EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of October 10,
1997, by and between American Interactive Media, Inc. (hereinafter the
"Company"), a Nevada corporation, and Xxxxx X. Xxxxxx (hereinafter "Employee").
WHEREAS, the Company desires to employ Employee as its Chief Executive
Officer, and Employee desires to be employed by the Company from and after the
date hereof upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
1. EMPLOYMENT:
a. The Company shall employ Employee and Employee accepts employment
by the Company and shall render services as its Chief Executive Officer,
with specific duties, not inconsistent with the office of Chief Executive
Officer, as determined by the Company's Board of Directors.
b. It is expressly understood that the Company's Board of Directors
shall, as soon as practicable after the execution of this Agreement, elect
Employee as a member of the Company's Board of Directors and as Chairman of
the Board of Directors.
c. Employee shall have final approval of any public or internal
notices concerning his employment, election as a director, termination as
an employee or withdrawal as a director.
d. The parties acknowledge that Employee has other business interests
in which Employee's ownership interest exceeds One Percent (1%) and that
Employee shall, not inconsistent with his duties hereunder, devote time and
attention to such other business
interests in addition to and contemporaneously with the performance of
Employee's duties hereunder. Employer shall reasonably accommodate
Employee's other business interests with respect to domestic and foreign
travel requirements associated with the performance of Employee's duties
under this Agreement.
2. TERM:
a. The term of this Agreement, and the term of Employee's employment
hereunder, shall be for five (5) years, shall commence as of January 2,
1997 and shall end on January 2, 2002, if not terminated by Employee or the
Company on or prior to any such anniversary. Notwithstanding the foregoing,
however, and subject to the terms and conditions set forth elsewhere in
this Agreement, the Company may terminate Employee's employment hereunder
at any time, with or without cause. Notwithstanding any other provision of
this Agreement, Employee's duties under an Employment Agreement dated
January 2, 1997 (the "January 2 Agreement"), a copy of which is attached
hereto and deemed a part hereof, shall serve to satisfy the parties'
obligations to one another through October 9, 1997, after which, the
parties' obligations are governed solely by the terms of this Agreement,
notwithstanding any provision (contrary or otherwise) in the January 2
Agreement. It is specifically understood that Employee's service under the
January 2 Agreement shall be considered the initial part of the five (5)
year term described herein.
b. Employee shall have the right to terminate his employment hereunder
for cause upon written notice to the Company referring to this subparagraph
2(b) and describing the condition relied upon by him in invoking the
provisions hereof if, without Employee's written consent: (i) the Company
fails to pay any salary or other compensation or benefit required to be
paid to Employee hereunder when due and for an additional period of
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fifteen (15) days after demand therefor by Employee; (ii) there occurs any
substantial change in the titles, authorities, powers, functions or duties
attached to Employee's positions unless the Company, within thirty (30)
days after Employee's giving of notice hereunder, takes full and effective
action to eliminate the condition cited by Employee in his notice of
termination as the reason for his giving of such notice; (iii) there is
consummated a merger or consolidation of the Company with any other
corporation or corporations in which the Company is not the surviving
corporation; or (iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition of all or substantially all of the
Company's assets.
3. COMPENSATION:
a. During the term of his employment hereunder, the Company shall pay
Employee a Fifty Thousand Dollar ($50,000.00) sign-on bonus, prior receipt
of which is hereby acknowledged, plus a base salary as follows: (i) at the
rate of Two Hundred Fifty Thousand Dollars ($250,000.00) per year for the
year 1997, which sum shall be paid from an escrow fund established by the
Company with its customary bank in advance of the execution of this
Agreement; and (ii) at the rate of Three Hundred Thousand Dollars
($300,000.00) during the year 1998. The Employee's base salary for the
third through fifth years of this five-year agreement shall be determined
by good faith negotiation between the Employee and the Company, but in no
event shall be less than Three Hundred Thousand Dollars ($300,000.00).
