EMPLOYMENT AGREEMENT
EXHIBIT
10.13
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”)
is
made and entered effective as of January 1, 2006 (“Effective Date”), between
Interactive Television Networks, Inc., a Nevada corporation, (the “Company”),
whose
principal place of business is 00000 Xxxxx Xx, Xxx 000, Xxxxxx Xxxxxx, XX 00000
and Xxxxxx Xxxxxx, an individual (the “Executive”),
whose
address is 0 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000.
RECITALS:
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A.
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The
Company is engaged in an Internet Protocol Television subscription
based
business that sells an internet appliance (“ITVN STB”) allowing
subscribers to view content using proprietary hardware and software
that
connects a television set to the internet (the “Business”).
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B.
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Executive
has experience in the Business and the Company wishes to employ Executive
pursuant to the terms and provisions of this
Agreement.
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NOW,
THEREFORE,
in
consideration of the mutual agreements herein made, the Company and the
Executive hereby agree as follows:
1. Employment.
The
Company hereby agrees to employ Executive as Executive Vice-President of
Programming, and Executive hereby accepts such employment, upon the terms and
conditions hereinafter set forth. Executive shall report to the Chief Executive
Officer. Executive shall devote a minimum of forty (40) hours per week, of
time
and effort to his duties to the Company, provided, however, that Executive
shall
not be prevented from serving as a director in other companies or investing
his
assets or time in investments in business entities which are not a Competitive
Business as hereinafter defined.
2. Compensation/Benefits.
a. Salary.
Company
shall pay Executive a base salary of One Hundred and Seventy Two Thousand Five
Hundred Dollars ($172,500) per year during the Term. Said salary shall be paid
in twenty-four (24) equal payments of Seven Thousand One Hundred and Eighty
Seven Dollars ($7,187) and each payment shall be paid on the 1st
and the
15th
day of
each calendar month (the “Base Salary”). The amount of the Base Salary shall be
reviewed and may be increased from time to time by the Compensation Committee
of
the Company. No such change shall in any way abrogate, alter, terminate or
otherwise affect the other terms of this Agreement.
b. Equity
Compensation.
Executive shall receive Two Hundred Thousand (200,000) options to acquire shares
of the Company’s common stock at the fair market value on the date such options
are granted by the Company’s board of directors (hereafter, the “Options”). One
half of these Options will vest immediately and one half shall vest on the
Executives first anniversary of employment with the Company. All of these
Options may be exercised at any time following the date of vesting for a period
of three years. This
paragraph sets forth the entire understanding and agreement of the parties
with
respect to any and all Company equity including but not limited to Company
Warrants, Options and/or Stock promised, contemplated or granted to Executive
or
Executive’s affiliates. This paragraph supersedes all prior and contemporaneous
understandings and agreements, whether oral or written relating to Company
equity but does not affect the Executive’s compensation as a member of the Board
of Directors of the Company. When the Executive resigns from the Board of
Directors, all earned cash compensation and unvested Options shall become fully
vested.
c. Other
Compensation.
The
Executive shall be entitled to receive reimbursement for all reasonable “out of
pocket” expenses as allowed under the Company’s Executive Travel and
Entertainment Policy, and the use of a Company lap-top, cellular phone, and
Blackberry.
d. Performance
Bonus.
The
Executive shall be entitled to a performance bonus to be paid quarterly of
Two
Thousand Five Hundred Dollars ($2,500) per launch of each Network from the
list
in Exhibit A that is distributed by the Company available through it’s ITVN STB
(however, Executive shall not be entitled to multiple performance bonuses for
multiple derivatives of a Network. For example, all of the HBO channels shall
be
considered one Network) . This list may be amended from time to time by mutual
agreement. Forty percent (40%) of this bonus may be paid in Common Stock with
piggy-back registration rights at a 15% discount to the VWAP of the Company’s
Common Stock during the calendar quarter in which the launch or launches
occurred. Should signature of the agreement providing for the launch occur
during the Executive’s employment but the launch occurs within One Hundred and
Eighty (180) days after Termination of the Executive’s employment, then the
Executive shall be entitled to the Performance Bonus relating to the launch
of
such Networks due on the last day of the month in which the Network(s) is(are)
launched.
e. Health
Insurance. The Executive and his dependants shall be entitled to receive medical
health insurance coverage under the Company’s PPO 30 or classic HMO health care
plans at no cost to Executive. Coverage shall be provided on the first day
of
the month after employment begins and Executive completes the health care
applications.
f. The
Executive shall be entitled to Four (4) weeks paid vacation per
year.
