EMPLOYMENT CONTRACT FOR SENIOR EXECUTIVE
THE WORLD WIDE MAGIC NET, INC., a California corporation, located at
000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, hereinafter referred to as
the Employer, and XXXX XXXXX, 0000 Xxxxx Xxxxxx, Xxx. B, Alhambra, California
91801, hereinafter referred to as the Employee, in consideration of the mutual
promises made herein, agree as follows:
ARTICLE 1. TERM OF EMPLOYMENT
Specified Term
Section 1.01. The Employer hereby employs Employee and Employee hereby
accepts employment with Employer for two (2) years beginning on September 16,
1996.
Earlier Termination
Section 1.02. This agreement may be terminated earlier as hereinafter
provided.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
Title and Description of Duties
Section 2.01. Employee shall serve as Vice President for Administration
and General Counsel of THE WORLD WIDE MAGIC NET, INC. In that capacity, Employee
shall do and perform all services, acts, or things necessary or advisable to
fulfill the duties of a corporate vice president and General Counsel. However,
Employee shall at all times be subject to the direction of the President, and to
the policies established by the Board of Directors, of Employer.
Xxxxx and Conscientious Performance of Duties
Section 2.02. Employee agrees that to the best of his ability and
experience he will at all times loyally and conscientiously perform all of the
duties and obligations required of him either expressly or implicitly by the
terms of this agreement.
Devotion of Entire Time to Employer's Business
Section 2.03. (a) Employee shall devote his entire productive time,
ability, and attention to the business of Employer during the term of this
contract.
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(b) During the term of this agreement, Employee shall not engage in any
other business duties or pursuits whatsoever. Furthermore, during the term of
this agreement, Employee shall not, whether directly or indirectly, render any
services of a commercial, or professional nature to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of Employer's President. However, the expenditure of reasonable amounts
of time for educational, charitable, or professional activities, including
pursuit of a legal practice, shall not be deemed a breach of this agreement if
those activities do not materially interfere with the services required under
this agreement and shall not require the prior written consent of Employer's
President.
(c) This agreement shall not be interpreted to prohibit Employee from
making passive personal investments or conducting private business affairs if
those activities do not materially interfere with the services required under
this agreement. However, Employee shall not, directly or indirectly, acquire,
hold, or retain any interest in any business competing with or similar in nature
to the business or Employer.
Competitive Activities
Section 2.04. During the terms of this contract and six (6) months
after termination, Employee shall not, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition in any
manner whatsoever with the business of Employer.
Uniqueness of Employee's Services
Section 2.05. Employee hereby represents and agrees that the services
to be performed under the terms of this contract are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law. Employee therefore expressly agrees that Employer,
in addition to any other rights or remedies which Employer may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a breach
of this contract by Employee.
Trade Secrets
Section 2.06. (a) The parties acknowledge and agree that during the
term of this agreement and in the course of the discharge of his duties
hereunder, Employee shall have access to and become acquainted with information
concerning the operation of Employer, including without limitation, financial,
personnel,
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sales, planning, and other information that is owned by Employer and regularly
used in the operation of Employer's business and that this information
constitutes Employer's trade secrets.
(b) Employee agrees that he shall not disclose any such trade secrets,
directly or indirectly, to any other person or use them in any way, either
during the term of this agreement or at any other time thereafter, except as is
required in the course of his employment with Employer.
(c) Employee further agrees that all files, records, documents,
equipment, and similar items relating to Employer's business, whether prepared
by Employee or others, are and shall remain exclusively the property of Employer
and that they shall be removed from the premises of Employer only with the
express prior consent of Employer's President.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
General Description
Section 3.01. Employer shall provide Employee with the compensation,
incentives, benefits, and business expense reimbursement specified elsewhere in
this agreement.
Office and Staff
Section 3.02. Employer shall provide Employee with a office,
stenographic help, office equipment and supplies, and other facilities and
services, suitable to Employee's position and adequate for the performance of
his duties.
Indemnification of Losses of Employee
Section 3.03. Employer shall indemnify Employee for all losses
sustained by Employee in direct consequence of the discharge of his duties on
Employer's behalf.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Annual Salary
Section 4.01. (a) As compensation for the services to be rendered by
Employee hereunder, Employer shall pay Employee an `annual salary at the rate
per annum $70,000.00, payable in equal semi-monthly installments of $2,916.67
on the fifteenth (15th) and final days of each month during the period of
employment, prorated for any partial employment period.