Employee's base salary shall be paid in equal, bi-monthly installments
commencing with the first pay period immediately following the Effective
Date, or at such other intervals upon which Employee and the Company shall
mutually agree, and to the extent allowed by applicable law,
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shall not when provided be reduced by federal, state, or local payroll
withholding taxes. Employer and Employee may agree at any time to increase
Employee's base salary.
b. In addition to any other compensation or incentive payable to
Employee hereunder, the Company shall grant Employee Options under the
Company's existing Incentive Stock Option Plan (the "Plan") to purchase One
Million Five Hundred Thousand (1,500,000) shares of Common Stock at a price
of One Dollar ($1.00), effective as of the Effective Date, subject to the
terms of the Plan and the Option Certificate attached as Exhibit "A"
hereto.
c. The Company represents and warrants that all shares and options for
shares of the Company's common stock granted under this Agreement shall be
registered with the Securities and Exchange Commission on Form S-8 or other
appropriate form, or shall be so registered as such shares vest hereunder,
to the extent such shares are subject to reporting. The Company shall cause
the Plan to be amended to authorize such additional shares as are necessary
to meet its obligation under this Agreement, and shall register such shares
with the Securities and Exchange Commission on Form S-8 or other
appropriate form to the extent such shares are subject to reporting. If the
shares described in this paragraph 3(e) are not registered with the
Securities and Exchange Commission on Form S-8 or other appropriate form on
or before December 31, 1997, then Employee may, at his sole option, (i)
choose to terminate for cause as if termination occurred described in
paragraph 2(b) herein but without regard to any precondition or advance
notice contained herein, and shall benefit from the provisions of
subparagraph 5(a) herein, or (ii) choose not to terminate for cause and
receive a lump sum cash payment from the Company of One Hundred Thousand
Dollars ($100,000.00) from the Company in quarterly payments of Twenty Five
Thousand Dollars ($25,000.00) in 1998, which
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sum shall not when provided be reduced by federal, state or local payroll
taxes to the extent allowed by applicable law.
d. The parties understand and agree that, in the course of and
incident to his employment by the Company, Employee will perform executive
services for the Company's majority-owned subsidiary corporations. The
Company shall have the right, in its sole discretion, to allocate the
financial burden of Employee's salary hereunder among its subsidiary
corporations, and any salary received by Employee from any majority-owned
subsidiary of the Company shall reduce the amount payable directly by the
Company; provided, however, that nothing herein is intended to relieve or
shall relieve the Company from its responsibility to pay the full amount of
Employee's salary to the extent not already paid by a subsidiary of the
Company.
4. OTHER BENEFITS:
a. The Company shall reimburse Employee for ordinary and reasonable
business expenses incurred by him in the performance of services pursuant
to this Agreement. In addition, the Company shall provide Employee with a
Company-owned or leased luxury automobile appropriate to his position for
his use, and shall provide for (or reimburse for, at Employee's option)
operating expenses with respect to such vehicle, including (without
limitation) gasoline, oil, insurance, general maintenance, tires, batteries
and repairs.
b. During the term of his employment and during any restricted period
during which he is entitled to receive payments pursuant to subparagraph
5(c) below, Employee shall be entitled to participate in any medical,
health, disability and accident or other hospitalization or insurance plan
established by the Company for its employees, on a basis equivalent to a
full-time employee.
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c. Employee shall receive a bonus of $10,000.00 for every
$1,000,000.00 in capital raised by the Company up to a total of
$15,000,000.00 in raised capital. After the first $15,000,000.00 in raised
capital, Employee shall receive a bonus of $5,000.00 for each $1,000,000.00
in raised capital up to the next $15,000,000.00 in raised capital (for a
total cap of $30,000,000.00 in raised capital). Employee shall also have
the right to participate in any bonus compensation plan or other
prerequisites that may be established from time to time appropriate to his
position.
d. During each full year of the term of his Employment, Employee shall
be entitled to three (3) weeks paid vacation time which shall not be
cumulative from year to year.
e. If Employee is made a party or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "Proceeding"),
by reason of the fact that he was a director or officer of the Company, or
was acting on behalf of or is or was serving at the request of the Company
as a director, officer, partner, employee or agent of another corporation,
partnership, joint venture or other enterprise or entity, the Company shall
indemnify Employee against all expenses, liability and loss actually and
reasonably incurred or suffered by him in connection with such Proceeding,
whether or not the indemnified liability arises or arose from any
Proceeding by or in the right of the Company, to the extent that such
indemnification is not prohibited by law as it presently exists or may
hereafter be amended. Upon Employee's request, the Company shall pay
expenses reasonably incurred by Employee in defending a Proceeding as they
are incurred, in advance of the final disposition of such Proceeding;
provided, however, as a condition to his right to receive such advances,
Employee shall agree to reimburse to the
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Company the amounts so advanced if and to the extent that a court of
competent jurisdiction shall determine that, because of his actions related
to the claim upon which such Proceedings were based, indemnification of
Employee from liability for such claim or expenses incurred in connection
with the defense of such claim was not allowed under applicable laws. The
Company's obligations under this paragraph 4(e) shall continue in respect
to any act or omission by Employee when done on behalf of or at the request
of the Company, even if a Proceeding is commenced after termination of
Employee's obligations under this Agreement, and even if such Proceeding is
frivolous, fraudulent or commenced in bad faith.
