EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") made and entered into as of
January 1, 1997 by and between BNN Corporation, a Nevada corporation which
will be reincorporated in Delaware under the name of Kaleidoscope Media Group,
Inc., (the "Company"), and Xxxxx Xxxxxx (the "Executive").
The Executive is being employed by the Company as an executive
officer. The parties desire to enter into an employment agreement and to set
forth herein the terms and conditions of the Executive's continued employment
by the Company and its subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and the mutual benefits to be derived herefrom,
the Company and the Executive agree as follows:
1. Employment.
a. Duties. The Company shall employ the Executive, on the
terms set forth in this Agreement, as its Chairman of the Board of Directors
and Chief Executive Officer. The Executive accepts such employment with the
Company and shall perform and fulfill such duties as are assigned to him
hereunder consistent with his status as a senior executive of the Company,
devoting his best efforts and entire professional time and attention to the
performance and fulfillment of his duties and to the advancement of the
interests of the Company, subject only to the direction, approval, control and
directives of the Company's Board of Directors (the "Board"). Nothing
contained herein shall be construed, however, to prevent the Executive from
trading in or managing, for his own account and benefit, in stocks, bonds,
securities, real estate, commodities or other forms of investments (subject to
law and Company policy with respect to trading in Company securities). Without
any additional consideration, Executive shall also serve as the Chairman of
the Board of Directors and Chief Executive Officer of any or all subsidiaries
of the Company. Unless otherwise indicated by the context, the term "Company"
shall include the Company and all its subsidiaries.
b. Place of Performance. In connection with his employment
by the Company, the Executive shall be based at the Company's principal place
of business in the New York, New York, except when required for travel on
Company business.
c. Nomination as Director. The Company agrees that it will
nominate the Executive as a member of the Board of Directors each year during
the term of this Agreement and will use its best efforts to ensure that the
Executive is elected to the Board of Directors.
2. Term. The Executive's employment under this Agreement shall
commence as of January 1, 1997 (the "Commencement Date") and shall, unless
sooner terminated in accordance with the provisions hereof, continue
uninterrupted until December 31, 1999 ("Term"). As used herein "Year" shall
refer to a twelve month period ending December 31st. Unless notice of
1
nonrenewal is given by either party at least sixty (60) days prior to the end
of the Term or prior to the end of any Year thereafter, the Term of this
Agreement shall be automatically extended for an additional period of one
year.
3. Compensation.
a. Base Salary. During each Year of the Term, the Executive
shall be entitled to receive an annual salary (the "Base Salary") of three
hundred fifty thousand Dollars ($350,000) in installments at such times as the
Company customarily pays its other executive officers (but in any event not
less often than monthly). For each Year thereafter, the Company shall increase
the Base Salary by an amount to be determined by the Board of Directors.
b. Bonus. The Board of Directors may at its sole discretion
grant bonuses to the Executive.
c. Health Insurance and Other Benefits. During the Term, the
Executive shall be entitled to all employee benefits generally offered by the
Company to its executive officers and key management employees, including,
without limitation, all pension, profit sharing, retirement, stock option,
salary continuation, deferred compensation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement,
survivor income, life insurance or any other benefit plan or arrangement
established and maintained by the Company, subject to the rules and
regulations then in effect regarding participation therein.
d. Keyman Insurance. The Company will obtain keyman life
insurance upon the life of the Executive. In amounts to be determined from
time to time by Executive and the Company.
4. Reimbursement of Expenses. The Executive shall be reimbursed for
all items of travel, entertainment and miscellaneous expenses that the
Executive reasonably incurs in connection with the performance of his duties
hereunder, provided the Executive submits to the Company such statements and
other evidence supporting said expenses as the Company may reasonably require.
5. Automobile Allowance. The Executive shall be reimbursed for the
expenses of owning or leasing an automobile suitable for his position and
consistent with Company practices, including the expenses of operating,
insuring and parking such automobile, provided the Executive submits to the
Company such statements and other evidence supporting such expenses as the
Company may require.
6. Vacation. The Executive shall be entitled to not less than four
(4) weeks of vacation in any calendar year.
