EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of October 10,
1997, by and between American Interactive Media, Inc. (hereinafter the
"Company"), a Nevada corporation, and Xxxx Xxxxx (hereinafter "Employee").
WHEREAS, the Company desires to employ Employee as its President, and
Employee desires to be employed by the Company from and after the date hereof
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
1. EMPLOYMENT:
a. The Company shall employ Employee and Employee accepts employment
by the Company and shall render services as its President, with specific
duties, not inconsistent with the office of President, as determined by the
Company's Board of Directors.
b. It is expressly understood that the Company's Board of Directors
shall, as soon as practicable after the execution of this Agreement, elect
Employee as a member of the Company's Board of Directors.
c. Employee shall have final approval of any public or internal
notices concerning his employment, election as a director, termination as
an employee or withdrawal as a director.
2. TERM:
a. The term of this Agreement, and the term of Employee's employment
hereunder, shall commence as of September 30, 1997 (the "Effective Date")
and shall end on January 2, 2002, if not terminated by Employee or the
Company on or prior to any
such anniversary. Notwithstanding the foregoing, however, and subject to
the terms and conditions set forth elsewhere in this Agreement, the Company
may terminate Employee's employment hereunder at any time, with or without
cause.
b. Employee shall have the right to terminate his employment hereunder
for cause upon written notice to the Company referring to this subparagraph
2(b) and describing the condition relied upon by him in invoking the
provisions hereof if, without Employee's written consent: (i) the Company
fails to pay any salary or other compensation or benefit required to be
paid to Employee hereunder when due and for an additional period of fifteen
(15) days after demand therefor by Employee; (ii) there is consummated a
merger or consolidation of the Company with any other corporation or
corporations in which the Company is not the surviving corporation; or
(iii) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition of all or substantially all of the
Company's assets.
3. COMPENSATION:
a. During the term of his employment hereunder, the Company shall pay
Employee a base salary as follows: (i) at the rate of Two Hundred Fifty
Thousand ($250,000.00) Dollars per year pro rated for the year 1997; and
(ii) at the rate of Three Hundred Thousand ($300,000.00) Dollars during the
year 1998. The Employee's base salary for the years 1999, 2000 and 2001
shall be determined by good faith negotiation between the Employee and the
Company, but in no event shall be less than Three Hundred Thousand
($300,000.00) Dollars. Employee's base salary shall be paid in equal,
bi-monthly installments commencing with the first pay period immediately
following the Effective Date, or at such other intervals upon which
Employee and the Company shall mutually agree, and to the extent allowed by
applicable law,
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shall not when provided be reduced by federal, state, or local payroll
withholding taxes. Employer and Employee may agree at any time to increase
Employee's base salary.
b. The parties understand and agree that, in the course of and
incident to his employment by the Company, Employee will perform executive
services for the Company's majority-owned subsidiary corporations. The
Company shall have the right, in its sole discretion, to allocate the
financial burden of Employee's salary hereunder among its subsidiary
corporations, and any salary received by Employee from any majority-owned
subsidiary of the Company shall reduce the amount payable directly by the
Company; provided, however, that nothing herein is intended to relieve or
shall relieve the Company from its responsibility to pay the full amount of
Employee's salary to the extent not already paid by a subsidiary of the
Company.
4. OTHER BENEFITS:
a. The Company shall reimburse Employee for ordinary and reasonable
business expenses incurred by him in the performance of services pursuant
to this Agreement. In addition, the Company shall reimburse Employee for a
leased automobile for his use, and shall reimburse Employee for operating
expenses with respect to such vehicle, including (without limitation)
gasoline, oil, insurance, general maintenance, tires, batteries and
repairs.
b. During the term of his employment and during any restricted period
during which he is entitled to receive payments pursuant to subparagraph
5(c) below, Employee shall be entitled to participate in any medical,
health, disability and accident or other hospitalization or insurance plan
established by the Company for its employees, on a basis equivalent to a
full-time employee.