3. Term.
The Term
of employment hereunder will commence as of the Effective Date and end Eighteen
(18) months from the Effective Date (“Term”), unless terminated pursuant to
Section 4 of this Agreement. The Term shall automatically renew (“Renewal Term”)
for successive twelve (12) month terms, unless written notification is provided
by either party no less than 30 days prior to the expiration of the Term.
4. Benefits.
a. Death.
In the
event of the death of the Executive during the Term or the Renewal Term of
the
Agreement, salary shall be paid to the Executive's designated beneficiary,
or,
in the absence of such designation, to the estate or other legal representative
of the Executive only for the period ending at the date of death. The Company
shall also pay to the Executive's estate or heirs, as the case may be, any
Performance Bonus due based upon (i) the formula set forth in Section 2(d)
of
this Agreement for the fiscal year in which the death of the Executive
occurred.
b. Disability.
(i) In
the
event of the Executive's Disability, as hereinafter defined, the Executive
shall
only be entitled to compensation in accordance with the Company’s disability
compensation practice for Executives, including any separate arrangement or
policy covering the Executive, but in all events the Executive shall continue
to
receive the Executive’s salary and all other benefits under this Agreement for a
period ending at the date of termination for Disability as determined below.
Any
amounts provided for in this Section 4(b) shall be offset by other long-term
disability benefits provided to the Executive by the Company.
(ii) “Disability”
for the purposes of this Agreement, shall be deemed to have occurred in the
event (a) the Executive is unable by reason of sickness or accident to perform
the Executive's duties under this Agreement for a cumulative total of twelve
(12) weeks within any one calendar year or (b) the Executive is unable to
perform Executive’s duties for ninety (90) consecutive days or (c) the Executive
has a guardian of the person or estate appointed by a court of competent
jurisdiction-. Termination due to Disability shall be deemed to have occurred
upon the first day of the month following the determination of Disability as
defined in the preceding sentence.
Anything
herein to the contrary notwithstanding; if, following a termination of
employment hereunder due to Disability as provided in the preceding paragraph,
the Executive becomes reemployed, whether as an Executive or a consultant,
any
salary, annual incentive payments or other benefits earned by the Executive
from
such employment shall offset any salary continuation due to the Executive
hereunder commencing with the date of reemployment.
c. Termination
by the Company for Cause.
(i) Nothing
herein shall prevent the Company from terminating the Executive’s employment for
“Cause” as hereinafter defined. The Executive shall continue to receive salary
only for the period ending with the date of such termination as provided in
this
Section 4(c). Any rights and benefits the Executive may have in respect of
any
other compensation shall be determined in accordance with the terms of such
other compensation arrangements or such plans or programs.
(ii) “Cause”
shall mean (a) committing or participating in an injurious act of fraud, gross
neglect, intentional and material misrepresentation, embezzlement or dishonesty
against the Company; (b) committing or participating in any other
materially injurious act or omission wantonly, willfully, recklessly or in
a
manner which was grossly negligent against the Company (monetarily or
otherwise); (c) conviction of an act or acts constituting a felony under the
laws of the United States or any state thereof
(d) a willful act by Executive as a result of which he knowingly receives
an significant improper material personal benefit at the expense of the Company,
(e) any other willful misconduct by Executive that is materially injurious
to
the business or business reputation of Employer.