2
7. Termination of Employment.
a. Death or Total Disability. In the event of the death of
the Executive during the Term, this Agreement shall terminate as of the date
of the Executive's death. In the event of the Total Disability (as that term
is defined below) of the Executive for sixty (60) days in the aggregate during
any consecutive nine (9) month period during the Term, the Company shall have
the right to terminate this Agreement by giving the Executive thirty (30)
days' prior written notice thereof, and upon the expiration of such thirty
(30) day period, the Executive's employment under this Agreement shall
terminate. If the Executive shall resume his duties within thirty (30) days
after receipt of such a notice of termination and continue to perform such
duties for four (4) consecutive weeks thereafter, this Agreement shall
continue in full force and effect, without any reduction in Base Salary and
other benefits, and the notice of termination shall be considered null and
void and of no effect. Upon termination of this Agreement under this Paragraph
7(a), the Company shall have no further obligations or liabilities under this
Agreement, except to pay to the Executive's estate or the Executive, as the
case may be, (i) the portion, if any, that remains unpaid of the Base Salary
for the Year in which termination occurred, but in no event less than six (6)
months' Base Salary; and (ii) the amount of any expenses reimbursable in
accordance with Paragraph 4 above, and any automobile allowance due under
Paragraph 5 above; and (iii) any amounts due under any Company benefit,
welfare or pension plan. Except as otherwise provided by their terms, any
stock options not vested at the time of the termination of this Agreement
under this Paragraph 7(a) shall immediately become fully vested.
The term "Total Disability," as used herein, shall
mean a mental or physical condition which in the reasonable opinion of an
independent medical doctor selected by the Company renders the Executive
unable or incompetent to carry out the material duties and responsibilities of
the Executive under this Agreement at the time the disabling condition was
incurred. In the event the Executive disagrees with such opinion, the
Executive may, at his sole expense, select an independent medical doctor and,
in the event that doctor disagrees with the opinion of the doctor selected by
the Company, they shall select a third independent medical doctor, and the
three doctors shall, by majority vote, determine whether the employee has
suffered Total Disability. The expense of the third doctor shall be shared
equally by the Company and the Executive. Notwithstanding the foregoing, if
the Executive is covered under any policy of disability insurance under
Paragraph 3(c) above, under no circumstances shall the definition of Total
Disability be different from the definition of that term in such policy.
b. Discharge for Cause. The Company may discharge the
Executive for "Cause" upon notice and thereby immediately terminate his
employment under this Agreement. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment if the Executive,
in the reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured such
breach or commenced in good faith to correct such breach within thirty (30)
days after notice; (ii) embezzles or converts to his own use any funds of the
Company or any client or customer of the Company; (iii) converts to his own
use or unreasonably destroys, intentionally, any property of
3
the Company, without the Company's consent; (iv) is convicted of a crime; (v)
is adjudicated an incompetent; or (vi) is habitually intoxicated or is
diagnosed by an independent medical doctor to be addicted to a controlled
substance (any disagreement of Executive shall be resolved using the procedure
provided in Paragraph 7(a) above).
c. Termination by Executive. Executive may terminate this
Agreement for the failure by the Company to comply with the material
provisions of this Agreement which failure is not cured within thirty (30)
days after notice ("Good Reason").
d. No Mitigation. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement
by seeking other employment or otherwise, not shall the amount of any payment
provided for in this Agreement be reduced by any compensation earned by the
Executive as the result of his employment by another employer.
8. Restrictive Covenant.
a. Competition. As used herein "Company Project" shall mean
any project which the Company is actively pursuing or actively considering
while the Executive was employed by the Company. The Executive undertakes and
agrees that during the term of this Agreement and for a period of two years
after the date of termination or expiration of this Agreement he will not
compete, directly or indirectly, with respect to a Company Project or
participate as a director, officer, employee, agent, consultant,
representative or otherwise, or as a stockholder, partner or joint venturer,
or have any direct or indirect financial interest, including, without
limitation, the interest of a creditor, in any business competing with respect
to a Company Project. Executive acknowledges that such prospects represent a
corporate opportunity or are the property of the Company and Executive should
have no rights with respect to such properties on projects. Executive further
undertakes and agrees that during the term of the Agreement and for a period
of one year after the date of termination or expiration of this Agreement he
will not, directly or indirectly employ, cause to be employed, or solicit for
employment any of Company's or its subsidiaries' employees.
b. Scope of Covenant. Should the duration, geographical area
or range or proscribed activities contained in Paragraph 8(a) above be held
unreasonable by any court of competent jurisdiction, then such duration,
geographical area or range of proscribed activities shall be modified to such
degree as to make it or them reasonable and enforceable.
c. Non-Disclosure of Information.
(1) The Executive shall (i) never, directly or
indirectly, disclose to any person or entity for any reason, or use for his
own personal benefit, any "Confidential Information" (as hereinafter defined)
either during his employment with the Company or following termination of that
employment for any reason (ii) at all times take all precautions necessary to
protect from loss or disclosure by him of any and all documents or other
information containing,
4
referring or relating to such Confidential Information, and (iii) upon
termination of his employment with the Company for any reason, the Executive
shall promptly return to the Company any and all documents or other tangible
property containing, referring or relating to such Confidential Information,
whether prepared by him or others.
(2) Notwithstanding any provision to the contrary
in this Paragraph 8(c), this paragraph shall not apply to information which
the Executive is called upon by legal process regular on its face (including,
without limitation, by subpoena or discovery requirement) to disclose or to
information which has become part of the public domain or is otherwise
publicly disclosed through no fault or action of the Executive.
