EXHIBIT 10.3
SERVICES CONTRACT
This Agreement is made by and between The Entertainment Internet, Inc., a Nevada
corporation ("Corporation", "Company" and/or "TEI") and Xxxxxx Xxxxxxxx
("Employee", "Xxxxxx Xxxxxxxx" and/or "Xx. Xxxxxxxx").
EFFECTIVE DATE
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This agreement is deemed effective as of November 25, 1999.
I. BACKGROUND
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The Corporation uses the services of Xx. Xxxxxxxx as its general counsel and is
satisfied with the manner, extent, and financial nature of the services
provided. The Corporation also pressed Xxxxxx Xxxxxxxx into service as its Chief
Operating Officer and, while neither party contemplated this need when framing
the fee contract now existing between the parties, the Corporation acknowledges
the unique skills, special talents, leadership, and management capabilities of
Xx. Xxxxxxxx and desires to continue its working relationship therewith.
The Corporation earlier suffered through several changes in management and
control and finds it in its best interests to maintain continuity through
execution of a long-term employment agreement with Xx. Xxxxxxxx.
The Corporation finds it in its best interests to enter into an agreement to
bind Xx. Xxxxxxxx to continue as Chief Operating Officer of the Corporation and
its Xxxxxxx.xxx services and to use such agreement as a complement to the
Attorney-Client Fee Contract existing between the parties, which is incorporated
by reference herein. Execution of this Agreement will allow the Corporation to
exploit a portion of Xx. Xxxxxxxx'x time at rates lower than those the
Corporation would incur if operating with Xx. Xxxxxxxx under an agreement for
legal services while continuing to have him expend time on non-legal or
managerial matters.
This Agreement is understood to be unique in that it allows Xx. Xxxxxxxx to
continue to provide services as counsel under the existing Attorney-Client Fee
Contract and to generally segregate his duties, billing separately for the time
during which he provides legal counsel or acts as an attorney for the
Corporation. Xx. Xxxxxxxx shall not be required, as a result of execution of
this Agreement, to provide legal counsel (such counsel is and shall be governed
by separate agreement).
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SCOPE OF SERVICES
The Corporation is hiring Xx. Xxxxxxxx to work as its Chief Operating Officer
and to generally oversee its routine business operations. Services are expected
to include liaison relating to business affairs with the Corporation's Board of
Directors, appearances on behalf of the Corporation as an invitee at industry
functions, and general business matters reasonably assigned by Xxxxxxx Xxxxx.
TERM
This Agreement shall extend from its Effective Date through December 31, 2003.
Thereafter, this Agreement may be renewed at the election of the Corporation for
one (1) year, provided written notice of such election is received by Xx.
Xxxxxxxx on or prior to June 30, 2001; thereafter, renewals will only be made
through further negotiation and separate written agreement.
INDEPENDENT CONTRACTOR STATUS
Xx. Xxxxxxxx shall retain his independent contractor status until such time as
the Corporation fully satisfies all prior existing obligations thereto or as and
when mandated by applicable law. In the event Xx. Xxxxxxxx at any time acts as a
statutory employee, the Corporation shall provide all benefits mandated by law
therefor, together with all benefits called for under this Agreement.
OTHER ACTIVITIES
Xx. Xxxxxxxx shall devote such portion of his working time and efforts
(estimated at 50% of working hours) to the work scope outlined by Xxxxxxx Xxxxx,
Chairman of the Corporation's Board of Directors. Nothing in this Agreement
shall be construed to restrict Xx. Xxxxxxxx'x rights or abilities to service his
prior existing clients or to restrain him from developing any aspect of his law
practice or other businesses. It is expressly agreed by the parties that the
Corporation shall make every possible effort to allow Xx. Xxxxxxxx the necessary
time and opportunities to maintain and develop his practice and business
opportunities. The Corporation shall not be entitled, by virtue of Xx.
Xxxxxxxx'x service to any prior associated party, to any offset or reduction in
the compensation or other benefits provided for herein.