f. During the term of this Agreement or any extension of this
Agreement, and for any acts or omissions arising from the performance of
Employee's obligations under this Agreement, the Company shall maintain
Directors' and Officers' liability insurance reasonably acceptable in form
and content to Employee, with a minimum limit of Three Million Dollars
($3,000,000.00), which shall inure to the benefit of Employee. The Company
shall cause such insurance to be in force within thirty (30) days of the
execution of this Agreement.
5. COMPENSATION UPON TERMINATION: If Employee's employment is terminated at
any time during the term of this Agreement, the following provisions shall
apply:
a. If Employee's employment is terminated for any reason whatsoever,
except for (i) termination by the Company with cause, as defined in
subparagraph 5(d) below, or (ii) by Employee without cause pursuant to
subparagraph 2(c) above, then, in such event, the Company shall pay
Employee, at the time of such termination, an amount equal to the
difference of (i) two years' base salary at the amount in effect at the
time of such termination, as
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provided in subparagraph 3(a) herein; plus all pay, benefits, bonuses,
options and perquisites described in paragraphs 3(c) through 3(d) herein,
and (ii) any renuneration received by the Employee in the first year after
such termination through gainful employment obtained after making a
reasonable effort to obtain employment, which payment shall be made in lieu
of any other severance or post-employment benefits except as otherwise
expressly provided for in this Agreement. Employee also shall have the
option to continued use of the automobile as described in paragraph 4(a)
herein, without regard to subsequent employment, for the full term of this
Agreement and any agreed-upon extended term, even if Employee's employment
is terminated as described in this paragraph 5(a), and shall be entitled to
the benefits of subparagraphs 4(b), 4(c), 4(f), 4(g) and 5(b) herein.
b. If Employee's employment is terminated by his death, his estate or
a beneficiary designated by him on notice to the Company shall receive (i)
the remainder of his base salary through the last month of the year of his
death, plus (ii) one year's base salary at the rate in effect in the year
of his death, which payments shall not be reduced by life insurance
proceeds, if any, paid to beneficiaries designated by Employee under any
life insurance policy owned by the Company.
c. If Employee voluntarily terminates his employment with the Company
without cause, the Company at its election, by notice to Employee given not
later than ten (10) days after such termination and referring specifically
to this subparagraph (c), shall have the right to require for one (1) year
from the date of termination (the "restricted period") that Employee not
directly or indirectly engage in any competitive activity, as defined
below, and, if the Company so elects, Employee agrees not to engage in any
competitive activity, provided, however, that (i) the Company provides
Employee with all pay, benefits, bonuses, options and
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perquisites described in subparagraphs 3(a) through 3(d) herein
("Compensation"); (ii) such Compensation shall not be provided when such
Compensation would otherwise be due, but rather shall be accelerated and
provided to Employee within ten (10) days of Employee's termination and
shall include Two Hundred Percent (200%) of all cash compensation which
otherwise would be provided under paragraph 3(a) of the Agreement for the
year following the year in which Employee's termination occurs, except if
Employee's termination occurs in the fourth year of this Agreement, in
which case such compensation shall include Two Hundred Fifteen Percent
(215%) of all cash compensation which otherwise would be provided under
paragraph 3(a) of this Agreement; and (iii) the Company honors and timely
performs its obligations to Employee under subparagraphs 4(a) through 4(c)
and 4(e), 4(f), 5(a) and 5(b) herein. Any failure by the Company to provide
the compensation accelerated as required hereunder, or to honor and timely
perform its obligations to Employee under subparagraphs 4(a) through 4(c)
and 4(e), 4(f), 5(a) and 5(b) above, and shall constitute a full and
irrevocable waiver of the Company's rights under this subparagraph 5(c).
d. For the purposes of subparagraph 5(a) above, "cause" for
termination of Employee's employment shall exist only in the event of
Employee's gross negligence or intentional malfeasance in the performance
of his duties as an officer of the Company and/or its subsidiaries which
results in or creates a substantial risk of serious financial injury to the
Company.