(3) For purposes of this Agreement, "Confidential
Information" means any information relating in any way to the business of the
Company disclosed to or known to the Executive as a consequence of, result of,
or through the Executive's employment by the Company which consists of
technical and nontechnical information about the Company's products,
processes, computer programs, concepts, forms, business methods, data, any and
all financial and accounting data, marketing, customers, customer lists, and
services and information corresponding thereto acquired by the Executive
during the term of the Executive's employment by the Company. Confidential
Information shall not include any of such items which are published or are
otherwise part of the public domain, or freely available from trade sources or
otherwise.
(4) Upon termination of this Agreement for any
reason, the Executive shall turn over to the Company all tangible property
then in the Executive's possession or custody which belongs or relates to the
Company. The Executive shall not retain any copies or reproductions of
computer programs, correspondence, memoranda, reports, notebooks, drawings,
photographs, or other documents which constitute Confidential Information.
9. Arbitration
(a) Any and all other disputes, controversies and claims
arising out of or relating to this Agreement, or with respect to the
interpretation of this Agreement, or the rights or obligations of the parties
and their successors and permitted assigns, whether by operation of law or
otherwise, shall be settled and determed by arbitration in New York City, New
York pursuant to the then existing rules of the American Arbitration
Association ("AAA") for commercial arbitration.
(b) In the event that the Executive disputes a determination
that Cause exists for terminating his employment hereunder pursuant to
paragraph 7(b), or the Company disputes the determination that Good Reason
exists for the Executive's termination of this Agreement pursuant to paragraph
7(c), either party disputing this determination shall serve the other with
written notice of such dispute ("Dispute Notice") within thirty (30) days
after the date the Executive is terminated for Cause or the date the Executive
terminates this Agreement for Good Reason. Within fifteen (15) days
thereafter, the Executive or the Company, as the case may be, shall, in
5
accordance with the Rules of the AAA, file a petition with the AAA for
arbitration of the dispute, the costs thereof to be shared equally by the
Executive and the Company unless an order of the AAA provides otherwise. If
the Executive serves a Dispute Notice upon the Company, an amount equal to the
portion of the Base Salary Executive would be entitled to receive hereunder
shall be placed by the Company in an interest-bearing escrow account mutually
agreeable to the parties or the Company shall deliver an irrevocable letter of
credit for such amount plus interest containing terms mutually agreeable to
the parties. If the AAA determines that Cause existed for the termination, the
escrowed funds and accrued interest shall be paid to the Company. However, in
the event the AAA determines that the Executive was terminated without Cause
or that Executive resigned for Good Reason, the escrowed funds and accrued
interest shall be paid to the Executive.
(c) Any proceeding referred to in paragraph 9(a) or (b)
shall also determine Executive's entitlement to legal fees as well as all
other disputes between the parties relating to Executive's employment.
(d) The parties covenant and agree that the decision of the
AAA shall be final and binding and hereby waive their right to appeal
therefrom.
10. Indemnity. The Company shall indemnify and hold executive
harmless from all liability to the full extent permitted by the laws of its
state of incorporation.
11. Miscellaneous.
a. Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below
by registered or certified mail, return receipt requested or sent by overnight
express mail or courier or facsimile to such address, if a party has a
facsimile machine. Notice shall be deemed to have been given and received when
so hand-delivered or after three (3) business days when so deposited in the
U.S. Mail, or when transmitted and received by facsimile or sent by express
mail properly addressed to the other party. The addresses are:
To the Company:
BNN Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000 Attn: President
To the Executive:
Xxxxx Xxxxxx
00 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
6
The foregoing addresses may be changed at any time by notice given in the
manner herein provided.
b. Integration; Modification. This Agreement constitutes the
entire understanding and agreement between the Company and the Executive
regarding its subject matter and supersedes all prior negotiations and
agreements, whether oral or written, between them with respect to its subject
matter. This Agreement may not be modified except by a written agreement
signed by the Executive and a duly authorized officer of the Company.
c. Enforceability. If any provision of this Agreement shall
be invalid or unenforceable, in whole or in part, such provision shall be
deemed to be modified or restricted to the extent and in the manner necessary
to render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law as if such provision had been
originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.
d. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including and their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
e. Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one (1) or more
instances shall be deemed or construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition, or the breach
of any other term or covenant set forth in this Agreement. Moreover, the
failure of either party to exercise any right hereunder shall not bar the
later exercise thereof with respect to other future breaches.
f. Governing Law. This Agreement shall be governed by the
internal laws of the State of New York.
g. Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
h. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
i. Due Authorization. The Company represents that all
corporate action required to authorize the execution, delivery and performance
of this Agreement has been duly taken.
7
IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and, on behalf of the Company, by its duly authorized officer on the day and
year first above written.
BNN CORPORATION
By: /s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx, Executive Officer
/s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx, Executive
