Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of April 1, 2004, is between AGU Entertainment
Corp., a Colorado corporation, its parent, subsidiaries and sister companies
(the "Company"), and Allen Jacobi (the "Employee").
RECITALS
A. The Company believes the Employee can make a unique contribution to the
business of the Company.
B. The Board of Directors of the Company believes that the services of
Employee would be of great value to the Company and desires retaining his
services for a period of time.
C. Employee is willing to accept employment by the Company upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and of the mutual benefits herein provided, the receipt and
sufficiency of which are hereby acknowledged, the Company and Employee hereby
agree as follows:
1. TERM OF EMPLOYMENT.
The Company shall employ Employee and Employee hereby accepts employment
by the Company, on the terms and conditions herein contained, for a period of
five (5) years commencing as of the date hereof and ending on the fifth (5th)
anniversary of the date hereof, subject to termination as hereinafter provided
(the period from the date hereof through the fifth (5th) anniversary of the date
hereof or the date of such termination, as the case may be, being the
"Employment Period"). This Agreement may be extended for one or more subsequent
one year periods by both parties signing an extension agreement within 30 days
prior to the expiration of this Employment Period.
2. DUTIES.
(a) GENERAL DUTIES. During the Employment Period, and subject to removal
by the Board of Directors of the Company in accordance with the termination
provisions hereof Employee shall serve the Company in a senior executive
position as the President of Pyramid Records International, Inc. for the
duration of the Employment Agreement, with such duties consistent therewith, and
shall perform such other services for the Company as may be reasonably assigned
to him from time to time by the Board of Directors of the Company.
(b) PRIMARY ACTIVITY. During the Employment Period and subject to the
Company's acknowledgement regarding the Employee's law practice as indicated
below, Employee shall devote his full business efforts, time and energy to the
interests and business of the Company; however, Employee shall be excused from
performing any services for the Company hereunder during periods of temporary
illness or incapacity and during reasonable vacations, and Employee may devote a
reasonable amount of time to the handling of his personal affairs, without
thereby in any way affecting the compensation to which he is entitled hereunder.
It is acknowledged that the duties of President may often require from time to
time attention to business at times other than normal business hours.
Notwithstanding anything to the contrary herein, the parties acknowledge that
Employee may spend up to 20% of his business time, during regular business
hours, devoted to his private law practice so long as such activities, in the
reasonable opinion of the Company, do not interfere or conflict with Employee's
ability to perform the services required hereunder or otherwise injure or
potentially injure the Company in any way. If Company believes such services do
interfere or conflict with the Company, then Company shall provide the Employee
with specific notice of same, in reasonable detail, and grant the Employee a
reasonable opportunity to correct any such conflict. During the Employment
Period, Employee shall, to the best of his skill and ability, use his best
efforts and endeavors to the extension and promotion of the business of the
Company, to the proper servicing of such business and to the protection of the
good will of such business, both as now enjoyed and hereafter acquired.
(c) TRAVEL. The Employee agrees to travel, at the expense of the Company,
for business purposes in a reasonable amount for reasonable lengths of time,
commensurate with Employee's position.
3. COMPENSATION.
As full compensation to Employee for performance of his services
hereunder, the Company agrees to pay Employee and Employee agrees to accept the
following salary and other benefits during the Employment Period:
(a) SALARY. The Company shall pay Employee a salary at the annual rate of
$200,000 per year or such greater annual rate of compensation as the Board of
Directors of the Company may from time to time determine ("Base Salary"). The
Base Salary due Employee hereunder shall be payable in equal bi-weekly
installments, less any amounts required to be withheld by the Company from time
to time from such salary under any applicable federal, state or local income tax
laws or similar laws then in effect. The parties agree that the Base Salary
shall increase 5% at the commencement of the second year of this Agreement and
that subsequently the Base Salary will be reviewed annually, for further
increases.
(b) REIMBURSEMENT OF EXPENSES. The Company shall reimburse Employee for
all expenses properly incurred by him in the performance of his duties hereunder
in accordance with policies established from time to time by the Board of
Directors of the Company.