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(b) Employee shall receive such annual increases in salary as may be
determined by Xxxxxxxx's president in his sole discretion at least annually on
or about each anniversary of the execution of this contract or at the meeting of
the shareholders or Board of Directors.
Tax Withholding
Section 4.02. Employer shall have the right to deduct or withhold from
the compensation due to Employee hereunder any and all sums required for federal
income and Social Security taxes and all state or local taxes now applicable or
that may be enacted and become applicable in the future.
ARTICLE 5. EMPLOYEE INCENTIVES
Cash Bonus Based on Profitability
Section 5.01. (a) in any fiscal year in which the net income of
Employer exceeds twelve (12) percent of capital investment in Employer, Employee
shall receive a share of a five (5) percent cash bonus on all amounts exceeding
twelve (12) percent of capital investment in Employer for his services in
addition to any other compensation which he is entitled to receive hereunder.
This bonus is for administrative staff only. Employee's share of such cash bonus
shall be decided by Employer.
(b) For the purpose of this provision, the net income of Employer is
defined as net income after expenses but before taxes as determined by the firm
of certified public accountants retained by Employer in accordance with sound
accounting principles and consistent with the prior accounting practices of
Employer.
(c) For purpose of this provision, the capital investment in Employer
shall be based on the weighted average capital invested in Employer during the
year of Employee's employment.
Restricted Stock Option
5.02. (a) As additional compensation, Employer agrees to provide
Employee with the option to purchase 100,000 shares of common stock at $.20 per
share. This restricted stock option shall vest six months after the execution of
this employment agreement. However, the Employee may only purchase fifty (50)
percent of the restricted stock option at the end of his first year of
employment (i.e., 50,000 shares). Employee shall have fifteen (15) business days
after the end of his first year of employment to exercise this restricted stock
option. The Employee may purchase the remaining fifty (50) percent of the
restricted stock option at the end of his second year of
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employment. Employee shall have fifteen (15) business days after the end of his
second year of employment to exercise this restricted stock option.
(b) Employee will have no right to this restricted stock option upon
Employer's termination of this agreement for or without cause.
Reimbursement of Professional Fees
5.03. (a) Employer agrees to reimburse Employee for all fees incurred
by Employee in order for Employee to maintain his status as an active member of
the State Bar of California, including but not limited to State Bar dues and
fees for MCLE classes. Employee will receive a maximum reimbursement of $500.00
for State Bar dues and a maximum reimbursement of $500.00 for MCLE classes.
ARTICLE 6. EMPLOYEE BENEFITS
Annual Vacation
Section 6.01. After completing one year of employment, Employee shall
be entitled to fifteen (15) working days vacation time each year with full pay.
Employee may be absent from his employment for vacation only at such times as
Employer's President shall determine from time to time. If Employee is unable
for any reason to take the total amount of authorized vacation time during any
year, he may accrue that time and add it to vacation time for any following year
up to a maximum of twenty (20) vacation days or may receive a cash payment in an
amount equal to the amount of annual salary attributable to that period.
Illness
Section 6.02. Upon completion of six (6) months in the service of
Employer, Employee shall be entitled to five (5) days per year as sick leave
with full pay. Sick leave may be accrued up to a maximum of eight (8) days per
year.
Group Medical Insurance
Section 6.03. Employer agrees to include Employee under Employer's
group medical insurance coverage. For the first six (6) months after the
execution of this employment agreement, Employee shall not receive any group
medical insurance coverage from Employer.
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ARTICLE 7. BUSINESS EXPENSES
Business Expenses
Section 7.01. (a) Employer shall promptly reimburse Employee for all
reasonable business expenses incurred by Employee in promoting the business of
Employer, including expenditures for entertainment, gifts, and travel.
(b) Each such expenditure shall be reimbursable only if it is of a
nature qualifying it as a proper deduction on the federal or state income tax
return of Employer.
(c) Each such expenditure shall be reimbursable only if Employee
furnishes to Employer adequate records and other documentary evidence required
by federal or state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of that expenditure as an income tax
deduction.
Repayment by Employee of Disallowed Business Expenses
Section 7.02. In the event that any expenses paid for Employee or any
reimbursement of expenses paid to Employee, shall, on audit or other examination
of Employer's income tax returns, be determined not to be allowable deductions
from Employer's gross income, and in the further event that any such
determination is acceded to by the Employer or made final by the appropriate
federal or state taxing authority or a final judgment of a court of competent
jurisdiction, and no appeal is taken from the judgment or the applicable period
for filing notice of appeal has expired, Employee shall repay to Employer the
amount of the disallowed expenses.