DISCHARGE AS COUNSEL
It was earlier agreed that the Corporation may discharge Xx. Xxxxxxxx as its
attorney at any time; such discharge or withdrawal shall not, however, be
effective to discharge Xx. Xxxxxxxx as the Chief Operating Officer or to
terminate this Agreement, which is not predicated on the provision of attorney
services. It is expressly understood that this Agreement is intended to bind all
parties for the minimum period as stated herein.
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II. DISCHARGE AS CHIEF OPERATING OFFICER
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The parties acknowledge that Xx. Xxxxxxxx took the title of Chief Operating
Officer at a time when the Corporation's common stock was trading at rates in
excess of one dollar (>$1.00 U.S.) and that the plan formed by the Chairman of
the Board of Directors involved a long-term "turnaround" of the company,
long-term growth, and transition to status as a "fully reporting company,"
without concern for the trading value of the stock at any particular time in the
next year and one-half. The parties stipulate that Xx. Xxxxxxxx agreed to take
the Chief Operating Officer title with the provision and under the condition
that said title would not be taken away from Xx. Xxxxxxxx (or that Xx.
Xxxxxxxx'x title would not be altered in any way) until the such time as the
Corporation's stock returns to open trading on the OTC Bulletin Board (not on
"pink sheets" or other quotation services); this provision was made to avoid the
negative impact upon Xx. Xxxxxxxx'x resume and management history that he would
incur upon earlier relinquishment of such title and is not considered an
entrenchment of any kind, as the Corporation expects to complete the comment and
reply process and return to open trading within four (4) months from the date
hereof and is the party soliciting this Agreement. The parties further stipulate
that the Corporation, under Xx. Xxxxxxxx'x control, already completed its
initial Form 10 filing with the Securities and Exchange Commission (to
transition the Corporation to status as a fully reporting company) and that such
filing could not be completed without transition to the "pink sheets" because of
the Corporation's failure to earlier maintain accounts and financial records in
such a manner as to allow said filing.
BILLING FORMAT/RECORDKEEPING
The Corporation acknowledges that Xx. Xxxxxxxx provides descriptions of his
legal services in a manner generally acceptable to Xxxxxxx Xxxxx as the Chairman
of the Board of Directors. While the Corporation understands the difficulties of
segregating "attorney time" from "Chief Operating Officer" time, the parties
agree that Xx. Xxxxxxxx will generally segregate such time by extracting from
his future records of legal services the actual (or a good-faith estimate of)
time which did not require legal counsel, legal skill or legal expertise.
Matters which are stipulated to require legal counsel, skill, or expertise
include but are not limited to: stock administration, contracts review and/or
drafting, shareholder disputes, settlement agreements, employee claims (i.e.,
DFEH claims), litigation (threatened or actual), copyright, trademark, and
intellectual property matters. Nothing in this Agreement shall require Xx.
Xxxxxxxx to record the time he spends in fulfillment of his duties as Chief
Operating Officer for the Corporation.
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Xx. Xxxxxxxx offered to provide long form descriptions of his services but the
Corporation stipulated the requirement of such recordkeeping would needlessly
increase Xx. Xxxxxxxx'x hours at significant cost to the Corporation.
Corporation and Xx. Xxxxxxxx therefore agree that he shall not be required to
maintain or provide long-form descriptions of his services. Any provision of
detailed descriptions of activities by Xx. Xxxxxxxx shall not be deemed a waiver
of the foregoing provisions.
Xx. Xxxxxxxx may retain copies of all corporate records for his files; such
records shall not be required to be retained by Xx. Xxxxxxxx or returned at any
time.
ERRORS & OMISSIONS INSURANCE; GENERAL LIABILITY INSURANCE; INDEMNITY
The Corporation shall be required to obtain a policy of general liability
insurance and a policy of directors' and officers' (D&O) errors and omissions
insurance and to fully indemnify to Xx. Xxxxxxxx to every extent permitted by
law, and to incur all related costs therefor, including, but not limited to, the
charges for any legal fees associated with Xx. Xxxxxxxx'x defense of any action
relating in any way to his association with the Corporation in which he is
named, directly or indirectly, as a party or in which he is called to testify or
provide any information or statement.