(iii) Notwithstanding
anything else contained in this Agreement, this Agreement will not be deemed
to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a notice of termination stating that the Executive committed
one of the types of conduct set forth in this Section 4(c) contained in this
Agreement and specifying the particulars thereof and the Executive shall be
given a thirty (30) day period to cure such conduct set forth in Section
4(c).
d. Termination
by the Company Other than for Cause.
(i) The
foregoing notwithstanding, the Company may terminate the Executive's employment
for whatever reason it deems appropriate; provided, however, that in the event
such termination is not based on Cause, as provided in Section 4(c) above,
the
Company shall continue to be obligated to pay to Executive his base salary
through the later of (A) three (3) months or (B) the remaining term of this
Agreement. In such event, Executive shall have no duty to mitigate such
payments.
(ii) In
the
event that the Executive's employment with the Company is terminated pursuant
to
this Section 4(d), or if the Company opts to not renew the Agreement for a
Renewal Term, then Section 5 of this Agreement and all references thereto shall
be inapplicable as to the Executive and the Company.
e. Voluntary
Termination.
In the
event the Executive terminates the Executive's employment on the Executive's
own
volition prior to the expiration of the Term or Renewal Term of this Agreement,
including any renewals thereof, such termination shall constitute a voluntary
termination and
in
such event the Executive shall receive base salary only for the period ending
with the date of such termination. Any rights and benefits the Executive may
have in respect of any other compensation, including any “Performance Bonus”
under Section 2(d) above, shall be determined in accordance with the terms
of
such other compensation arrangements or such plans or programs.
5. Covenant
Not to Compete.
Executive acknowledges and recognizes the highly competitive nature of Company's
business and the goodwill and business strategy of the Company and continued
patronage constitute a substantial asset of the Company. Executive further
acknowledges and recognizes that during the course of the Executive's employment
Executive will receive specific knowledge of Company's business, access to
trade
secrets and Confidential Information, as defined in Section 6, participate
in
business acquisitions and corporate decisions, and that it would be impossible
for Executive to work for a Competitive Business without using and divulging
this valuable confidential information. Executive acknowledges that Company
is
without an adequate remedy at law in the event this covenant is violated.
Executive further acknowledges that this covenant not to compete is an
independent covenant within this Agreement. This covenant shall survive this
Agreement for a period of six months after termination of this Agreement and
shall be treated as an independent covenant for the purposes of enforcement;
provided, however, that the provisions of this Section 5 shall not apply if
Executive's employment is terminated without cause as provided in Section 4(d)
above, or if the Company declines to renew this Agreement at the end of the
Term
or at the end of a Renewal Term. The Executive recognizes that the terms of
this
covenant are reasonable and necessary for the protection of the Company's
business because the value of Executive's services will be enhanced by his
association with the Company. Accordingly, Executive agrees to the
following:
a. That
during the term of this Agreement and for a period of six (6) months after
termination for Cause or Voluntary Termination of the Executive’s employment
under this Agreement or any renewal or extension thereof (the “Restricted
Period”), Executive will not individually or in conjunction with others,
directly or indirectly engage in any Competitive Business, other than on behalf
of the Company and as agreed by the Company and Executive, whether as an
officer, director, proprietor, employer, Executive, partner independent
contractor, investor (other than as a holder of less than one percent (1%)
of
the outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent or otherwise. For purposes of this Agreement, a “Competitive
Business” is a business which designs, manufactures, sells, distributes or
licenses, directly or indirectly, an internet appliance that enables an end
user
to connect an internet connection to a television so as to enable the television
to display streamed media delivered over the internet.
b. That
during the Restricted Period, Executive will not, indirectly or directly,
compete with the Company by soliciting, inducing or influencing any of the
Company's customers or Executives at any time during the Restricted Period
to
discontinue or reduce the extent of such relationship with the
Company.
c. That
during the Restricted Period, Executive will not (i) directly or indirectly
recruit or solicit any Executive or agent of the Company to discontinue such
employment or agency relationship with the Company, or (ii) employ or seek
to
employ, or cause to permit any Competitive Business to employ or seek to employ
for any Competitive Business any person who is then (or was at any time within
three (3) months prior to the date Executive or the Competitive Business employs
or seeks to employ such person) employed by the Company. Notwithstanding the
above, the Executive retains the right to employ Xxxxxx de la Gueronniere at
any
time.
