Exhibit 10.21

 

EXECUTIVE EMPLOYMENT AGREEMENT

WITH

SHIN TANABE

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of
October 1, 2002 by and between TDK Mediactive, Inc. (“Employer”), and Shin
Tanabe (“Executive”), with reference to the following facts:

 

RECITALS

 

A. Employer is in the video game business and operates throughout the world.

 

B. Employer and Executive desire to assure Employer of the services of Executive
and to set forth the rights and duties of the parties.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

 

AGREEMENTS

 

1. Employment.

 

(a) Employer hereby agrees to employ Executive, and Executive hereby accepts and
agrees to employment by Employer, on the terms and conditions set forth herein.

 

(b) Executive shall serve in the capacity of President and Chief Operating
Officer of Employer. Executive shall perform such services and duties with
Employer as are usually associated with the position of a president and chief
operating officer. Executive shall report directly to the Chief Executive
Officer of Employer. Executive further agrees that, except during vacation
periods or in accordance with Employer’s personnel policies covering executive
leaves and reasonable periods of illness or other incapacitation, Executive
shall devote his full time and services to the business and interests of
Employer. Notwithstanding the foregoing, Executive shall also be permitted to
serve on the boards of directors of other business corporations and may
participate in charitable, cultural, professional, civic and business
association activities. Executive shall perform the duties of his office and
those assigned to him by Employer’s Chief Executive Officer with fidelity, to
the best of his ability, and in the best interests of Employer.

 

2. Term of Employment.

 

Executive’s term of employment by Employer pursuant to this Agreement shall
commence as of October 1, 2002 (the “Effective Date”) and shall continue
thereafter for a period of two (2) years unless otherwise terminated pursuant to
the provisions of Section 6 (the “Employment Term”).

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3. Compensation & Duties.

 

(a) During the Employment Term, Employer shall pay Executive a base salary at
the annual rate equal to $250,000. Said base salary shall be payable in cash in
equal installments on a semi-monthly basis, or in accordance with such other
salary payment schedule as Employer may adopt for its Executives generally.

 

(b) During the Employment Term, Executive shall be entitled to the following
benefits provided by Employer: (1) medical insurance, providing coverage on
terms no less beneficial than those afforded other senior executives of Employer
from time to time; (2) participation in any pension, profit sharing or similar
retirement plans as may be implemented by Employer on terms no less beneficial
than those afforded other senior executives of Employer from time to time; (3) a
suitable office and furnishings; (4) participation in any bonus plan adopted by
Employer for its senior executives at the level designated in such plan or as
otherwise determined by Employer’s Board of Directors; and (5) such other
benefits as Employer may provide from time to time on terms no less beneficial
than those afforded other senior executives of Employer.

 

(c) Employer shall add Executive to its standard Director and Officer insurance
and indemnification policies. Additionally, Employer shall enter into its
standard form of indemnification agreement with Executive, whereby it will agree
to indemnify him for losses, damages, claims and causes of action arising out of
the actions or inactions of the Board of Directors and/or the officers of
Employer, subject to the terms and conditions set forth therein.

 

(d) Executive shall be granted options to purchase 350,000 shares of the common
stock of Employer pursuant to the 1995 Stock Option Plan of Employer. The
purchase price of the common stock covered by the foregoing options shall be
fixed as of January 28, 2003, which is the date that such grant was approved by
the Compensation Committee of Employer’s Board of Directors, in accordance with
the provisions of such stock option plan. Such options shall vest as set forth
below:

 

Options to purchase 116,667 shares of common stock shall vest as of January 28,
2004.

 

Options to purchase 116,667 shares of common stock shall vest as of January 28,
2005.

 

Options to purchase 116,666 shares of common stock shall vest as of January 28,
2006.

 

All such stock options, and all other stock options previously granted by
Employer to Executive, shall fully vest and be fully exercisable, upon the
earlier of (1) the date upon which the fair market value of the common stock
(determined as provided in the 1995 Stock Option Plan) is at least $3.50 per
share, or (2) the occurrence of any Change in Control (as defined below).

 

(e) If requested by Employer, Executive shall cooperate with Employer to secure,
for Employer, a key man life insurance policy on the life of the Executive in an
amount of up to $1,000,000 to be paid to Employer upon the Executive’s death.

 

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(f) During the term of his employment hereunder, Employer shall purchase and
keep in effect life insurance in an amount of $1,000,000 on the life of
Executive; provided that the total cost to Employer for such insurance shall not
exceed $5,000 per annum. If $1,000,000 of coverage is not available for $5,000
per annum or less, Employer shall purchase the maximum coverage available at a
total cost to Employer not to exceed $5,000 per annum. Such life insurance will
name as beneficiaries those individuals designated by Executive.

