EXHIBIT 10.27
REVISED EMPLOYMENT AGREEMENT
This Revised Employment Agreement ("Revised Agreement") is entered into by
and between Xxxxxxx X. Xxxxx ("Xxxxx") and Interactive Telecom Network, Inc.
("ITN"). For the purposes of Section II of this Revised Agreement, the term ITN
shall include New Frontier Media, Inc. ("NFM") and any NFM subsidiary.
I. RECITALS
WHEREAS, Xxxxx and ITN entered into an Employment Agreement ("Agreement")
dated October 27, 1999;
Xxxxx and ITN agree to modify their respective rights and obligations under
the Agreement; and
Xxxxx and ITN have agreed that the terms of this Revised Agreement shall
supersede and replace the terms of the Agreement previously entered into by
Xxxxx and ITN.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, Xxxxx and ITN and NFM agree that Xxxxx shall be
employed as an employee by ITN in accordance with the following terms and
conditions:
II. TERMS AND CONDITIONS OF EMPLOYMENT
A. Employment During the Period August 1, 2001 through December 31, 2001
1. Xxxxx shall receive a salary, to be paid in equal installments on a
bi-weekly basis, at the annual rate of Two Hundred Thousand Dollars ($200,000) a
year. Xxxxx shall not be entitled to any kind of bonus, but Xxxxx shall continue
to receive medical insurance, 401k plan matching contributions, and a car
allowance on the same basis as received by Xxxxx under the Agreement.
2. Xxxxx shall make himself available to work for ITN on a full time basis
(up to 40 hours per week, Monday through Friday, excluding ITN designated
holidays), and shall perform such services, commensurate with Xxxxx'x
experience, and similar or substantially similar to those previously performed
by Xxxxx for ITN, as may be required by ITN, which services may include, but not
be limited to, assisting ITN in any investigation, or the prosecution or defense
of any lawsuit, or in any other matter.
3. Unless ITN requires Xxxxx to perform services at ITN's offices, Xxxxx
shall work at his home or other location of Xxxxx'x choice away from ITN's
offices. ITN shall give Xxxxx at least four (4) hours advance notice before
Xxxxx is required to work at ITN's offices.
4. Xxxxx shall not accrue any additional paid vacation days. Prior to
December 31, 2001, Xxxxx shall use all paid vacation days (which presently total
20) that accrued prior to the execution of the Revised Agreement, which days
Xxxxx may use at any time upon 10 days' advanced notice.
B. Employment During the Period January 1, 2002 through March 31, 2003
1. Xxxxx shall receive a salary, to be paid in equal installments on a
bi-weekly basis, at the annual rate of One Hundred Seventy Thousand Dollars
($170,000) a year. Xxxxx shall not be entitled to any kind of bonus, 401k plan
matching contributions, or auto allowance. However, Xxxxx shall continue to
receive medical insurance as provided by policies and programs of ITN to the
extent applicable to executives of ITN occupying peer positions to that formerly
occupied by Xxxxx.
2. Subject to the provisions of paragraph B.3 below, Xxxxx shall make
himself available to work for ITN for up to ten (10) hours a week, (Monday
through Friday, excluding ITN designated holidays)
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and shall perform such services, commensurate with Xxxxx'x experience, and
similar or substantially similar to those previously performed by Xxxxx for ITN,
as may be required by ITN. ITN shall give Xxxxx at least 48 hours advance notice
before Xxxxx is required to work for ITN. Xxxxx shall cooperate with and assist
ITN in any company investigation, in the prosecution or defense of any lawsuit,
and in any other matter. The time spent by Xxxxx cooperating with or assisting
ITN shall be credited toward Xxxxx'x weekly service requirement.
3. For any week that Xxxxx does not work at least ten (10) hours, the
unused hours shall accrue and ITN may require that Xxxxx, during any other week,
work such accrued hours in addition to the regular ten (10) hours for that week,
provided that ITN may not require Xxxxx to work more than twenty (20) hours in
any week without Xxxxx'x consent.
4. ITN may not require that the first ten (10) hours of work by Xxxxx in
any week be performed over the course of more than any three (3) days during
that week, and ITN may not require that any hours worked in excess of the
regular ten (10) hours for that week be performed over the course of more than
any three (3) days during that week. While ITN shall make reasonable efforts to
schedule Xxxxx so that the three (3) days during which Xxxxx performs the first
ten (10) hours of work coincide with the three (3) days during which Xxxxx
performs additional hours of work, ITN shall not be required to make those days
coincide.
5. Xxxxx shall not accrue any paid vacation days. However, Xxxxx shall be
entitled to designate up to four (4) weeks on an annual basis during which he
will be unavailable to render services. For any such week, Xxxxx shall not be
required to perform work for ITN and no unused hours shall accrue. Xxxxx shall
give at least ten (10) days advance notice prior to designating any such week of
unavailability.
6. Xxxxx may engage in activities other than work for ITN provided that
such activities do not materially interfere with his services to ITN or create
any conflict of interest, provided, however, that Xxxxx may engage in audio text
work.