e. For purposes of subparagraph 5(c) above, the term "competitive
activity" shall mean, directly or indirectly, acting alone or in
conjunction with others: (i) engaging as a director, officer, employee,
partner, shareholder, or any other capacity, in any business related,
indirectly or directly, to the manufacture or sale of internet access
hardware,
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access software or access services; (ii) requesting any customers of any
business then being conducted by Company to curtail or cancel their
business with the Company; (iii) disclosing to any person, firm or
corporation any trade, technical or technological secrets, any details or
organization or business affairs, any names of past or present customers of
Company or any other information relating to the business of Company; (iv)
soliciting, canvassing or accepting any business or transaction for any
other person, firm or corporation or business similar to any business of
Company; (v) inducing, or attempting to influence, any employee of Company
to terminate employment with Company or to enter into any employment or
other business relationship with any other person (including Employee),
firm or corporation; (vi) acting in any manner which he shall have reason
to believe is contrary to the best interests of Company; provided, however,
that nothing in this paragraph 5(e) shall be deemed by the Company to
prevent or restrict Employee from fully performing all obligations to which
he is bound (by contract or otherwise) at the time of the execution of this
Agreement, including (without limitation) participation on boards of
directors, performance of covenants of restriction, or obligation to report
business activities.
6. OWNERSHIP OF DOCUMENTS/PROPRIETARY PROPERTY:
a. All books, tapes, records, documents, programs, customer lists,
supplier lists or any other confidential information of the Company,
regardless of whether developed, compiled or made by Employee, made
available to Employee or used by Employee during the term of this Agreement
are and shall remain the property of the Company and shall be delivered to
the Company by Employee at the end of the term hereof.
b. Employee shall promptly disclose, grant and assign ownership to the
Company for its sole use and benefit any and all articles, inventions,
improvements,
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discoveries, copyrights, information, ideas and suggestions (whether
patentable or not) (collectively, "Proprietary Property") (i) which he may
develop, acquire, conceive or reduce to practice while Employee is carrying
out the duties of this Agreement and which relate to the business, products
or services of the Company, including the design and/or development of
internet access software programs and codes, and/or (ii) which result,
directly or indirectly, in whole or in part, from use of the time,
facilities, materials or information of the Company; in each case together
with all patent applications, copyrights and reissues thereof that may at
any time be granted for or upon any such Proprietary Property. Employee
understands and agrees that the Company is and shall be the sole owner of
any and all property rights in any Proprietary Property.
c. Employee agrees to execute such further assignments as necessary to
the Company or to its nominees, successors, or assigns of all of his right,
title and interest in and to any and all such Proprietary Property and in
and to any and all copyrights and patent applications therefor, and in and
to all copyrights and patents that may be granted therefor throughout the
world. Employee also agrees, during and subsequent to his employment with
the Company, to render to the Company at its expense all such assistance as
the Company may require in order to fully carry out the intent of this
Agreement.
d. Employee shall keep and maintain adequate and current written
records of all such Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be made available to, and
remain the property of, the Company at all times.
e. Employee represents, warrants and agrees that as of the date of
this Agreement, he has not developed, conceived or reduced to practice any
Proprietary Property
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other than those for which a copyright registration or patent application
have been previously filed or which are listed in Exhibit "B" attached
hereto.
f. Except as expressly set forth herein, no severance or similar
compensation shall be payable to Employee upon the termination of his
employment.
7. ADDITIONAL OBLIGATIONS OF THE COMPANY UPON TERMINATION: Upon the
termination of Employee's employment for any reason or cause other than
termination by the Company with cause, or termination by Employee without cause,
options to purchase common stock of the Company owned by Employee shall be
convertible into common stock of the Company by Employee, at his election, upon
notice to the Company making specific reference to this Section 7. Any such
conversion shall be effective upon the giving of such notice by Employee. The
numbers of shares into which such options shall be converted shall equal the
number of options to be converted multiplied by a fraction, the numerator of
which is the difference between the market price of the common stock (determined
in accordance with Section 3(c) above) on the date of conversion minus the
exercise price of the options, and the denominator of which shall equal the
market price of the Company's common stock on such date.
8. ASSIGNMENT: This Agreement is personal in its nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except that: (i) the Company
may assign or transfer this Agreement to a successor organization in the event
of merger, consolidation, or transfer of sale of all or substantially all of the
assets of the Company, in which case the term Company shall mean such successor,
provided that in the case of any such assignment or transfer, the obligations of
this Agreement are assumed by such successor or are binding upon and inure to
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the benefit of such successor as a matter of law; and (ii) in the event of
Employee's death, the term "Employee" shall include his heirs, executors and
administrators.