The Corporation stipulates that it completed a new application for D&O insurance
on or about November 24, 1999, and is presently awaiting return of quotations.
It is noted that the policies being considered do not provide complete
protection and indemnity for the Corporation's directors and officers under all
circumstances; to the extent that any policy does not or fails to completely
indemnify Xx. Xxxxxxxx, the Corporation shall indemnify Xx. Xxxxxxxx.
In the event that the Corporation fails to obtain or maintain D&O and general
liability insurance (or if such policies are not obtained, lapse, or are
revoked) or to fully indemnify Xx. Xxxxxxxx as required, such failure and/or
refusal shall be considered a material breach of this Agreement, entitling Xx.
Xxxxxxxx to damages as provided for as if the Corporation early terminated Xx.
Xxxxxxxx, in addition to any other remedies and relief available at law. Xx.
Xxxxxxxx shall allow the Corporation until January 3, 2000, to obtain D&O
insurance and a policy of general liability insurance.
The Corporation agrees and stipulates that Xx. Xxxxxxxx shall have no obligation
to provide services hereunder at any time when D&O or general liability
insurance policies are not in full force and effect or when the Corporation
appears unable to indemnify Xx. Xxxxxxxx. No delay in Xx. Xxxxxxxx'x assertion
or rights or claims hereunder shall be considered a waiver of such claims or
rights.
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PAYMENTS/INTEREST ON COSTS & EXPENSES
Corporation shall pay Xx. Xxxxxxxx his earnings on a monthly, bi-weekly, or
weekly basis (at the Corporation's election).
Corporation agrees to reimburse Xx. Xxxxxxxx for all business expenses (relating
to Castnet or the Corporation) incurred to date; Corporation further agrees to
reimburse Xx. Xxxxxxxx for all out-of-pocket expenses and other reasonable
business expenses incurred including, but not limited to: all meals while
providing services to Corporation, all travel to and from the Corporation's
offices, all of the all meals and travel expenses for the Corporation's business
outside the County of Los Angeles, all phone expenses, entertainment expenses,
and all expenses relating to potential business development. In the event
expenses are advanced by Xx. Xxxxxxxx in the form of credit card or other debt,
the Corporation shall use its best efforts to ensure Xx. Xxxxxxxx receives
payment in a manner which allows him to make timely payment to his creditors. In
the event any costs and/or charges are incurred by error, failure or refusal of
the Corporation to issue payment, the Corporation agrees that it shall reimburse
Xx. Xxxxxxxx for such costs and/or charges.
Reimbursement for costs shall be due within ten (10) days of submission of an
expense report or request for reimbursement therefor; interest shall accrue on
any unpaid costs and expenses at the rate of ten percent (10%) per annum.
CONSIDERATION: FUTURE SERVICES
Corporation agrees to pay Xx. Xxxxxxxx an annual salary of two hundred thousand
dollars ($200,000), pro-rated and, upon Corporation's election, deferred for
1999; for each successive year, the base salary shall be equivalent to the
annual salary for the prior year plus fifteen percent (+15%). For example, in
year 2000, the base salary shall be $230,000, and in year 2001, the base salary
shall be $230,000 + fifteen percent (+15%) of $230,000. The fifteen percent
(+15%) annual increase shall be considered as a cost-of-living related increase
and shall not exclude any performance or other bonuses or grant of stock or
options. The Corporation may pay additional amounts, compensation,
consideration, and/or bonuses as it deems appropriate.
Corporation agrees to pay the premiums or reimburse Xx. Xxxxxxxx'x expenses for
medical and dental insurance (and any applicable deductible payments) during the
duration of this Agreement and for six (6) months thereafter.