(c) FURTHER BENEFITS. Employee shall be entitled to participate in any
health, accident, retirement or similar employee benefit plans provided by the
Company generally to its employees to the extent commensurate with the
participation therein of Employees of the Company. Employee shall be entitled to
participate in any present or future bonus, insurance, pension, retirement,
profit sharing or other compensation or incentive plans adopted by the Company,
for the general and overall benefit of Employees of the Company, the extent and
manner of participation to be determined by the Board of Directors of the
Company. The benefits provided in this subsection (c) shall be in addition to
the compensation and benefits provided in the other subsections of this Section
3. Notwithstanding the foregoing, the parties do agree that at all times during
the Employment Period, subject to a reasonable timeframe after the execution of
this Agreement for the Company to implement a health insurance plan, the Company
shall maintain a health insurance plan in which the Employee can choose to
participate on the same basis as all employees generally. Employee acknowledges
that the Company does not currently have a health insurance plan but that the
Company will utilize its best efforts to implement a health insurance plan as
soon as practical after the execution of this Agreement.
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(d) OFFICES. Employee agrees to serve without additional compensation, if
elected or appointed thereto, in one or more offices or as a director of any of
the Company's parent, affiliates, subsidiaries or sister companies so long as
such services do not materially change Employee's overall obligations.
(e) VACATION. The Employee shall be entitled to three (3) weeks vacation
per year for years one and two of the Employment Period. Commencing with the
third year of the Employment Period, and each subsequent year thereafter, the
Employee shall be entitled to four (4) weeks vacation per year.
(f) STOCK OPTION AWARD. Employee is hereby granted an option to purchase
800,000 common shares of the Company upon the following terms and conditions:
(a) the term of the option shall be for five years; (b) the exercise price of
the option shall be $.10 per share; (c) the option shall vest 40% at the first
anniversary date and 30% on each of the succeeding year's anniversary date; (d)
the option will not be effective until such time as the shareholders of the
Company approve an equity incentive plan and stock option agreement; (f) the
terms of the option shall be identical to the form of the stock option agreement
approved by the shareholders; and (g) in the event the Company merges into any
entity for the purpose of becoming a public company the number of option shares
granted to Employee hereunder (800,000) shall remain unchanged regardless of the
capital structure of the surviving entity. Both parties acknowledge that the
exercise price set forth hereunder constitutes fair market value of the
underlying common stock as of the date of this grant. In the event the Company
does not adopt a stock option plan or the shareholders of the Company do not
approve the same, then the Company shall provide Employee with equivalent value
in some other form as the parties can then mutually agree upon.
4. RESTRICTIONS AGAINST COMPETITION, SOLICITATION, SERVICING,
AND DIVULGING CORPORATE CONFIDENTIAL DATA
(a) COVENANT NOT TO COMPETE. As a material inducement to sign this
Agreement and providing for the Series A Preferred Stock, the Employee agrees
that as long as he is an employee of the Company, he will not Compete with the
Company and, further, that he will not Compete with the Company during the two
(2) year period beginning on the date of termination of this Agreement. During
the Employment period and the two year period subsequent to termination, the
Employee shall not within the United States directly or indirectly, either for
Employee's own account, or as a partner, shareholder ( other than shares
regularly traded in a recognized market), officer, director, employee, agent,
consultant or otherwise, be employed by connected with, participate in, consult
or otherwise associate with any other business, enterprise or venture that is
competitive with the Company. During employment and for a period of two years
thereafter, the Employee shall not, directly or indirectly, solicit for
employment or employ any employee of the Company. Notwithstanding anything to
the contrary in this subparagraph (a), nothing herein shall be interpreted to
prohibit Employee from the practice of law as an entertainment attorney within
the music industry; provided, however, that such practice of law shall not
permit Employee to Compete against the Company in violation of the restrictive
covenants herein or otherwise permit Employee to interfere, directly or
indirectly, with the business of the Company in the reasonable discretion of the
Company.
(b) COVENANT NOT TO SOLICIT OR SERVICE. The Employee acknowledges and
agrees that the Company parent has spent significant amounts of time and money
in the development of a list of its customers, distributors, and vendors, which
lists are not available to the general public or the Company's ordinary
employees, and that these lists may contain other information about the
customers, distributors, and vendors not available to the general public and
that the Employee will be privileged to these lists. The Employee also
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acknowledges and agrees that the Company's business would be irreparably and
greatly damaged by the use of this information other than for its benefit.