 

4. Executive Expenses.

 

Subject to such policies as may be maintained in effect from time to time by
Employer, Executive shall be entitled to reimbursement of amounts expended by
Executive for the benefit of Employer, including professional dues and expenses,
during the Employment Term, upon presentation of acceptable reports of such
expenses.

 

5. Confidential Information.

 

Executive specifically agrees that he will not at any time, whether during or
subsequent to the Employment Term, in any fashion, form or manner, unless
specifically consented to in writing by Employer, either directly or indirectly
use or divulge, disclose or communicate to any person, firm or corporation, any
confidential information of any kind, nature, or description concerning any
matters affecting or relating to the business of Employer, except in the
ordinary course of Employer’s business. All equipment, notebooks, documents,
memoranda, reports, recipes, formulas, files, samples, books, correspondence,
lists, other written and graphic records, and the like, affecting or relating to
the business of Employer, which Executive shall prepare, use, construct,
observe, possess or control, shall be and remain Employer’s sole property. The
foregoing confidentiality obligation shall not apply to information that (i)
Executive deems necessary to disclose pursuant to any governmental, judicial or
regulatory investigation, proceeding or order; (ii) is in the public domain
through no fault of Executive; or (iii) is obtained by Executive from a source
other than Employer which is not bound by a similar confidentiality obligation.

 

6. Termination with Cause.

 

(a) The employment of Executive may be terminated at any time for Cause. As used
herein, “Cause” shall mean:

 

(1) Executive’s continued willful and habitual neglect of his duties following
written notification of such neglect by Employer’s Chief Executive Officer and
the failure of Executive to cure such neglect within thirty (30) days of such
notice.

 

(2) Executive’s conviction of a felony or any other conduct which, by its
nature, would materially injure the reputation of Employer as determined by
Employer’s Chief Executive Officer acting in good faith and upon reasonable
grounds.

 

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(3) Executive’s incapacity to perform the duties required of him hereunder as a
result of mental or physical illness, which incapacity continues for a period of
ninety (90) days.

 

(4) Death of the Executive.

 

(b) Termination of Executive’s employment shall not be in limitation of any
other right or remedy Employer may have under this Agreement or in law or
equity.

 

(c) If Executive’s employment is terminated by Employer for Cause, Employer
shall pay Executive his full base salary, when due, through the Date of
Termination (as defined below) at the rate in effect at the time Notice of
Termination (as defined below) is given, plus all other amounts to which
Executive is entitled under any compensation plan of Employer at the time such
payments are due, and Employer shall have no further obligations to Executive
under this Agreement.

 

7. Termination without Cause; Termination with Good Reason; Change in Control.

 

(a) If Executive’s employment is terminated by Employer without Cause before
October 1, 2004, or if such employment is terminated by Executive for Good
Reason (as defined below) following a Change in Control, Employer shall pay
Executive the benefits set forth in Section 7(d). As used herein, “Good Reason”
shall mean any of the following: (i) a material and adverse change by Employer
in the Executive’s assignments, duties or responsibilities; or (ii) a reduction
in Executive’s salary or a material change in Executive’s benefits. As used
herein, a “Change in Control” shall be deemed to have occurred upon (1) the
consummation of (x) any consolidation or merger of Employer in which Employer is
not the continuing or surviving corporation or pursuant to which shares of
Employer’s common stock would be converted into cash, securities or other
property, other than a merger of Employer in which the holders of Employer’s
common stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (y) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of Employer, (2) the commencement of a tender offer for the common stock of
Employer (other than by Employer) for all, or a majority of, the common stock of
Employer, or (3) the approval by the stockholders of Employer of any plan or
proposal for the liquidation or dissolution of Employer.

 

(b) Any purported termination of Executive’s employment by Employer or Executive
must be communicated by written Notice of Termination to the other party
pursuant to Section 10. Notice of Termination shall mean a notice that shall
indicate the specific termination provision in this Agreement.

 

(c) “Date of Termination” shall mean the date specified in the Notice of
Termination (which, in the ­case of a termination for Cause shall not be less
than thirty (30) days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason shall not be less than thirty (30) nor
more than sixty (60) days from the date such Notice of Termination is given).