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As consideration for the execution of this Agreement Xx. Xxxxxxxx shall receive
warrants/options to purchase one hundred thousand (100,000) shares on a favored
nations basis; the calculation of any warrants/options or other compensation due
Xx. Xxxxxxxx shall be calculated and/or determined without regard to any stock,
compensation, or consideration received for services earlier provided, other
than the seventy five thousand shares (75,000) shares of common stock issued to
Xx. Xxxxxxxx for director services, or any attorney services provided. All
options and warrants shall allow Xx. Xxxxxxxx the most favorable cashless
exercise method allowed other directors, officers, or shareholders of the
Corporation; such options shall be issued as incentive stock options when
permitted by law and appropriate but the Corporation shall provide and effect a
no-cost conversion of incentive stock options to nonqualified stock options in
the event of Xx. Xxxxxxxx'x cessation of employment hereunder. Specifically, the
parties understand that the Corporation's current Stock Option Plan mandates
that any options provided to employees expire if not exercised within three (3)
months of cessation of employment; the parties agree that in the event of
cessation of Xx. Xxxxxxxx'x employment (for any reason), any options granted,
accrued, or due will be converted by the Corporation to nonqualified stock
options expiring ten (10) years from the date of grant; all options issued under
this Agreement shall be noncancelleable (other than by natural expiration) and
extended for a ten (10) year term. Xx. Xxxxxxxx may receive additional
compensation, stock, warrants, and/or options at the discretion of the
Corporation.
Corporation shall bear and pay any tax liability of Xx. Xxxxxxxx resulting from
his receipt of stock, warrants, and/or options hereunder and treat the same as
additional compensation to Xx. Xxxxxxxx; this provision shall apply to any
stock, warrants, and/or options converted and/or received as a result of
termination or cessation of Xx. Xxxxxxxx'x employ.
EXPENSES, EQUIPMENT, ASSISTANT, RELATED MANAGEMENT ITEMS
The Corporation agrees to provide Xx. Xxxxxxxx with the portable computers,
telephones, electronic data managers (i.e., PDAs), peripherals, connectivity
solutions, and software of his choice during the term of this Agreement. In the
event Xx. Xxxxxxxx is required to work in more than one location, the
Corporation agrees to provide such additional equipment as Xx. Xxxxxxxx deems
appropriate for use in such locations (or reimburse him for expenditures
therefor).
The Corporation agrees to provide Xx. Xxxxxxxx with one (1) salaried assistant
of his choice. Such assistant shall be considered an employee of the Corporation
and shall be paid thereby at rates and with a compensation package to be
determined by Xx. Xxxxxxxx; such assistant's performance shall be subject to the
oversight of Xx. Xxxxxxxx and Xxxxxxx Xxxxx only. Xx. Xxxxxxxx may, but is not
obligated to, secure the future performance of his assistant through a long-term
employment agreement.
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The Corporation agrees to provide Xx. Xxxxxxxx with the necessary equipment,
services, and management tools to effect the plans of the Corporation and the
desires of Xxxxxxx Xxxxx as Chairman of the Board of Directors.
The Corporation agrees to provide Xx. Xxxxxxxx with a vehicle lease or payment
allowance in the amount of six hundred dollars ($600) per month, and stipulates
that it earlier offered such allowance to Xxx Xxxx when serving on the
Corporation's behalf. The Corporation states that the vehicle lease or payment
allowance is intended to partially compensate Xx. Xxxxxxxx for the wear and tear
and necessity of use of an executive-type vehicle for travel to and from his
residence in Long Beach, California. The Corporation may, at its election and in
lieu of the vehicle lease or payment allowance, lease a new vehicle for Xx.
Xxxxxxxx and pay for all expenses associated therewith, provided such vehicle is
of equal or better executive styling than his Lexus (and is reasonably
acceptable to Xx. Xxxxxxxx).