Therefore, as a material inducement to the Company to enter into this Agreement
and the granting of the Preferred Stock upon execution hereof, the Employee will
not, except as it relates to Employee's practice of law, solicit or do business
with, or attempt to solicit or do business with, directly or indirectly any of
the Company's customers, distributors or vendors, except on the Company's behalf
and will not solicit or do business with or attempt to solicit or do business
with, directly or indirectly, any of the Company's customers, distributors, and
vendors during the two (2) year period beginning on the termination of this
Agreement.
(c) COVENANT NOT TO VIOLATE CORPORATE CONFIDENCES. The Employee will have
access to and will become aware of confidential information and trade secrets
including Customer data, files, business secrets, and business techniques not
generally available to the public, and this confidential information has been
compiled by the Company, and its parent, its subsidiaries and affiliates, at
great expense and over a great amount of time. The parties acknowledge that this
confidential information gives the Company a competitive advantage over other
businesses in its field of endeavor and that the Company's business will be
greatly and irreparably damaged by the release or use of this confidential
information outside of its own business. Therefore, as a material inducement to
signing this Agreement, the Employee will not, while he is a Stockholder of
Pyramid Music Corp. or an employee of the Company, or during the two (2) year
period beginning on the termination of this Agreement, either disclose or
divulge this confidential information to anyone or use this confidential
information in any manner to Compete with the Company.
(d) ENFORCEMENT. The Company may enforce the provisions of this section by
suit for damages, injunction, or both.
(i) The Company would be irreparably injured by the breach of any
provision of this Section , and money damages alone would not be an
appropriate measure of the harm to the Company from such continuing
breach. Therefore, equitable relief, including specific performance of
these provisions by injunction, would be an appropriate remedy for the
breach of these provisions.
(ii) Money damages will be appropriate with respect to any past breach
of any provision of this Section. Therefore, in case of any breach of this
Section, the breaching party shall render a full and complete accounting
of the gross receipts, expenses, and net profits that have resulted from
such breach and shall be liable for money damages equal to twenty-five
percent (25%) of the gross amount derived by such breaching party from all
transactions in breach of this Section, such amount representing the
amount of profit the Company could have derived from its own transaction
of such business.
(iii) Should a court of competent jurisdiction determine that equitable
relief is not available to remedy the continuous breach of any or all of
the provision of this Section, an amount of liquidated damages shall be
paid to the Company by the breaching party equal to twenty-five percent
(25%) of the gross amount derived by such breaching party from all
transactions in breach of this Section, such amount representing the
amount of profit the Company could have derived from its own transaction
of such business.
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(iv) If this Agreement is terminated for any reason whatsoever, not
renewed or extended, the provisions of this Agreement shall survive and
shall be in full force and effect for the period commencing from the date
of actual termination of employment of the Employee.
(a) Definitions. For the purposes of this Agreement, the following
definitions are applicable:
(1) "Compete." "To Compete" and "to Compete with the Company" both
mean to engage in any business that is competitive with the Company in
any manner whatsoever as of the date of termination of this Agreement,
including competing as a proprietor, partner, investor, stockholder,
director, officer, employee, consultant, independent contractor, or
otherwise, within the United States.
(2) "Customer." A "Customer" of the Company is any person for whom
it has performed or attempted to perform services or sold or attempted
to sell any product or service, whether or not for compensation, and
regardless of the date of such rendition, sale, or attempted rendition
or sale.
5. TERMINATION OF AGREEMENT.
(a) EVENTS OF TERMINATION. The Employment Period shall cease and terminate
upon the earliest to occur of the events specified below:
(i) The close of business on the fifth (5th)anniversary of the date
hereof;
(ii) the death of Employee;
(iii) termination of Employee's employment for Cause. For the purpose
of this Agreement, the Company shall have "Cause" to terminate Employee's
employment hereunder upon (A) the failure by Employee to substantially
perform his material duties hereunder in the reasonable discretion of the
Company, other than any such failure resulting from incapacity due to
physical or mental illness, (B) the engaging by Employee in gross
negligence or willful misconduct injurious or potentially injurious to the
Company in the Company's reasonable discretion, (C) the violation by
Employee of the provisions of Section 4 hereof in the reasonable
discretion of the Company, or (D) the conviction of Employee of any crime,
other than a misdemeanor. As a condition precedent to the Company
terminating the Employee for Cause pursuant to Section 5(a)(iii)(A)
hereof, and in the event the reason for Cause termination is something
that is curable by the Employee in the Company's reasonable discretion,
then in such event only, the Company agrees to provide notice to Employee
of the Cause for termination and a 30 day period to cure. If within the
reasonable discretion of the Company, the Employee has failed to cure the
reason for the Cause termination within said 30 day cure period, then
Company may immediately terminate the Employee without further notice.