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c. Employee shall have the right to participate in any bonus
compensation plan or other prerequisites that may be established from time
to time appropriate to his position.
d. During each full year of the term of his Employment, Employee shall
be entitled to three (3) weeks' paid vacation time which shall not be
cumulative from year to year.
e. If Employee is made a party or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "Proceeding"),
by reason of the fact that he was a director or officer of the Company, or
was acting on behalf of or is or was serving at the request of the Company
as a director, officer, partner, employee or agent of another corporation,
partnership, joint venture or other enterprise or entity, the Company shall
indemnify Employee against all expenses, liability and loss actually and
reasonably incurred or suffered by him in connection with such Proceeding,
whether or not the indemnified liability arises or arose from any
Proceeding by or in the right of the Company, to the extent that such
indemnification is not prohibited by law as it presently exists or may
hereafter be amended. Upon Employee's request, the Company shall pay
expenses reasonably incurred by Employee in defending a Proceeding as they
are incurred, in advance of the final disposition of such Proceeding;
provided, however, as a condition to his right to receive such advances,
Employee shall agree to reimburse to the Company the amounts so advanced if
and to the extent that a court of competent jurisdiction shall determine
that, because of his actions related to the claim upon which such
Proceedings were based, indemnification of Employee from liability for such
claim or expenses incurred in connection with the defense of such claim was
not allowed under applicable laws. The
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Company's obligations under this paragraph 4(f) shall continue in respect
to any act or omission by Employee when done on behalf of or at the request
of the Company, even if a Proceeding is commenced after termination of
Employee's obligations under this Agreement, and even if such Proceeding is
frivolous, fraudulent or commenced in bad faith.
f. During the term of this Agreement or any extension of this
Agreement, and for any acts or omissions arising from the performance of
Employee's obligations under this Agreement, the Company shall maintain
Directors' and Officers' liability insurance reasonably acceptable in form
and content to Employee, with a minimum limit of Three Million
($3,000,000.00) Dollars, which shall inure to the benefit of Employee. The
Company shall cause such insurance to be in force within thirty (30) days
of the execution of this Agreement.
5. COMPENSATION UPON TERMINATION: If Employee's employment is terminated at
any time during the term of this Agreement, the following provisions shall
apply:
a. If Employee's employment is terminated for any reason whatsoever,
except for (i) termination by the Company with cause, as defined in
subparagraph 5(d) below, or (ii) by Employee without cause pursuant to
subparagraph 2(c) above, then, in such event, the Company shall pay
Employee, at the time of such termination, an amount equal to the
difference of (i) two years' base salary at the amount in effect at the
time of such termination, as provided in subparagraph 3(a) herein, and (ii)
any remuneration received by the Employee in the first year after such
termination through gainful employment obtained after making a reasonable
effort to obtain employment, which payment shall be made in lieu of any
other severance or post-employment benefits except as otherwise expressly
provided for in this Agreement.
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Employee also shall have the option to continued use of the automobile as
described in paragraph 4(a) herein, without regard to subsequent
employment, for the full term of this Agreement and any agreed-upon
extended term, even if Employee's employment is terminated as described in
this paragraph 5(a), and shall be entitled to the benefits of subparagraphs
4(b), 4(c), 4(f), 4(g) and 5(b) herein.
b. If Employee's employment is terminated by his death, his estate or
a beneficiary designated by him on notice to the Company shall receive (i)
the remainder of his base salary through the last month of the year of his
death, plus (ii) one year's base salary at the rate in effect in the year
of his death, which payments shall not be reduced by life insurance
proceeds, if any, paid to beneficiaries designated by Employee under any
life insurance policy owned by the Company.
c. If Employee voluntarily terminates his employment with the Company
without cause, the Company at its election, by notice to Employee given not
later than ten (10) days after such termination and referring specifically
to this subparagraph (c), shall have the right to require for one (1) year
from the date of termination (the "restricted period") that Employee not
directly or indirectly engage in any competitive activity, as defined
below, and, if the Company so elects, Employee agrees not to engage in any
competitive activity, provided, however, that (i) the Company provides
Employee with all pay, benefits, bonuses, options and perquisites described
in subparagraph 3(a) herein ("Compensation"); (ii) such Compensation shall
not be provided when such Compensation would otherwise be due, but rather
shall be accelerated and provided to Employee within ten (10) days of
Employee's termination and shall include One Hundred (100%) Percent of all
cash compensation which otherwise would be provided under paragraph 3 (a)
of the Agreement for the year following the year in which
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Employee's termination occurs. The Company shall honor and timely perform
its obligations to Employee under subparagraphs 4 (a) through 4 (c) and 4
(e), 4 (f), 5(a) and 5 (b) herein. Any failure by the Company to provide
the compensation accelerated as required hereunder, or to honor and timely
perform its obligations to Employee under subparagraphs 4(a) through 4 (c)
and 4 (e), 4 (f), 5 (a) and 5 (b) above, and shall constitute a full and
irrevocable waiver of the Company's rights under this subparagraph 5 (c).