The Corporation recognizes that Xx. Xxxxxxxx is under retainer to Crescent
Capital, Ltd. and received monthly the sum of five thousand dollars ($5,000) in
base compensation along with health plan and other benefits during the months of
October and November, 1999. The Corporation agrees to reimburse Crescent
Capital, Ltd. or its assignee for these expenditures, as the Corporation was
unable to pay Xx. Xxxxxxxx'x bills for services rendered other than by
converting debt to stock. The Corporation further agrees to reimburse Crescent
Capital, Ltd. for any further expenditures made as compensation for Xx. Xxxxxxxx
until such time as said corporation deems Xx. Xxxxxxxx available to attend to
its needs in accordance with its retainer. Following receipt by Crescent
Capital, Ltd. of reimbursement for expenditures referenced herein, Xx. Xxxxxxxx
agrees to work with the Corporation and Crescent Capital, Ltd. to adjust future
attorney services xxxxxxxx or other future accounts to ensure that the
Corporation does not pay the compensation called for hereunder in addition to
amounts paid to Crescent Capital, Ltd.
TELECOMMUTING, HOLIDAYS, VACATIONS, RELIGIOUS OBSERVANCES
The Corporation recognizes the benefits of telecommuting and encourages Xx.
Xxxxxxxx to do so whenever possible. The Corporation agrees to extend holiday
and vacation benefits on a favored nations basis. The Corporation understands
that Xx. Xxxxxxxx typically observes Rosh Hashonah, Yom Kippur and other
selected Jewish holidays with his family in Vermont and agrees to allow him
liberal leave to travel to worship with his family and remain therewith during
the term of such holidays (including, but not limited to, the period extending
between Rosh Hashonah and Yom Kippur), without offset, interruption, or
diminution of pay or benefits. The Corporation recognizes that Xx. Xxxxxxxx
plans to observe Passover with his family and will allow him liberal leave to do
so. Unless otherwise agreed, the Corporation shall continue to pay Xx. Xxxxxxxx
annualized salary payments during any vacation period. The Corporation
specifically states that this Agreement shall supersede the provisions of any
employment manual created by or for the Corporation and/or its subsidiaries as
it applies to vacation accrual, leave policies, at-will status and/or other
matters.
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LEAVE OF ABSENCE
The Corporation recognizes the necessity for its senior management to, at times,
take leaves of absence from the Corporation. The Corporation agrees to extend
such leaves to Xx. Xxxxxxxx on a favored nations basis, with such benefit(s)
commensurate with those provided by the Corporation to Xxxxxxx Xxxxx.
CHANGE IN CONTROL
The Corporation understands, agrees, and stipulates that, prior to entry into
this Agreement, Xx. Xxxxxxxx expressed concerns regarding potential changes in
control and/or management and only agreed to work with the Company under the
provision and condition that Xxxxxxx Xxxxx serve as its Chairman of the Board of
Directors. In the event of a leave of absence of Xxxxxxx Xxxxx, the Corporation
expressly agrees that Xx. Xxxxxxxx is expected during such time to function in
an independent fashion and shall be subject to the control of Director Xxx
Xxxxxx; in the event Xxx Xxxxxx is not then a member of the Board of Directors,
then Xx. Xxxxxxxx shall be subject to control of Director Xxxxxxx Xxxxxx; in the
event Xxxxxxx Xxxxxx is not a member of the Board of Directors, then Xx.
Xxxxxxxx shall be subject to control by a majority of the then-composed Board of
Directors only, with the exception that, to the extent permitted by law, Xx.
Xxxxxxxx shall not be subject to the control of any after appointed Officer or
Director (who shall be excluded from calculation of any quorum vote for purposes
of any control or management issue relating to Xx. Xxxxxxxx'x employ). In the
event no prior-appointed Director remains, Xx. Xxxxxxxx may, at his election,
function independently or elect to have the Corporation pay severance in
accordance with the "pay or play" provisions of this Agreement hereinbelow.
TERMINATION & SEVERANCE PACKAGE
In the event that there is a change in control or composition of the Board of
Directors, Xx. Xxxxxxxx or the majority of the then constituted Board of
Directors may elect, in their discretion, to sever this Agreement, at which time
the Corporation shall pay (in addition to all consideration then owed) an amount
equivalent to the compensation and benefits that would otherwise be due Xx.