(iv) the election by Employee to terminate his employment hereunder
upon 120 days prior written notice;
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(v) the election by the Company to terminate Employee's employment
hereunder without cause; or
(vi) the permanent disability of Employee. For the purpose of this
Agreement, the "permanent disability" of Employee shall mean Employee's
inability, because of his injury, illness, or other incapacity (physical
or mental), to perform the services to the Company contemplated hereby for
a continuous period of 180 days. Such permanent disability shall be deemed
to have occurred on the he 180th day.
(b) COMPENSATION UPON TERMINATION. If the Employment Period shall cease
and terminate hereunder
(i) for any reason, with the exception of (a)(v) of this Section 5,
Company shall pay to Employee (or his estate in the case of subsection
(a)(ii)) his Base Salary pursuant to Section 3(a) hereof and the
reimbursable expenses incurred under Section 3(b) hereof through the date
of termination. The Company shall have no additional or further liability
to Employee hereunder, or
(ii) pursuant to subsection (a)(v) of this Section 5, the Company shall
(A) pay to Employee his Base Salary pursuant to Section 3(a) hereof and
the reimbursable expenses incurred under Section 3(b) hereof through the
date of termination, (B) pay to Employee an amount equal to the lesser of
(x) his then current Base Salary for the number of months remaining in the
term of this Agreement, or (y) his then current monthly Base Salary
multiplied by 18, such amount to be payable in 18 equal monthly
installments, in either event less any amounts required to be withheld by
the Company under any applicable federal, State or local income tax laws
or similar laws then in effect, and (C) continue for a period of 18 months
from the date of termination (but only if permitted by the applicable
plan) all fringe benefits to which Employee is then entitled pursuant to
Section 3(c) hereof (including payment for any benefits to which Employee
would be entitled to receive under the Consolidated Omnibus Budget
Reconciliation Act of 1985, the benefit period with respect to which shall
commence on the date of termination); provided, however, that the
Employment Period shall be deemed to have expired on the date of
termination for the purposes of any vesting period, and provided further,
that in no event shall Employee be entitled to receive pursuant to clause
(b) above an amount in excess of that to which Employee would have been
entitled had this Agreement not been so terminated.
(c) EFFECT OF TERMINATION. This Agreement and all liabilities and
obligations of the parties hereto hereunder shall cease and terminate effective
upon any termination of the Employment Period permitted by this Agreement;
provided, however, that Employee's obligations under Section 4 hereof shall
survive any such termination.
(d) REMEDIES. Nothing herein contained shall be construed as prohibiting
any party hereto from pursuing any other remedies available to it for any breach
of any provision hereof.
6. ASSIGNMENT.
This Agreement shall not be assigned by either party hereto, except that
the Company shall have the right to assign its rights hereunder to any direct or
indirect subsidiary of the Company or its parent, any successor in interest of
the Company or its parent whether by merger, consolidation, purchase of assets
or otherwise, and any person controlling or which controls or is under common
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control with the Company or its parent, any such subsidiary or any such
successor; provided, however, that any such assignment shall not relieve the
Company of any of its obligations hereunder.
7. NOTICES.
All notices requests, demands and other communications hereunder must be
in writing and shall be deemed to have been given if delivered by hand or mailed
by first class, registered mail, return receipt requested, postage and registry
fees prepaid and addressed as follows:
(a) If to the Company:
AGU Entertainment Corp.
Attn: David Levy, CEO
11077 Biscayne Blvd.
Suite 100
Boca Raton, FL 33431
With a copy to:
Blank Rome, LLP
Bruce C. Rosetto, Esq.
1200 Federal Highway
Suite 417
Boca Raton, FL 33432
(b) If to Employee, addressed to:
Allen Jacobi 11077 Biscayne
Blvd.