9. NOTICES: All notices hereunder shall be in writing and shall be deemed
to have been given at the time when mailed in any general or branch United
States Post Office enclosed in a certified post-paid envelope, addressed to the
respective parties stated below, or to such changed address as such party may
fix by notice as aforesaid:
To the Company: Attn: Board of Directors
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
To Employee: Xxxxx X. Xxxxxx
0 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
10. RESOLUTION OF DISPUTES:
a. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, including without limitation a claim for
declaratory relief or relief which is equitable in nature, shall be settled
by arbitration in the State of New Jersey, by an arbitrator selected by
Employee and the Company. If the Company and Employee cannot agree on the
appointment of an arbitrator within ten (10) days after a request for
arbitration, then such arbitration shall be conducted by a panel of three
arbitrators selected in accordance with procedures established and
implemented by the American Arbitration Association. The arbitration shall
be conducted in accordance with the rules of the American Arbitration
Association, except as otherwise provided in this paragraph 10. Except as
otherwise provided herein, all costs of the arbitrator shall be borne by
the Company. Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction over the parties. Any award of the
arbitrator may include interest at a rate or rates considered just under
the circumstances by the arbitrator, but shall not include any award of
punitive damages.
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b. Employee shall be entitled to recover from the Company reasonable
attorney's fees and costs and other expenses incurred by him in connection
with any arbitration hereunder. Subject to the limitations of subparagraph
10(c) below, payment of such fees and expenses shall be made by the Company
as they are incurred by Employee. If, however, the arbitrator(s) should
later determine that, under the circumstances, it was unjust for the
Company to have made any of these payments of attorney's fees and costs and
expenses to Employee, the arbitrator(s) may require Employee to repay any
such payments in accordance with such terms and conditions as the
arbitrator(s) shall direct.
c. Notwithstanding anything to the contrary in subparagraph 10(b)
above, the amount which the Company shall be required to advance to
Employee or which Employee shall be entitled to recover from the Company on
account of attorney's fees, costs and expenses incurred by him in any
arbitration hereunder shall be limited to the amount incurred by the
Company on account of its own attorney's fees, costs and expenses, as and
when such fees, costs and expenses are incurred by the Company, unless the
arbitrator(s) shall determine that, under the circumstances, it is unjust
to so limit the Company's advances and reimbursements to Employee.
d. Employee recognizes that immediate and irreparable damage will
result to Company if Employee breaches any of the terms and conditions of
Sections 5(e) (if applicable) or 6 hereof. Therefore, notwithstanding any
other term of this Agreement, Employee and Company agree that any claim for
injunctive relief (including preliminary injunctive relief) based upon an
alleged violation of such Sections may be brought in the courts of the
State of New Jersey (including the United States District Court for the
District of New Jersey) and Employee consents to the jurisdiction of such
courts.
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11. MISCELLANEOUS:
a. At any time, and from time to time, after the signing of this
Agreement, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to carry out
the intent and purposes of this Agreement.
b. This Agreement shall be governed, construed and enforced in
accordance with the substantive laws of the State of New Jersey,
notwithstanding any conflicts-of-law doctrines or laws of any jurisdiction
to the contrary.
c. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties and their heirs, personal representatives,
successors and assigns.
d. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. e. This Agreement
shall not be interpreted in favor of or against either party on account of
such party having drafted this Agreement.
f. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
g. The provisions of this Agreement are independent of and separable
from each other, and no provision shall be affected or rendered invalid or
unenforceable by
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virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part. Without limiting the
foregoing, it is specifically agreed with regard to each of the covenants
in this Agreement set forth in paragraphs 8 and 9 that they are severable
and if any of them are held invalid or unenforceable by reason of length of
time, area covered or actively covered, or any combination thereof, or for
any other reason, and such covenant shall be adjusted or reduced to the
extent necessary to cure any invalidity and to protect the interest of the
Company to the fullest extent of the law.
h. This Agreement contains the entire understanding among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
IN WITNESS WHEREOF, Employee has signed his name and the Company, by the
signatures of its duly authorized officers, has executed this Agreement as of
the date and year mentioned at the top of page one.
____________________________________
American Interactive Media, Inc.
(CORPORATE SEAL)
By: _______________________________
Attest: ____________________________
Secretary
WITNESS:
________________________________ ____________________________________
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