d. For the purposes of subparagraph 5(a) above, "cause" for
termination of Employee's employment shall exist only in the event of
Employee's gross negligence or intentional malfeasance in the performance
of his duties as an officer of the Company and/or its subsidiaries which
results in or creates a substantial risk of serious financial injury to the
Company.
e. For purposes of subparagraph 5 (c) above, the term "competitive
activity" shall mean directly or indirectly, acting alone or in conjunction
with others: (i) engaging as a director, officer, employee, partner,
shareholder or any other capacity, in any business related, indirectly or
directly, to the manufacture or sale of internet access hardware, access
software or access services; (ii) requesting any customers of any business
then being conducted by Company to curtail or cancel their business with
the Company; (iii) disclosing to any person, firm or corporation any trade,
technical or technological secrets, any details or organization or business
affairs, any names of past or present customers of Company or any other
information relating to the business of Company; (iv) soliciting,
canvassing or accepting any business or transaction for any other person,
firm or corporation or business similar to any business of Company; (v)
inducing, or attempting to influence, any employee of Company to terminate
employment with Company or to enter into any employment or other business
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relationship with any other person (including Employee), firm or
corporation; (vi) acting in any manner which he shall have reason to
believe is contrary to the best interests of Company; provided, however,
that nothing in this paragraph 5(e) shall be deemed by the Company to
prevent or restrict Employee from fully performing all obligations to which
he is bound (by contract or otherwise) at the time of the execution of this
Agreement, including (without limitation) participation on boards of
directors, performance of covenants of restriction, or obligation to report
business activities.
6. OWNERSHIP OF DOCUMENTS/PROPRIETARY PROPERTY.
a. All books, tapes, records, documents, programs, customer lists,
supplier lists or any other confidential information of the Company,
regardless of whether developed, compiled or made by Employee, made
available to Employee or used by Employee during the term of this Agreement
are and shall remain the property of the Company and shall be delivered to
the Company by Employee at the end of the term hereof.
b. Employee shall promptly disclose, grant and assign ownership to the
Company for its sole use and benefit any and all articles, inventions,
improvements, discoveries, copyrights, information, ideas and suggestions
(whether patentable or not) (collectively, "Proprietary Property") (i)
which he may develop, acquire, conceive or reduce to practice while
Employee is carrying out the duties of this Agreement and which relate to
the business, products or services of the Company, including the design
and/or development of internet access software programs and codes, and/or
(ii) which result directly or indirectly, in whole or in part, from use of
the time, facilities, materials or information of the Company; in each case
together with all patent applications, copyrights and reissues thereof that
may at any time be granted for or upon any such Proprietary Property.
Employee understands and agrees
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that the Company is and shall be the sole owner of any and all property
rights in any Proprietary Property.
c. Employee agrees to execute such further assignments as necessary to
the Company or to its nominees, successors, or assigns of all of his right,
title and interest in and to any and all such Proprietary Property and in
and to any and all copyrights and patent applications therefor, and in and
to all copyrights and patents that may be granted therefor throughout the
world. Employee also agrees, during and subsequent to his employment with
the Company, to render to the Company at its expense all such assistance as
the Company may require in order to fully carry out the intent of this
Agreement.
d. Employee shall keep and maintain adequate and current written
records of all such Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be made available to, and
remain the property of, the Company at all times.
e. Employee represents, warrants and agrees that as of the date of
this Agreement, he has not developed, conceived or reduced to practice any
Proprietary Property other than those for which a copyright registration or
patent application have been previously filed or which are listed in
Exhibit "B" attached hereto.
f. Except as expressly set forth herein, no severance or similar
compensation shall be payable to Employee upon the termination of his
employment.
7. ADDITIONAL OBLIGATIONS OF THE COMPANY UPON TERMINATION: Upon the
termination of Employee's employment for any reason or cause other than
termination by the Company with cause, or termination by Employee without cause,
options to purchase common stock of the Company owned by Employee shall be
convertible into common stock of the Company by Employee, at his election, upon
notice to the Company
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making specific reference to this Section 7. Any such conversion shall be
effective upon the giving of such notice by Employee. The numbers of shares into
which such options shall be converted shall equal the number of options to be
converted multiplied by a fraction, the numerator of which is the difference
between the market price of the common stock (determined in accordance with
Section 3(c) above) on the date of conversion minus the exercise price of the
options, and the denominator of which shall equal the market price of the
Company's common stock on such date.
8. ASSIGNMENT: This Agreement is personal in its nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except that: (i) the Company
may assign or transfer this Agreement to a successor organization in the event
of merger, consolidation, or transfer of sale of all or substantially all of the
assets of the Company, in which case the term Company shall mean such successor,
provided that in the case of any such assignment or transfer, the obligations of
this Agreement are assumed by such successor or are binding upon and inure to
the benefit of such successor as a matter of law; and (ii) in the event of
Employee's death, the term "Employee" shall include his heirs, executors and
administrators.