Xxxxxxxx under this Agreement for the period extending from the date of election
through the expiration of one year thereafter (nothing in this Section shall be
construed, however, to abrogate or diminish the mandates or provisions of
Section VIII (Discharge of Chief Operating Officer) hereof). In the event of
exercise of such election, the Corporation shall additionally provide, allow, or
otherwise pay Xx. Xxxxxxxx for use of a presentable, secure office (in keeping
with the appearance and favorable location of the office most recently supplied
during the active term hereof), use of his assistant for a period of three (3)
months, to retain all equipment for a period of nine (9) months, and other
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reasonable use of equipment and facilities to plan and execute his transition
from the Corporation in a beneficial manner, all to be paid for by the
Corporation without charge to Xx. Xxxxxxxx. Nothing in this Section shall
abrogate, diminish, or extinguish the terms of any employment agreement for Xx.
Xxxxxxxx'x assistant. Apart from the event of a change in control, Xx. Xxxxxxxx
may terminate this agreement upon the expiration of ten (10) days written notice
to the Corporation; in case of such event, Xx. Xxxxxxxx shall, at a minimum,
retain all salary, stock, options, warrants and other benefits granted, vested,
or earned through the later of a) the date such termination notice is accepted
by the Board of Directors of the Corporations in fully-executed resolutions or
b) ten days (10) following the date such termination notice is tendered to the
Corporation or c) Xx. Xxxxxxxx'x last date of employment hereunder; the
Corporation shall convert all incentive stock options granted or otherwise owed
to Xx. Xxxxxxxx to nonqualified stock options, as provided for in this Agreement
and in accordance with his Favored Nations status; the Corporation shall also
pro-rate and compensate Xx. Xxxxxxxx through payment or grant of any other
stock, options, warrants, or other benefits which would otherwise be earned on
an annualized or other time-restricted basis. For example, if other directors
receive two hundred thousand (200,000) shares for each year of service to the
Board of Directors,and Xx. Xxxxxxxx'x last date of employment was six (6) months
after being appointed to said Board, he would be entitled to one hundred
thousand (100,000) shares therefor, together with any other compensation and/or
benefits due or accrued.
STATEMENTS REGARDING XX. XXXXXXXX
In the event of any dispute, conflict, or early or other termination of this
Agreement, the Corporation shall refrain from the making, issuance, or utterance
(directly or indirectly) of any statement or opinion which could reflect Xx.
Xxxxxxxx or his performance in anything less than a favorable light; in sum, the
Corporation agrees that it shall use its best efforts to ensure that its
statements always present and reflect Xx. Xxxxxxxx in a positive manner
beneficial to the advancement of his business interests. The foregoing duties
shall continue until the expiration of one (1) year after what would otherwise
be the natural expiration of this Agreement.
LIMITATIONS OF SERVICE/DISCLAIMER OF GUARANTEE
Xx. Xxxxxxxx shall not be required to provide any legal counsel under this
agreement. No legal advice or legal counsel provided by Xx. Xxxxxxxx shall be
considered to act as a waiver of this provision, regardless of the scope or
nature of such advice or counsel.
Xx. Xxxxxxxx shall not be required to provide any services to the Corporation
outside of California.
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Nothing in this Agreement or Xx. Xxxxxxxx'x statements to the Corporation will
be construed as a promise or guarantee about the outcome of any other matter;
Xx. Xxxxxxxx makes no such promises or guarantees and does not guarantee that
the outcome of any matter or plan. Xx. Xxxxxxxx'x comments about the
Corporation's matters are expressions of opinion only.
CONFLICT OF INTEREST
The Corporation is aware that Xx. Xxxxxxxx earlier represented the following
individuals and/or entities:
Mr. Xxxxxxx Xxxxx
Xx. Xxxx Xxxxxxx; Threshold Technologies, Inc.
Crescent Capital, Ltd.
Hadid Development Corporation
The Corporation expressly waives any perceived or actual conflict of interest
which exists or may arise as a result of Xx. Xxxxxxxx'x representation of the
parties referenced hereinabove.