ARTICLE 8. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 8.01. (a) Employer reserves the right to terminate this
agreement if employee (1) willfully breaches or habitually neglects the duties
which he is required to perform under the terms of this agreement, or (2)
commits acts of dishonesty, fraud, misrepresentation, or other acts of moral
turpitude, that would prevent the effective performance of his duties.
(b) Employer may at its option terminate this agreement for the reasons
stated in this section by giving written notice of termination to Employee
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or under this agreement.
(c) The notice of termination required by this section
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shall specify the ground for the termination and shall be supported by a
statement of all relevant facts.
(d) Termination under this section shall be considered "for cause" for
the purposes of this agreement.
Termination Without Cause
Section 8.02. (a) This agreement shall be terminated upon the death of
Employee.
(b) Employer reserves the right to terminate this agreement not less
than three months after Employee suffers any physical or mental disability that
would prevent the performance of his duties under this agreement. Such a
termination shall be effected by giving 10 days' written notice of termination
to Employee.
(c) Employer reserves the right to terminate Employee without cause
within the first six (6) months after the execution of this employment
agreement.
(d) Termination under this section shall be considered "without cause"
for the purposes of this agreement.
Effect of Merger, Transfer of Assets, or Dissolution
Section 8.03. (a) This agreement shall not be terminated by any
voluntary or involuntary dissolution of Employer resulting from either a merger
or consolidation in which Employer is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
Employer.
(b) In the event of any such merger or consolidation or transfer of
assets, Employer's rights, benefits, and obligations hereunder shall be assigned
to the surviving or resulting corporation or the transferee of Employer's
assets.
(c) This agreement shall be terminated by any voluntary of involuntary
dissolution of Employer not resulting from either a merger or consolidation. In
the even of such dissolution, Employer will provide Employee with one (1) month
severance pay.
Termination by Employee
Section 8.04. Employee may terminate his obligations under this
agreement by giving Employer at least one month notice in advance.
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Effect on Compensation
Section 8.05. In the event that this agreement is terminated prior to
the completion of the term of employment specified herein, Employee shall be
entitled to the compensation earned by and vested in him prior to the date of
termination as provided for in this agreement, computed pro rata up to and
including that date. Employee shall be entitled to no further compensation as of
the date of termination.
ARTICLE 9. GENERAL PROVISIONS
Notices
Section 9.01. Any notices to be given by either party to the other
shall be in writing and may be transmitted either by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addresses appearing in
the introductory paragraph of this agreement, but each party may change that
address by written notice in accordance with this section. Notices delivered
personally shall be deemed communicated as of the date of actual receipt; mailed
notices shall be deemed communicated as of the date of mailing.
Arbitration
Section 9.02. (a) Any controversy between Employer and Employee
involving the construction or application of any of the terms, provisions, or
conditions of this agreement shall on the written request of either party served
on the other be submitted to arbitration. Arbitration shall comply with and be
governed by the provisions of the California Arbitration Act.
(b) Employer and Employee shall each appoint one person to hear and
determine the dispute. If the two persons so appointed are unable to agree, then
those persons shall select a third impartial arbitrator whose decision shall be
final and conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing party or in
such proportions as the arbitrators decide.
Attorneys's Fees and Costs
Section 9.03. If any legal action based in contract law is necessary to
enforce or interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which that party may be entitled. This provision
shall be construed as applicable to the entire contract.
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Entire Agreement
Section 9.04. This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Employee by Employer, and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
agreement shall be valid or binding.
Modifications
Section 9.05. Any modification of this agreement will be effective only
if it is in writing signed by the party to be charged.
Effect of Waiver
Section 9.06. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right of power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Partial Invalidity
Section 9.07. If any provision in this agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
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Law Governing Agreement
Section 9.08 This agreement shall be governed by and construed in
accordance with the laws of the State of California.
Executed on October 8, 1996, at Alhambra, California.
EMPLOYER
THE WORLD WIDE MAGIC NET, INC.
By: /S/ XXXXX XXXX
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XXXXX XXXX, PRESIDENT
EMPLOYEE
/S/ XXXX XXXXX
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XXXX XXXXX
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