 

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(d) If Executive’s employment by Employer is terminated by Executive for Good
Reason following a Change in Control, or by Employer other than for Cause before
October 1, 2004, then Executive shall be entitled to the benefits provided
below:

 

(i) Employer shall pay to Executive his full base salary, when due, through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which Executive is entitled under any
compensation plan of Employer at the time such payments are due;

 

(ii) In lieu of any further salary payments to Executive for periods subsequent
to the Date of Termination, Employer shall pay as severance pay, at the time
specified below, a lump sum severance payment (together with the payments
provided herein below, the “Severance Payments”) equal to Executive’s annual
base salary as in effect as of the Date of Termination or the remaining balance
due through the end of the term of the contract, whichever is less;

 

(iii) For a six (6) month period after such termination, Employer shall provide
Executive with insurance benefits substantially similar to those that Executive
was receiving immediately prior to the Notice of Termination; and

 

(iv) Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced by any compensation earned by Executive as a result of earnings from
another employer, self-employment, or retirement benefits.

 

8. Severable Provisions.

 

The provisions of this Agreement are severable, and if any one or more
provisions may be determined to be judicially unenforceable, in whole or in
part, the remaining provisions shall nevertheless be binding and enforceable.

 

9. Successors; Binding Agreement.

 

Employer shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or other­wise) to all or substantially all of the business
and/or assets of Employer expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession had taken place.

 

This Agreement shall inure to the benefit of and be enforceable by Executive and
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive’s devisee,
legatee or other designee or, if there is no such designee, to Executive’s
estate.

 

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10. Notices.

 

Any notice to be given to Employer under the terms of this Agreement shall be
addressed to Employer at the address of its principal place of business, and any
notice to be given to Executive shall be addressed to him at his home address
last shown on the records of Employer, or at such other address as either party
may hereafter designate in writing to the other. All Notices shall be in writing
and shall be delivered personally, sent by United States certified or registered
mail, return receipt requested, first class postage prepaid, or by private
messenger or courier service. Any such notice shall be deemed to have been
received on the earlier of (i) two (2) business days after it is mailed or (ii)
the date it is actually received.

 

11. Waiver.

 

Either party’s failure to enforce any provision or provisions of this Agreement
shall not in any way be construed as a waiver of any such provision, or prevent
that party thereafter from enforcing each and every other provision of this
Agreement.

 

12. Title and Headings.

 

Titles and headings to sections in this Agreement are for the purpose of
reference only and shall in no way limit, define or otherwise affect the
provisions of it.

 

13. Governing Law.

 

The parties hereto agree that it is their intention and covenant that this
Agreement and performance under it, and all suits and special proceedings that
may ensue from its breach, be construed in accordance with and under the laws of
the State of California, and that in any action, special proceeding, or other
proceeding that may be brought arising out of, in connection with or by reason
of this Agreement, the laws of the State of California shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be instituted.

 

14. Entire Agreement.

 

This Agreement, any other written agreement executed concurrently therewith, and
the documents referred to herein, shall be construed together and constitute the
entire agreement between the parties pertaining to the subject matter hereof.
Any prior agreements are superseded. There are no warranties, conditions or
representations (including any that may be implied by statute) and there are no
agreements in connection with such subject matter except as specifically set
forth or referred to in this Agreement. No reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made by any party hereto or
its directors, officers, Executives or agents, to any other party hereto or its
directors, officers, Executives or agents, except to the extent that the same
has been reduced to writing and included as a term of this Agreement.
Accordingly, there shall be no liability, either in tort or in contract,
assessed in relation to any such warranty, representation, opinion, advice or
assertion of fact, except to the aforesaid. No

 

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amendment, change or variance from this Agreement shall be binding on either
party unless executed in writing by both parties.

 

15. Arbitration; Dispute Resolution

 

Any disagreement, dispute, controversy or claim arising out of or relating to
this Agreement shall be settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Arbitration Rules”) of the American Arbitration
Association (the “AAA”) (except as otherwise provided in this Agreement) in Los
Angeles, California. The arbitral tribunal shall consist of one arbitrator. In
making any decision, the arbitrator shall apply and follow the substantive law
of California. The parties to the arbitration jointly shall directly appoint
such arbitrator within thirty (30) days of initiation of arbitration. If the
parties shall fail to appoint such arbitrator as provided above, such arbitrator
shall be appointed by the AAA as provided in the Arbitration Rules. Executive
and Employer agree that the arbitral award may be enforced against the parties
to the arbitration proceeding or their assets wherever they may be found and
that a judgment upon the arbitral award may be entered in any court having
jurisdiction thereof. Employer shall pay all fees and expenses of the Arbitrator
regardless of the result and shall provide all witnesses and evidence reasonably
required by Executive to present Executive’s case.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

“EMPLOYER”

 

By:

 

/s/    VINCENT J. BITETTI

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Vincent J. Bitetti

Chief Executive Officer

 

“EXECUTIVE”

 

By:

 

/s/    SHIN TANABE

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Shin Tanabe

President and Chief Operating Officer

 

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