CONVERSION OF DEBT
In the event Corporation is unable to remit funds to Xx. Xxxxxxxx for the any
charges incurred (the Corporation's "debt"), Xx. Xxxxxxxx may, at his election,
convert any portion or whole of such debt in accordance with the most favored
manner of conversion provided to any other director or promissory note holder.
Nothing in this Section shall mandate conversion of debt to stock by Xx.
Xxxxxxxx. All provisions hereof are subject to the Favored Nations mandates
included hereinbelow. No delay or failure to request issuance of stock, or
adjustment or recalculation of any prior issuance, or application of favored
nations status (as referenced hereinbelow) shall be considered a waiver of any
portion of this Agreement or an applicable defense by the Corporation, which
expressly states that it expects Xx. Xxxxxxxx to refrain from enforcement of
such recalculation provisions during January, 2000 (and at other times in
accordance with Xx. Xxxxxxxx'x discretion). In the event Corporation does
perform or does not have sufficient authorize shares to meet its obligations
hereunder, and conversion during said period would have entitled Xx. Xxxxxxxx to
a greater number of shares if the Corporation performed or had the ability to
perform, Xx. Xxxxxxxx shall be entitled to the greater number of shares that he
otherwise would have received if the Corporation had performed or had the
ability to perform.
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FAVORED NATIONS
Corporation agrees and stipulates that Xx. Xxxxxxxx is to be treated as a
favored party with respect to all aspects of this Agreement and any
consideration due hereunder. Corporation agrees and stipulates that Xx. Xxxxxxxx
is to be treated no less favorably than any member of the Corporation's Board of
Directors other than Xxxxxxx Xxxxx as Chairman of said Board and any Chief
Executive Officer; for this reason, this Agreement shall be deemed modified to
favor, reflect, and include any and all compensation and benefits relating to
employment presently or hereafter more favorably enjoyed by or offered to any
employee or member of the Board of Directors (as stated hereinabove) including,
but not limited to, contract provisions, stock incentives granted for execution
of any agreement to provide services, stock and/or options as compensation or
benefits for providing consultation, employment or services, offer(s) to buyback
shares, any conversion rates applied, recalculation and additional issuances
based upon reverse split, stock price decline, change in capitalization,
dilution, method of exercise of options, ownership date of stock, registration
rights, voting rights, treatment in the event of merger, reverse merger,
acquisition or sale, discharge/severance packages, benefits, and "pay or play"
provisions; .the foregoing provisions shall additionally apply to any acquirer
of the Corporation; with respect to the Corporation, the foregoing shall be
considered retroactive to July, 1999, and shall cause adjustment to ensure the
compensation, benefits, stock, options, and warrants Xx. Xxxxxxxx receives as a
director for his first (and any other) year of service is no less favorable than
that which was or is provided to any other director of the Corporation, with the
exceptions stated hereinabove. When calculating or applying Favored Nations
status, the Corporation shall not consider any compensation, benefits, stock,
options, and warrants Xx. Xxxxxxxx may have received, been entitled to receive,
or which are due from or through his separate Attorney Client Fee Contract.
STIPULATIONS REGARDING STOCK & OPTION ISSUANCE
The Corporation acknowledges, agrees, and stipulates that the value of any
stock, warrants, and/or options granted under this Agreement is zero and shall
be deemed by the Corporation to be zero ($0.00) during the period of any
restriction affecting trade of the same (regardless of the value reflected on
any financials schedules). Xx. Xxxxxxxx shall be entitled, at a minimum, to
piggyback registration rights on all shares; nothing in this section is intended
to waive or diminish the otherwise favorable effect of application of the
Favored Nations status referenced hereinabove.
Because Xx. Xxxxxxxx functions as counsel for the Corporation, the parties
acknowledge that there may be some difficulty in clearing for trade any stock
issued with a Rule 144 restrictive or other legend without the written opinion
of counsel. The Corporation stipulates that it will pay for all costs and
attorney's fees incurred to obtain the written legal opinions of outside counsel
deemed by Xx. Xxxxxxxx to be reasonably necessary to ensure that such stock is
tradeable immediately upon expiration of one (1) year from the effective date of
any stock issuance. Time shall be considered of the essence in obtaining the
aforereferenced letters.
