EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, ("Agreement") is entered into as of the first day of
December, 1999 by and between THE ENTERTAINMENT INTERNET, INC., a Nevada
corporation, ("Employer", "Corporation", and/or "TEI") and Xxxxxxx Xxxxxxx
("Employee").
ARTICLE I
PRINCIPAL DUTIES
Employer agrees to employ Employee primarily in the capacity of Co-Chairman of
The Entertainment Internet, Inc. and Chief Executive Officer and President for
Employer.
In the foregoing capacities, Employee shall be responsible for advancement of
the objectives of the Employer as outlined and/or approved by the Chairman of
the Board of Directors (individually) and the Board of Directors (jointly); this
shall include, but not be limited to, consultation on operational and management
concerns of Employer, advancement of the Xxxxxxx.xxx services into major
domestic cities (e.g., New York, Chicago, Boston) and foreign territories
worldwide, obtaining a significantly increased market share in the production
and casting communities through exponential increase of membership enrollments,
increased media visibility, and providing the benefits of all expertise and
contacts developed during the extensive and distinguished career of Employee.
Employee expressly understands that Employee may be required to perform such
other duties and to work in such other capacities as Employer may deem necessary
or advisable and as may be assigned to Employee from time to time by Employer.
Employee agrees to duly undertake and perform all such work as may be required
by the positions assigned to Employee and to serve Employer faithfully,
diligently and to the best of his ability. Employee agrees during the term of
this Agreement to devote his best efforts, attention, energy and skill to the
performance of his employment duties and to furthering the interests of
Employer. Employee shall be subject to the oversight of and report to the
Chairman of the Board of Directors (individually) and/or the Board of Directors
(jointly).
ARTICLE II
COMMENCEMENT OF EMPLOYMENT
Employee's employment under this Agreement shall commence on January 1, 2000, or
such other time as the parties may mutually agree and continue through December
31, 2003, constituting three years (the "Contract Period"), unless sooner
terminated as hereinafter provided, Employee shall faithfully keep and observe
all of the rules which may be prescribed from time to time by the Employer or by
any political, governmental, or other authority, for the conduct, whether
personal or in the line of duty, of employees and other persons in and about the
area of employment.
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ARTICLE III
AREA OF EMPLOYMENT
Employee's first assignment is expected to be worldwide.. However, Employee
resides in Los Angeles and shall not be required to change residence or to
travel frequently to other areas.
ARTICLE IV
COMPENSATION
4.1 Employer shall pay Employee an annual salary for year 2000 of two
hundred fifty thousand dollars ($250,000). Salary shall be pro-rated
for any partial year. Employer shall provide annual raises to the
extent necessary to ensure Employee's salary is equal to the salary
provided to Xxxxxxx Xxxxx as its Chairman of its Board of Directors.
This salary will be paid by Employer to Employee in semi-annual
installment payment, less taxes payable. If Employer does not have the
funds available to make salary payments to Employee, the Board of
Directors of Employer shall make the payments in stock or options as
determined in their sole discretion.
4.2 Employer may, at its option, pay for a policy of key man life
insurance. Employer shall pay the premium for Employee's medical and
dental insurance. Employee agrees to fill out any forms and submit to a
medical examination, if required.
4.3 No bonus pay or other salary, other than as stated herein, shall be
required to be made to Employee, unless approved by Employer's Board
of Directors.
4.4 Employee shall be reimbursed for all reasonable business expenses,
including cell phone, travel, entertainment and other business
expenses.
4.5 As consideration for the execution of this Agreement Employee shall
receive eight hundred fifty thousand (850,000) shares of common stock
of Employer and options to purchase an equivalent number of shares of
common stock at a price of $0.50, exercisable for 5 years and vested in
accordance with Employer's Stock Option Plan. In the event that
Employer's Stock Option Plan is not at any time authorized to satisfy
the requirements hereof (i.e., necessary reservation of shares to be
granted hereunder), Employer shall use its best faith efforts to cure
and remedy such situation and, in the event such situation cannot be
cured within a reasonable period, to perform its remaining obligations
or any deficiency hereunder through the grant of sufficient warrants
(apart from Employer's Stock Option Plan) under fair and reasonable
terms.
4.6 Employee shall in all respects be afforded "favored nations" status
with respect to the compensation and benefits paid hereunder; in all
respects not otherwise addressed herein, Employee shall receive and
enjoy compensation and benefits on par with those paid to Xxxxxxx Xxxxx
as its Chairman of its Board of Directors.
