "Company
Information." During and after the Employment Term, the Employee shall not (i)
use or exploit in any manner the Company Information for himself or any person,
partnership, association, corporation or other entity other than the Company,
(ii) remove any Company Information, or any reproduction thereof, from the
possession or control of the Company or (iii) treat Company Information
otherwise than in a confidential manner.
(b) All Company Information developed, created or maintained by the
Employee, alone or with others while employed by the Company, and all Company
Information maintained by the Employee thereafter, shall remain at all times the
exclusive property of the Company. The Employee shall return to the Company all
Company Information, and reproductions thereof, whether prepared by him or
others, that are in his possession immediately upon request and in any event
upon the completion of his employment by the Company.
10. Remedies.
The Employee expressly acknowledges that the remedy at law for any
breach of Sections 7, 8 and 9 will be inadequate and that upon any such breach
or threatened breach, the Company shall be entitled as a matter of right to
injunctive relief in any court of competent jurisdiction, in equity or
otherwise, and to enforce the specific performance of the Employee's obligations
under these provisions without the necessity of proving the actual damage to the
Company or the inadequacy of a legal remedy. Subject to the remainder of this
Section 10, the rights conferred upon the Company by the preceding sentence
shall not be exclusive of, but shall be in addition to, any other rights or
remedies which the Company may have at law, in equity or otherwise.
11. General.
(a) Governing Law. The terms of this Agreement shall be governed by the
laws of the State of Delaware.
(b) Company. For purpose of Sections 7, 8, 9 and 10, the term "Company"
shall be deemed to include any incorporated or unincorporated entities that are
controlled, directly or indirectly, by the Company through ownership, agreement
or otherwise.
(c) Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit and be enforceable by the
respective heirs, representatives, successors (including any successors as a
result of a merger or similar reorganization) and assigns of the parties hereto,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable in whole or in part by the Employee.
(d) Notices. All notices required to be given under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent by Federal Express or other overnight
delivery service, addressed as follows:
TO EMPLOYEE:
Mr. Edward Ringler
1442 E. Lincoln Avenue
Orange, CA 92669
with a copy to:
Robert M. Bennett, Esq.
MELROSE LAW CENTER
316 South Melrose Drive, Suite 100
Vista, CA 92083-6632
TO THE COMPANY:
Microleague Multimedia, Inc.
750 Dawson Drive
Newark, DE 19713
Attn: Neil B. Swartz, Chairman
with a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Fax: 215-963-4663
Attn: Stephen M. Goodman, Esquire
(e) Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. Notwithstanding the termination of the Employment Term
and of the Employee's employment by the Company, this Agreement shall continue
to bind the parties for so long as any obligations remain under the terms of
this Agreement.
(g) Waiver. No waiver of any breach of this Agreement shall be
construed to be a waiver as to succeeding breaches.
(h) Severability. If any provision of this Agreement or application
thereof to anyone under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability, shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto dully executed this Agreement as of the day and year first written
above.
MICROLEAGUE MULTIMEDIA, INC.
By: /s/ Neil B. Swartz
----------------------------------
Neil B. Swartz, Chairman
/s/ Edward Ringler
----------------------------------
Edward Ringler
EXHIBIT A
Vesting of Bonus Compensation
Bonus Options
Satisfactory Completion of New Football Game $10,000 15,000
Satisfactory Completion of New Basketball Game 10,000 15,000
Satisfactory Completion of New Hockey Game 10,000 15,000
Satisfactory Completion of 10 New Titles 10,000 5,000
The terms "Completion" and "New" as used within this Exhibit A shall refer to
any retail or online service or product acquired by Company, or developed
internally or externally for Company, which is or becomes ready for publication,
distribution or sale by Company or any third party after the beginning date of
the Employment Term. The term "10 New Titles" as used within this Exhibit A
shall exclude for counting purposes the "New Football, Basketball, and Hockey
Games" listed above but shall include any derivatives or conversions of them or
any other "New" retail or online service or product.