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CONSIDERATION: PRIOR SERVICES
Nothing in this Agreement is intended to abrogate, extinguish, or otherwise
affect any consideration due for prior services to the Corporation or any
Agreement existing between the parties hereto. This Agreement shall be
considered complementary to any earlier agreements but shall be effective to
function independently in the event Xx. Xxxxxxxx ceases to provide services as
legal counsel at any time.
SEVERABILITY
The Corporation agrees that this contract shall continue and be given full force
and effect under California law regardless of any typographical or other error
that may have occurred in its drafting or preparation. The Corporation further
agrees that this document is severable and that if any provision hereof is found
unenforceable or unlawful, the offending provision(s) shall be considered
modified to the extent necessary to comply with law (or excised in the event
modification cannot be made) and the remainder of the contract shall continue in
full force and effect. The parties stipulate that they participated jointly in
the drafting of this Agreement and that its provisions shall not be held or
construed in any manner more or less favorable to any party because he, she, or
it was the drafter thereof.
DISPUTE RESOLUTION
To the extent permitted by law, the Corporation waives its rights to a jury
trial, non jury trial, any and all actions which may be filed a result of
execution, performance, non-performance or breach of this Agreement including,
but not limited to, those claims alleging negligence, breach of contract, breach
of fiduciary duty, fraud, and negligent misrepresentation, in favor of mediation
and, failing to reach an agreement through mediation, through arbitration by a
single arbitrator. The parties agree and stipulate to jurisdiction and venue in
the City of Long Beach, County of Los Angeles in the State of California; all
disputes shall be heard therein. In the event that the Corporation breaches this
Agreement, Xx. Xxxxxxxx shall be entitled to the costs and fees associated with
resolution of and/or redress of such breach(es), claims, actions or proceedings.
STATE BAR RULE 3-300
The Corporation is informed that the State Bar Rule of Professional Conduct
3-300 provides:
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"A member of the state Bar shall not enter into a business transaction with a
client, or knowingly acquire an ownership, possessory, security, or other
pecuniary interest adverse to a client, unless each of the following
requirements has been satisfied: (A) The transaction or acquisition and its
terms are fair and reasonable to the client and are fully disclosed and
transmitted in writing to the client in a manner and terms which should have
been reasonably understood by the client; and (B) The client is advised in
writing that the client may seek the advice of an independent lawyer of the
client's choice and is given reasonable opportunity to seek that advice; and (C)
The client thereafter consents in writing to the terms of the transaction or the
terms of the acquisition."
By its execution of this Agreement, the Corporation agrees and stipulates that
all conditions of the aforereferenced Rule of Professional Conduct have been
satisfied and that the Corporation desires and consents to the terms of this
Agreement.
The Corporation stipulates that it was advised by Xx. Xxxxxxxx that any
employment agreement provided to him may not be deemed an "arms length"
transaction and to seek independent legal counsel regarding and prior to
formation of this Agreement; the Corporation stipulates that it either received
such counsel or was provided sufficient opportunity to do so and declined.
//continued for signatures//
13
ACCEPTANCE
BY SIGNING THIS AGREEMENT, ALL PARTIES ARE AGREEING TO HAVE ALL ISSUES DECIDED
BY MEDIATION AND, FAILING A RESOLVE THROUGH MEDIATION, THROUGH NEUTRAL
ARBITRATION, AND ARE GIVING UP THEIR RIGHT TO A JURY OR COURT TRIAL.
I/We have read and understood the terms of the foregoing Agreement and agree to
them.
Signature: _______________________________________
Xxxxxxx Xxxxx, Chairman, Board of Directors
For The Entertainment Internet, Inc., a Nevada corporation
Signature: _______________________________________
Xxxxxx X. Xxxxxxxx