4.7 Employer and Employee discussed and agreed upon bonus payments to be
made to Employee in the event Employer's common stock reaches certain
trading levels and sustains the same for a period of thirty (30) days
thereafter; such bonus structure grants Employee additional shares of
Employer's common stock ("shares") for exceptional performance in the
following manner:
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Sustained Stock Price Employee Receives
One dollar ($1.00): two hundred thousand (200,000) shares;
Two dollars fifty cents ($2.50); one hundred thousand (100,000) shares;
Five dollars ($5.00): three hundred thousand (300,000) shares;
Seven dollars fifty cents ($7.50): two hundred thousand (200,000) shares;
Ten dollars ($10.00): three hundred thousand (300,000) shares;
The foregoing bonuses are "one time only" stock grants and are not
repeated each time Employer's common stock price rises or falls.
4.8 Additionally, if Employer's common stock rises to and maintains a
trading value in excess of five dollars ($5.00) per share for a
sustained period of one (1) year (365 consecutive days), Employee shall
be granted one hundred thousand (100,000) shares; the foregoing bonus
shall be recurrent, meaning that Employee shall be granted one hundred
thousand (100,000) shares for each one (1) year (365 consecutive day)
period in which Employer's common stock maintains the trading value
described herein.
4.9 If Employer's stock rises above and maintains a trading value in excess
of ten dollars ($10.00) dollars for a sustained period of ninety (90)
consecutive days, Employee shall be granted fifty thousand (50,000)
shares. The foregoing bonus is recurrent but shall not apply to any
overlapped periods and shall be limited to application four (4) times
in each one (1) year (365 consecutive day) period. If, for example,
Employee is granted shares under this paragraph for a stock trading
value in excess of ten dollars ($10.00) for the first ninety (90) days
of year 2000, the next period for consideration of stock trading values
under this paragraph would commence no earlier than the day after the
expiration of the ninety (90) days of the first period for which the
previous grant was made hereunder.
By further illustration, this means if Employer's stock trades
in excess of the ten dollar ($10.00) threshold for the period
extending from January 15, 2000 through April 7, 2000, the
next period for bonus calculation under this section cannot
commence until April 8, 2000.
4.10 Employee shall be reimbursed for fifty percent (50%) of the fifty
thousand dollar ($50,000) annual salary actually paid to his assistant
during the term of this Agreement. In the event Employee's assistant is
paid a lesser annual salary, Employer shall reimburse Employee for
fifty percent (50%) of the salary amount actually paid during the term
hereof. Employee's assistant may participate in any benefits plan
afforded to Employer's other part-time employees in accordance with
TEI's previously adopted Employee Manual.
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ARTICLE V
TREATMENT IN EVENT OF MERGER, SALE, OR DIRECTIVE OF CHAIRMAN
5.1 Employee understands Employer made preliminary contacts and has been
negotiating for potential sale, acquisition, merger, and/or changes in
control of Employer's corporation and that Employer desires to continue
to develop such contacts, negotiations, and talks without becoming
constrained by the existence or terms of this Agreement. For this
reason, Employer and Employee agree that Employer shall have the right
to continue the foregoing activities as it desires, subject to the
following "buy out" rights, which shall supersede all other provisions
of this Agreement:
5.2 In the event of sale, acquisition, merger, and or changes in control
after which the services of Employee are no longer desired, Employer
shall have the right to terminate this Agreement in exchange for the
following compensation to Employee:
5.2.1 Payment (Retention) in the form of the eight hundred fifty
thousand (850,000) shares referenced in paragraph 4.5
hereof;
5.2.2 Payment (Retention) by Employee of any monetary salary
(pro-rated) payments earned or made.
5.3.3 Reimbursement of any reasonable business expenses paid by
Employee, including, but not limited to, any pro-rated
payments which would otherwise be due for Employee's
assistant.
The foregoing provisions shall apply to the following persons, business entities
and their agents, successors, and assigns:
Creative Planet, Xxxx Xxxxxxx, Xxxxxxx Xxxxx
Online Production Services (ONPS)
Sector Communications, Inc.
Sunburst III
The foregoing provisions shall additionally apply to any transactions for which
a formal agreement is executed within ninety (90) days from the execution
hereof.
ARTICLE VI
TERMINATION
6.1 Employer may terminate this Agreement at any time in accordance with
the provisions of Article V hereof, without further recourse by
Employee.
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Apart from the provisions of Article V hereof, Employer may terminate
this Agreement with or without Cause at any time upon thirty (30) days
written notice to Employee specifying the effective date of
termination. If Employer terminates Employee's employment with Cause
then Employer shall not be required to continue the compensation or
benefits provided in Section 4 beyond such termination date. If
Employer terminates without cause, Employee shall retain all
compensation provided herein for a period of one (1) month after
termination.