Suite 200
Miami, FL 33161
Addresses may be changed by notice in writing signed by the addressee.
8. INVENTIONS.
Employee shall disclose promptly to Company any and all conceptions and
ideas for inventions, improvements, and valuable discoveries, whether patentable
or not, which are conceived or made by Employee solely or jointly with another
during the period of employment or within one year thereafter and which are
related to the business or activities of the Company. Employee hereby assigns
and agrees to assign all his interest therein to Company or its nominee.
Whenever requested by the Company, Employee shall execute any and all
applications, assigns or other instruments that Company shall deem necessary to
apply for and obtain Letters of Patents of the United States or any foreign
country or to otherwise protect Company's interest therein. These obligations
shall continue beyond termination of employment with respect to inventions,
improvements and valuable discoveries, whether patentable or not, conceived,
made or acquired by Employee during the period of employment or within one year
thereafter, and shall be binding upon Employee's heirs, assigns, executors,
administrators and other legal representatives.
9. RETURN OF PROPERTY.
All correspondence, reports, charts, products, records, designs, patents,
plans, manuals, sales and marketing material, memorandum, advertising materials,
customer lists, distributor lists, vendor lists, telephones, beepers, portable
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computers, and any other such data, information or property collected by or
delivered to Employee by or on behalf of the Company, their representatives,
customers, suppliers or others and all other materials compiled by Employee
which pertain to the business of the Company shall be and shall remain the
property of the Company and shall be delivered to the Company promptly upon its
request at any time and without respect upon completion or other termination of
Employee's employment hereunder for any reason.
10. REPRESENTATIONS OF EMPLOYEE.
Employee represents and warrants to the Company that he is not subject to any
restriction or non-competition covenant in favor of a former employer or any
other person or entity, and that the execution of this Agreement by Employee and
his provision of services to the company and the performance of his obligations
hereunder will not violate or be a breach of any agreement with a former
employer or any other person or entity. Further, Employee agrees to indemnify
Company for any claim, including but not limited to attorneys' fees and expenses
of investigation, by any such third party that such third party may now have or
may hereafter have against the Company based upon any noncompetition agreement,
invention or secrecy agreement between Employee and such third party.
Employee further represents and warrants that it will transfer or cause to be
transferred to the Company all title and interest to any domain names or other
intellectual property associated with the Company and all of its subsidiaries.
11. MISCELLANEOUS.
This Agreement embodies the entire understanding between the parties
hereto respecting the subject matter hereof and no change, alteration or
modification hereof may be made except in writing signed by both parties hereto.
Any prior agreement between the Company and Employee, of whatever kind or
nature, shall be deemed to be superseded for all purposes by this Agreement and,
upon the execution and delivery of this Agreement by Employee and the Company,
any such prior employment agreement shall be deemed to be canceled and of no
further force or effect. The Employee hereby releases and forever discharges the
Company, and its subsidiaries, from any all agreements that may have existed
between the Employee and the Company, and its subsidiaries, prior to the date
hereof.
The headings in this Agreement are for convenience of reference only and shall
not be considered as part of this Agreement or to limit or otherwise effect the
meaning hereof. If any provisions of this Agreement shall be held invalid,
illegal or unenforceable in whole or in part, neither the validity of the
remaining part of such provisions nor the validity of any other provisions of
this Agreement shall in any way be affected thereby. This agreement shall in all
respects be governed by and construed in accordance with the laws of the State
of Florida.
12. ADVICE OF COUNSEL
Employee recognizes that the Company is represented by counsel, namely
Blank Rome, LLP., and that such counsel does not represent the interests of
Employee. The Company strongly recommends and suggests that Employee obtain its
own counsel to review this Agreement prior to execution of the Agreement. The
Company agrees to provide Employee with a reasonable period of time to have this
Agreement reviewed by its own counsel or any other professional adviser deemed
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appropriate by the Employee. Should Employee not choose to have this Agreement
reviewed by its own counsel, then Employee assumes the risk of such decision,
and Employee hereby acknowledges that Company has not unduly influenced Employee
in any way and that Company desires that Employee retain its own counsel.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Witnesses: "COMPANY"
By:
- -------------------------------- ---------------------------------------
David Levy
"EMPLOYEE"
- -------------------------------- ------------------------------------------
Allen Jacobi
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