d. That
during the Restricted Period, Executive will not interfere with, disrupt or
attempt to disrupt any past, present or prospective relationship contractual
or
otherwise, between the Company and any of the Company's Executives or
agents.
e. The
provision of this Section 5 will not be in effect for any corporation or
partnership which is a direct or indirect shareholder, subsidiary, related
entity or interest holder, of the Company, and/or has entered into any kind
of
joint venture relationship or partnership with the Company.
6. Non-Disclosure
of Confidential Information.
a. Executive
acknowledges that the Company's trade secrets, private or secret processes,
methods and ideas as they exist from time to time, information concerning the
Company's products, business records and plans, inventions, acquisition
strategy, price structure and pricing, discounts, costs, computer programs
and
listings, source code and/or subject code, copyright trademark proprietary
information, formulae, protocols, forms, procedures, training methods,
development technical information, know-how, show-how, new product and service
development, advertising budgets, past, present and future marketing, activities
and procedures, method for operating the Company's Business, credit and
financial data concerning the Company's Clients and customer lists, which
customer lists shall not only mean one or more of the names and address of
the
customers of the Company, but it shall also encompass any and all information
whatsoever regarding them, including their needs, and marketing; advertising,
promotional and sales strategies, sales presentations, research information,
revenues, acquisitions, practices and plans and information which is embodied
in
written or otherwise recorded form, and other information of a confidential
nature not known publicly or by other companies selling to the same markets
and
specifically including information which is mental, not physical (collectively,
the "Confidential Information"), are valuable, special and unique assets of
the
Company, access to and knowledge of which have been provided to Executive by
virtue of Executive's association with the Company. In light of the highly
competitive nature of the industry in which the Company’s business is conducted,
Executive agrees that all Confidential Information, heretofore or in the future
obtained by Executive as a result of Executive's association with the Company
shall be considered confidential.
b. The
Executive agrees that the Executive shall (i) hold in confidence and not
disclose or make available to any third party any such Confidential Information
obtained directly or constructively from the Company, unless so authorized
in writing
by the Company; (ii) exercise all reasonable efforts to prevent third parties
from gaining access to the Confidential Information; (iii) not use, directly
or
indirectly the Confidential information in order to perform the Executive's
duties and responsibilities to the Company; (iv) restrict the disclosure or
availability of the Confidential Information to those who have read and
understand this
Agreement and who have a need to know the information in order to achieve the
purposes of this Agreement without the prior consent of the Company; (v) not
copy or modify any Confidential Information without prior written consent of
the
Company, provided, however, that
such
copy or modification of any Confidential Information does not include any
modifications or copying which would otherwise prevent the Executive from
performing his/her duties and responsibilities to the Company; (vi) take such
other protective measures as may be reasonably necessary to preserve the
confidentiality of the Confidential Information; (vii) promptly deliver to
the
Company any such matter as the Company may direct at any time, and not retain
any copies or other reproductions thereof.
c. Excluded
from the Confidential Information, and therefore not subject to the provisions
of this Agreement, shall be any information which the Executive can show (i)
at
the time of disclosure, is in the public domain as evidenced by printed
publications; (ii) after the disclosure, enters the public domain by way of
printed publication through no fault of the Executive; (iii) by written
documentation was in its possession at the time of disclosure and which was
not
acquired directly or indirectly from the Company; or (iv) by written
documentation was acquired, after disclosure, from a third party who did not
receive it from the Company, and who had the right to disclose the information
without any obligation to hold such information confidential. The foregoing
exceptions shall apply only from and after the date that the information becomes
generally available to the public or is disclosed to the Executive by a third
party, respectively. Specific information shall not be deemed to be within
the
foregoing exceptions merely because it is embraced by more general information
in the public domain. Additionally, any combination of features shall not be
deemed to be within the foregoing exceptions merely because individual features
are in the public domain. If the Executive intends to avail himself/herself
of
any of the foregoing exceptions, the Executive shall notify the Company in
writing of his/her intention to do so and the basis for claiming the
exception.
d. Upon
written request of the Company, Executive shall return to the Company all
written materials containing the Confidential Information. Executive shall
also
deliver to the Company written statements signed by Executive certifying all
materials have been returned within five (5) days of receipt of the
request.