6.2 As used herein, "Cause" shall mean any of the following occurrences:
(a) unexcused absences of Employee; or
(b) willful violation by Employee of any statute, regulation, or
ordinance of the United States or any state or local governing
authority in the United States, the compliance with which is
necessary for operation of the business of Employer; or
(c) material violations or breach by Employee of any of the
provisions of the Agreement; or
(d) commission by Employee of one or more acts of misconduct or
disobedience in connection with his duties as described in
writing by Employer or described hereunder, which, when
considered individually or in the aggregate, Employer deems
material; or
(e) failure to abide by the written rules and regulations of Employer
or its clients, or failure to observe general rules of good
conduct, in the line of business; or
(f) consistent failure of Employee to perform his duties in
reasonably proficient manner; or
(g) Employee being convicted of a felony; or
(h) mental or physical illness of Employee, which in Employer's good
faith judgment prevents, inhibits or impairs Employee's ability
to perform his duties in a reasonably proficient and safe manner;
or
(i) death or disability which prevents Employee from fulfilling his
duties.
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6.3 Voluntary. Employee may terminate this Agreement prior to the end of
its term by written notice to Employer. A notice of voluntary
termination shall specify a proposed effective date or termination of
at least ten (10) days after the date of deposit in the U.S. mail.
Employer may accept the proposed termination date or may set in the
U.S. mail a sooner termination date by mailing notice of such earlier
date to Employee by U.S. mail. In the event Employee voluntarily
terminates this Agreement, he will receive the compensation and
benefits due hereunder through the effective date of termination and no
other compensation or benefits, except as earned on a pro-rated basis
as of the date of termination.
"Cause" shall be determined by the Employer's Board of Directors,
provided that Employee is given five (5) days written notice and
permitted to cure any purported violations (other than absences, which
shall not be entitled to a notice and cure period). If Employee deems
the matter cured, but Employer's Board of Directors disagrees, the
matter shall be submitted to mediation and/or arbitration under
Paragraph 9.4 hereof, but Employee's employment shall continue until
final determination by the arbitrators adverse to the Employee.
ARTICLE VII
OTHER ACTIVITIES
Employee shall devote such portion of his working time and efforts (estimated at
fifty one percent (51%) of normal working hours) during the Company's normal
business hours (reasonable vacations and sick leave excluded) to the business
and affairs of the company and to achieve the duties and responsibilities
assigned to him pursuant to this Agreement. Notwithstanding the foregoing,
Employee may devote a reasonable amount of his time to civic, community, or
charitable activities. Employee in all events shall be free to invest his assets
in such manner as will not require any substantial service by Employee in the
conduct of the businesses or affairs of the entities or in the management of the
assets in which such investments are made during normal business hours of
Employer. Employee may serve on the Board of Directors of other public
companies.
ARTICLE VIII
CONFIDENTIALITY
8.1 Employee agrees that he will not, at any time, in any fashion, form or
manner, either directly or indirectly, divulge, disclose or communicate
to any person, firm, corporation or other entity in any manner
whatsoever, any trade secret information of any kind, nature regarding
the Company obtained while in the employ of Employer, including all
matters known regarding Employer's operations.
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8.2 For one (1) year (365 consecutive days) after the Contract Period ends,
Employee agrees that he will not, at any time, in any fashion, form or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, corporation, or other entity in any
manner whatsoever, any information of any kind, nature or description
concerning any trade secret of or relating to the Company, or any other
business conducted by the Employer ("Confidential Information").
8.3 The parties hereto recognize and agree that in the event that the
Employee breaches any of the terms or provisions of paragraph eight (8)
of this Agreement, the nature and extent of the resulting damages to
the Employer will be difficult if not impossible, of exact computation
and calculation, and accordingly, the rights of the Employer hereunder
may be enforced by an injunction issued by a court of competent
jurisdiction enjoining the Employee from engaging in any activities or
practices which are a breach of this Agreement. The parties stipulate
and agree that if a mediator, arbitrator, or Court of appropriate
jurisdiction should find the duration and our extent of the agreements
herein made by the Employee to be unreasonable, then the same should
not be held void, but rather should be reformed to that which is
reasonable.
8.4 The provisions of Article VIII and all subparagraph shall survive
termination of this Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Employee understands and agrees that all stock grants are subject to
approval by Employer's Board of Directors or Compensation Committee as
required. Employer acknowledges that the bonus structure included
herein is desired by Employee and by Xxxxxxx Xxxxx as its present
Chairman of its Board of Directors, and agrees to seek approval from
its Board of Directors for inclusion of provisions for the same in this
Agreement.
9.2 Employee understands the grant and bonus provisions contained herein
would cause Employer to issue stock in excess of its presently
authorized number of shares and that Employer must seek and obtain an
amendment to its Articles of Incorporation (and Bylaws, as necessary)
to effect such issuances.