C. Stock Options
1. Xxxxx, prior to the execution of the Revised Agreement, received options
for the purchase of a total of 25,000 shares of stock in NFM exercisable at
$5.00 per share. Currently, 12,500 of such options have vested. In addition, in
the event that Xxxxx is an employee on January 7, 2002, the remaining 12,500
options shall vest. Xxxxx shall have the right to exercise his vested options at
any time up to and including ninety (90) calendar days following the termination
of his status as employee of the Company.
2. Xxxxx, prior to the execution of the Revised Agreement, received options
for the purchase of a total of 200,000 shares of stock in NFM exercisable at
$2.00 per share. Under the stock option plan, options to purchase the first
100,000 shares are to vest in December, 2001, and options to purchase the
remaining 100,000 shares are to vest in December, 2002. Pursuant to the Revised
Agreement, Xxxxx shall retain the options scheduled to vest in December, 2001,
but Xxxxx shall, and hereby does, relinquish, and shall have no further rights
to, the options scheduled to vest in December, 2002. The 100,000 retained
options are comprised of 20,700 qualifying options and 79,300 non-qualifying.
Xxxxx shall have the right, at any time up to and including ninety (90) calendar
days following the termination of his status as an employee, to exercise the
20,700 qualifying options, and Xxxxx shall have until June 30, 2003, to exercise
the 79,300 non-qualifying options.
D. Sale of Shares
Xxxxx agrees that prior to March 31, 2003, he shall not sell or offer for
sale more than 25,000 shares of NFM stock in any week or 100,000 shares in any
three-month period of time. Notwithstanding the foregoing, this restriction
shall have no further effect in the event that either Xxxx Xxxxxxx or Xxxxxxx
Xxxxxx shall sell or offer for sale at any time during the pendency of the
Revised Agreement
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shares of NFM stock in excess of 25,000 shares in any week or 100,000 shares in
any three-month period. In addition, this restriction shall not apply with
respect to a NFM sale, merger transaction, or tender offer for the shares of
NFM, which sale, merger, or tender offer has been approved by NFM's board of
directors.
E. Termination of Employment
Xxxxx'x employment with ITN, and ITN's obligation to compensate Xxxxx as
provided above, shall cease on March 31, 2003 except as provided below:
1. The Revised Agreement shall terminate automatically upon the death of
Xxxxx any time prior to March 31, 2003.
2. ITN may terminate Xxxxx'x employment if ITN determines in good faith
that Xxxxx has become disabled. For the purposes of this paragraph, the term
"disabled" shall mean that Xxxxx has been unable to work for one hundred eighty
(180) consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by ITN or its insurers and acceptable to Xxxxx or Xxxxx'x legal
representative, which acceptability shall not be unreasonably withheld.
3. ITN may terminate Xxxxx'x employment for cause. For the purposes of
this paragraph, the term "cause" shall mean (a) the conviction of Xxxxx for
committing an act of fraud, embezzlement, theft or other act constituting a
felony or the entry of a guilty or nolo contendere plea of Xxxxx to such act or
felony; or (b) a material act of dishonesty or breach of trust by Xxxxx, during
the term of the Agreement or the Revised Agreement, resulting or tending to
result directly or indirectly in material personal gain or enrichment at the
expense of ITN.
F. Business Expenses
During the term of Xxxxx'x employment with ITN, ITN shall reimburse Xxxxx
for employment-related expenses reasonably incurred by Xxxxx while performing
services at the direction of ITN, including, but not limited to, telephone and
parking expense. Immediately upon execution of the Revised Agreement, Xxxxx
shall relinquish his parking pass and return it to ITN. Xxxxx may keep his cell
phone at his expense and may keep his laptop computer.
G. Termination and Release of Rights Under October 27, 1999 Agreement
The Revised Agreement shall replace and supersede the Agreement, and all
rights and obligations under the Agreement are hereby terminated and
extinguished. Xxxxx and ITN hereby release each other from any and all claims,
rights and liabilities arising out of the Agreement which either may have
against the other, provided that ITN shall remain obligated to pay Xxxxx for any
reasonable outstanding expenses.
H. Indemnity
ITN shall indemnify and defend Xxxxx against all claims relating to the
performance of his duties hereunder and under the Agreement to the fullest
extent permitted by ITN's Articles of Incorporation and Bylaws, the relevant
provisions of which shall not be amended in their application to Xxxxx to be any
less favorable to him than as at present, except as required by applicable law.
The foregoing shall not limit in any way rights, if any, to indemnity which
Xxxxx may have under applicable law.
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I. Enforcement
1. Any party claiming that the other party has breached the Revised
Agreement shall give the other party 21 days written notice thereof and
opportunity to cure the claimed breach.
2. Any legal action arising out of the Revised Agreement shall be brought
in the County of Los Angeles, State of California, and shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts executed and performed within the State of California.
3. In any legal action arising out of the Revised Agreement, the
prevailing party shall be entitled to an award of reasonable attorney's fees and
costs.
INTERACTIVE TELECOM NETWORK, INC.:
By: /s/ XXXXXXX XXXXXX /s/ XXXXXXX X. XXXXX
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Xxxxxxx Xxxxxx Xxxxxxx X. Xxxxx
Date: 8/10/01 Date: 8/10/01
NEW FRONTIER MEDIA, INC.:
By: /s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Date: 8/10/01
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