9. NOTICES: All notices hereunder shall be in writing and shall be deemed
to have been given at the time when mailed in any general or branch United
States Post Office enclosed in a certified post-paid envelope, addressed to the
respective parties stated below, or to such changed address as such party may
fix by notice as aforesaid:
To the Company: Attn.: Board of Directors
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
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To Employee: Xx. Xxxx Xxxxx
0 Xxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
10. RESOLUTION OF DISPUTES:
a. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, including, without limitation, a claim for
declaratory relief or relief which is equitable in nature, shall be settled
by arbitration in the State of New York, by an arbitrator selected by
Employee and the Company. If the Company and Employee cannot agree on the
appointment of an arbitrator within ten (10) days after a request for
arbitration, then such arbitration shall be conducted by a panel of three
arbitrators selected in accordance with procedures established and
implemented by the American Arbitration Association. The arbitration shall
be conducted in accordance with the rules of the American Arbitration
Association, except as otherwise provided in this paragraph 10. Except as
otherwise provided herein, all costs of the arbitrator shall be borne by
the Company. Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction over the parties. Any award of the
arbitrator may include interest at a rate or rates considered just under
the circumstances by the arbitrator, but shall not include any award of
punitive damages.
b. Employee shall be entitled to recover from the Company reasonable
attorney's fees and costs and other expenses incurred by him in connection
with any arbitration hereunder. Subject to the limitations of subparagraph
10(c) below, payment of such fees and expenses shall be made by the Company
as they are incurred by Employee. If, however, the arbitrator(s) should
later determine that, under the circumstances, it was unjust for the
Company to have made any of these payment of attorney's fees and costs and
expenses to
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Employee, the arbitrator(s) may require Employee to repay any such payments
in accordance with such terms and conditions as the arbitrator(s) shall
direct.
c. Notwithstanding anything to the contrary in subparagraph 10(b)
above, the amount which the Company shall be required to advance to
Employee or which Employee shall be entitled to recover from the Company on
account of attorney's fees, costs and expenses incurred by him in any
arbitration hereunder shall be limited to the amount incurred by the
Company on account of its own attorney's fees, costs and expenses, as and
when such fees, costs and expenses are incurred by the Company, unless the
arbitrator(s) shall determine that, under the circumstances, it is unjust
to so limit the Company's advances and reimbursements to Employee.
d. Employee recognizes that immediate and irreparable damage will
result to Company if Employee breaches any of the terms and conditions of
Section 5(e) (if applicable) or 6 hereof. Therefore, notwithstanding any
other term of this Agreement, Employee and Company agree that any claim for
injunctive relief (including preliminary injunctive relief) based upon an
alleged violation of such Sections may be brought in the courts of the
State of New York (including the United States District Court for the
Southern District of New York) and Employee consents to the jurisdiction of
such courts.
11. MISCELLANEOUS:
a. At any time, and from time to time, after the signing of this
Agreement, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to carry out
the intent and purposes of this Agreement.
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b. This Agreement shall be governed, construed and enforced in
accordance with the substantive laws of the State of New York,
notwithstanding any conflicts-of-law doctrines or laws of any jurisdiction
to the contrary.
c. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties and their heirs, personal representatives,
successors and assigns.
d. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
e. This Agreement shall not be interpreted in favor of or against
either party on account of such party having drafted this Agreement.
f. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
g. The provisions of this Agreement are independent of and separable
from each other, and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other or others
of them may be invalid or unenforceable in whole or in part. Without
limiting the foregoing, it is specifically agreed with regard to each of
the covenants in this Agreement set forth in paragraphs 8 and 9 that they
are severable and if any of them are held invalid or unenforceable by
reason of length of time, area covered or
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actively covered, or any combination thereof, or for any other reason, and
such covenant shall be adjusted or reduced to the extent necessary to cure
any invalidity and to protect the interest of the Company to the fullest
extent of the law.
h. This Agreement contains the entire understanding among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
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IN WITNESS WHEREOF, Employee has signed his name and the Company, by the
signatures of its duly authorized officers, has executed this Agreement as of
the date and year mentioned at the top of page one.
____________________________________
American Interactive Media, Inc.
(CORPORATE SEAL)
By: _______________________________
Attest: ____________________________
Secretary
WITNESS:
________________________________ ____________________________________
Xxxx Xxxxx
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