7. Remedies.
a. The
Executive acknowledges that the granting of a temporary injunction, temporary
restraining order or permanent injunction merely prohibiting the use of
Confidential Information would not be an adequate remedy upon breach or
threatened breach of Section 5 or Section 6 and consequently agrees, upon proof
of any such breach, to the granting of injunctive relief prohibiting any form
of
involvement with any Competitive Business. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
b. In
the
event that the Executive shall be in violation of the aforementioned restrictive
covenants as set forth in Section 5 or Section 6, then the time limitation
during which breach or breaches should occur, and in the event the Company
should be required to seek relief from such breach in any court or other
tribunal, then the covenant shall be extended for a period of time equal to
the
pendency of such proceedings, including appeal.
8. Amendments.
This
Agreement shall not be modified or amended except by written agreement duly
executed by the parties hereto.
9. Headings.
All
sections and descriptive headings of this Agreement are inserted for convenience
only, and shall not affect the construction or interpretation
hereof.
10. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which, when
executed and delivered, shall be an original, but all counterparts shall
together constitute one and the same instrument.
11. Entire
Agreement.
This
Agreement hereto constitutes the entire understanding between the parties with
respect to the matter covered herein, superseding all prior and contemporaneous
understandings and agreements, whether oral or written.
Nothing
in this Agreement will prevent or restrict Executive from serving on the Board
of Directors of public or private companies and receive compensation from such
service.
12. Governing
Law.
This
Agreement is to be construed and enforced according to the laws of the State
of
California. This Agreement shall not be construed more strictly against one
party than the other, merely by virtue of the fact that it may have been
prepared by counsel for one of the parties, it being recognized that both
Company and Executive have contributed substantially and materially to the
negotiation and preparation of this Agreement.
13. Venue.
Venue
in any action arising from this Agreement shall be in the State of
California.
14. Attorneys’
Fees.
In
connection with any controversy arising out of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees and costs at pretrial,
trial, and appellate levels from the non-prevailing party.
15. Severability.
Inapplicability or unenforceability of any provision of this Agreement shall
not
limit or impair the operation or validity of any other provision of this
Agreement or any such other instrument.
16. Non-Assignability.
This
Agreement is personal in nature and not assignable by any party
hereto.
17. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties, its’
successors, transferees and assigns.
18. Construction.
In
construing this Agreement, the singular shall include the plural and the plural
shall include the singular, and the use of any gender shall include every other
and all genders.
19. Relationship
and Covenants of Executive.
Executive acknowledges that the relationship between the parties hereto is
exclusively that of Company and employee. The Company shall be the sole owner
of
all the fruits and proceeds of Executive's services hereunder, including, but
not limited to, all ideas, concepts, formats, software designs, suggestions,
developments, arrangements, articles, stories, writings, compilations,
campaigns, packages, programs, promotions and other intellectual properties
which Executive may create in connection with Executive’s activities as an
Executive of the Company during the Term ("Executive's Work Product"), free
and
clear of any and all claims by Executive (or anyone claiming under or through
Executive). Executive is rendering his services hereunder as an
Executive-for-hire by the Company and that all such writings and materials
developed by Executive in connection with the Company’s business are
work-made-for-hire under the copyright law of the United States.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above written in
Orange County, California.
| THE COMPANY | ||
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| By: | ||
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Name: Xxxxxxx Xxxxx |
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| Its: CEO | ||
| EXECUTIVE | ||
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| By: | ||
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Xxxxxx Xxxxxx |
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