9.3 Additional Assurances, The provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties
except as may be specifically proved to the contrary in this Agreement;
provided, however, at the request of Company, Employee shall execute
such additional instruments and take such additional acts as Company
may deem necessary to effectuate this Agreement.
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9.4 Mediation/Arbitration. With the exception of Paragraph eight (8) of
this Agreement any dispute as to the rights and duties of the parties
under this Agreement or to its Construction, validity or enforcement
shall be submitted first to mediation and, only after and in the event
mediation fails, to binding arbitration through JAMS/Endispute in Los
Angeles pursuant to the rules discovery proceedings promulgated thereby
and using a single arbitrator only. The decision of the mediator and/or
arbitrator shall be enforceable in any court of competent jurisdiction.
The prevailing party in such mediation and/or arbitration or any
proceeding in respect thereof or challenging such mediation and/or
arbitration, shall be entitled to receive its or her attorney fees and
court incurred in connection therewith.
9.5 Waiver of Breach. The waiver by Company of Employee of a breach or
violation of any provision of this Agreement shall not operate as, or
be construed to be, a waiver by Company or Employee of any subsequent
breach of the same or other provision hereof.
9.6 Gender and Number. Whenever the context of this Agreement requires, the
gender of all words herein shall include the masculine, feminine, and
neuter, and the number of all words herein shall include the singular
and the plural. References to the "Chairman of the Board of Directors"
are intended to refer to Xxxxxxx Xxxxx singularly.
9.7 Divisions and Headings. The division of this Agreement into sections
and the use of captions and headings in connection therewith are solely
for convenience and shall have no legal effect in construing the
provisions of this Agreement.
9.8 Severability. In the event that any of the provisions of this Agreement
shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the
remainder of this Agreement and same shall be construed as if such
invalid or unenforceable provisions had never been a part hereof.
9.9 Notices. Any notices provided for in this Agreement shall be given in
writing and transmitted by personal delivery or prepaid first class
registered or certified U.S mail address as follows:
Employer: The Entertainment Internet, Inc.
0000 Xxxxxxxx Xxxxxxxxx Xxxxx 000
Xxx Xxxxxxx, XX 00000
Employee: Mr. Xxxxxxx Xxxxxxx
000 X. Xx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
(or to such addresses as Employer and/or Employee may designate).
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9.10 Successors to Employer. Except as otherwise provided herein, this
Agreement shall be binding upon the inure to the benefit of Employer
and any successor of Employer, including, without limitation, any
corporation or Corporations acquiring directly or indirectly all of
substantially all of the assets or business of Employer whether by
merger, consolidation, sale or otherwise (and such successor shall
thereafter be deemed "Employer" for the purposes of this Agreement),
but shall not otherwise be assignable by Employer.
9.11 Governing Law. This Agreement shall be governed by the laws of the
State of California.
9.12 Choice of Forum. The parties hereto agree that in the event that any
legal suits, actions, or proceedings arising out of this Agreement are
instituted by any party hereto, such suits, actions or proceedings
shall be instituted only in the state or federal courts in the County
of Los Angeles and the State of California. The parties hereto do
hereby consent to the jurisdiction of such courts and waive any
objection which they may now or hereafter have to the venue of any such
suits, actions or proceedings; provided, however, that any party hereto
shall have the right to institute proceedings in another jurisdiction
if the purpose of such proceedings is to enforce or realize upon any
final court judgment arising out of this Agreement.
9.13 Consent to Service. Service of any and all process which may be served
on any party hereto in any suit, action, or proceeding related to this
Agreement may be made by registered or certified mail to Employee or
Employer at their respective address for notice as set forth in Section
9.9, and service so made shall be taken and held to be valid personal
service upon such party by any party to this Agreement on whose behalf
such service is made.
9.14 Entire Agreement This Agreement constitutes the entire agreement
between the parties, superseding all prior understandings, arrangements
and agreements, whether oral or written, and may not be amended except
by a writing signed by the parties hereto. As used herein) unless the
context otherwise indicates, the term "this Agreement" includes any
renewals and/or amendments hereof.
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9.15 This Agreement shall not be amended or modified except by instrument in
writing signed by the parties hereto. No failure of either party to
insist upon the strict performance by the other of any provision of
this Agreement shall be construed to waive the right of such party to
subsequently insist upon strict performance of that or any other
provision.
IN WITNESS WHEREOF, Employer has, by its appropriate officers executed this
Agreement and Employee has executed this Agreement effective the date first
written above.
EMPLOYER:
/s/ Xxxxxxx Xxxxx
By: ___________________________
Xxxxxxx Xxxxx, Chairman, Board of Directors
The Entertainment Internet, Inc.
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxx
By: ___________________________
XXXXXXX XXXXXXX
