Exhibit 10.1
000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000 Media and Xxxxxxxxxxxxx.xxx, Inc
Xxx Xxxxx, Xxxxxx 00000
LETTER AGREEMENT
This Letter Agreement is entered into as of October 1, 2001
(the "Effective Date") by and between Media and Xxxxxxxxxxxxx.xxx, Inc.,
a Nevada Corporation (the "Company"), and ______ (the "Executive").
The Executive is a [co-founder] and a Key Executive of the Company
and currently serves as [office(s)] of the Company and has continuously
done so since the founding of the Company.
The parties now desire to define herein the basic, minimal terms
and conditions of the relationship and the commitments between them and
further agree to subsequently enter into a formal, more fully detailed
Employment, Consulting and/or Personal Services Agreement at a later
date, in accordance with this Letter Agreement; and
THEREFORE, in consideration of the promises and mutual
covenants outlined herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, it is
mutually covenanted and agreed by and among the parties as follows:
1. Duties and Scope: The Executive shall continue to provide
personal services to the Company in such capacities and in such manner
as follows, whether such services shall be provided as an Independent
Contractor ("Consultant") and/or Employee, as mutually agreed upon from
time to time by and between the Executive and the Board:
(a) Positions and Duties. Executive shall continue to serve as
[office(s)] of the Company. Executive shall render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, and as shall reasonably be
assigned to him by the Company's Board of Directors (the "Board"). The
period of Executive's rendering such service under this Agreement is
referred to herein as the "Term."
(b) Board Membership. Executive shall also continue to serve as a
member of the Board of Directors.
(c) Obligations. During theTerm, Executive shall perform his
duties faithfully and to the best of his ability and shall devote his
business efforts and time to the Company, as he solely may deem
necessary, to fulfill the objectives of the Company.
(d) The Executive's performance of personal, civil, or charitable
activities or the Executive's service on any boards or committees, or
working on a part or full-time basis in other business capacities not
directly in competition with the Company as of the date of this
Agreement or at any future time during the term of this Agreement shall
not be deemed to interfere with the performance of the Executive's
services and responsibilities to the Company pursuant to this
Agreement.
2. Term. The Term of this Agreement shall be for An initial
period of five (5) years commencing on October 1, 2001 and ending on
September 30, 2006. The term of this Agreement shall automatically be
renewed for successive additional one year terms on each anniversary
of the commencement of Executive's service under this Agreement,
beginning with the October 1, 2002 anniversary date, each of which
terms shall be added at the end of the then existing term (taking
into account any prior extensions or failures to extend), unless either
party notifies the other at least 30 days prior to an anniversary date
of this Agreement that he or it does not desire the additional one
year term to be added to the term of the Agreement. For example,
unless either party notifies the other to the contrary on or before
September 30, 2002, the term of this Agreement shall be extended from
October 1, 2006 to September 30, 2007. For further example, and
assuming the term of this Agreement has been extended to September 30,
2007, if one party notifies the other that it does not desire to
extend the term of this Agreement for an additional year and such
notice is given on or before September 30, 2003, the term of this
Agreement shall not be extended from October 1, 2007 to September 30,
2008.
3. Place of Performance. The Executive currently resides in Las
Vegas, Nevada, it is in the best interests of the Company that he
continue to do so and the Executive shall not be required to relocate
to any other location whatsoever at any time during the Term of this
agreement, including any renewals and/or extensions hereto. During the
Term, the Company shall maintain executive offices and staff for the
Executive, as the Executive may deem necessary, in both Las Vegas,
Nevada and Los Angeles, California. During the Term, the Company shall
reimburse, or provide, the Executive reasonable housing and living
expenses in Los Angeles, California as mutually agreed to by the
Company and Executive.
4. Compensation.
(a) Base Compensation. During the Term, the Company shall pay
Executive as minimum compensation for his services a base salary or fee
at the annualized rate of [$192,000.00/$153,600.00] (the "Base")
payable in monthly installments of [$16,000.00/$12,800.00] commencing
October 1, 2001.
(b) Annual increases and adjustments: The Base shall be increased
annually in such amounts as determined by the Board. However, it is
agreed that the Annual increase in the Base shall not be less than Six
(6%) percent.
(c) Bonus. In addition to the Base, Executive shall be entitled to
earn an annual performance bonus (the "Bonus"). Such Bonus shall be
based on the achievement of target milestones to be determined by the
Board after consultation with Executive and shall be paid on a
quarterly basis. The Executive and the Board shall mutually agree on an
Annual Bonus Formula and the Bonus Formula shall be reviewed annually
by the Board and the Executive.
Media & Xxxxxxxxxxxxx.xxx, Inc.
Letter Employment Agreement
Page 1 of 5
(d) Equity Based Compensation: The Executive shall be granted
incentive options for shares in the company based on the discretion of
the Board at such times and in such quantities as the Board deems
appropriate.
(e) Form of Payment: Executive shall have the option to receive
accrued fees, salary, expenses, bonuses, incentive compensation, and
other compensation, if any, as the Board shall award Executive from
time to time in cash, Company stock, stock options, other stock based
compensation, other form of remuneration, or any combination of the
foregoing as the Executive may elect. However, the Company hereby
agrees to pay excise taxes, if any, plus full gross-up to cover tax
liability of Executive as a result any such transaction.
(f) Prior Service: As co-founder of the company, the Executive
has been continually providing services to and on behalf of the company
since it's founding to date, all without full compensation or
reimbursement for his time, efforts and incurred expenses. Since the
company has not been, and is not now, in the position to pay the
executive in cash for those past services rendered by him, it is agreed
that the company shall issue stock to the Executive as payment of those
services in accordance with the following:
(i) the value of the stock shall be determined by averaging
the selling price of the stock for the full calendar year in which the
services were rendered by the Executive, specifically the years of 2000
and 2001. For purposes of this paragraph, it is agreed that the per
share value of stock shall be as follows:
For the calendar year 2000 $ 0.10 per share
For the calendar year 2001 $ 0.30 per share
(ii) It is agreed that a fair and reasonable amount due the
Executive for past services rendered shall be as follows:
For the calendar year 2000 $ [48,000.00]
For the period of January 2001
Thru September 2001 $ [60,000.00]
(iii) As of September 30, 2001 the Executive received
[250,000] shares of Stock.
(iv) During October 2001, the Executive will have received
an additional [250,000] of Stock.
[It is agreed that the Executive `earned' 480,000 shares of stock for
the year ending 2000 and 200,000 shares for the balance due him for the
period ending September 30, 2001, for a total of 680,000 shares for all
prior services rendered through September 30, 2001. Therefore, the
Company shall issue an additional 180,000 shares to the Executive
and/or his designee. Since the Stock is restricted, the Company hereby
agrees to pay excise taxes, if any, plus full gross-up to cover tax
liability of Executive as a result of this and any prior transactions.]
(d) Stock Options: As a Key Executive of the company, the company
further grants the Executive an option to purchase up to Five (5%)
Percent of the Total Authorized shares of the Company's Stock. The
exercise price per share shall be equal to the average fair market
value per share for the twelve (12) months preceding the date the
option is granted or on the effective date of this agreement, whichever
is earlier. The option will be subject to the terms and conditions
applicable to options granted under the Company's 2001 Stock Plan and
any applicable stock option agreement. The option will be immediately
exercisable, in full at one time or in part from time to time as the
Executive may elect. The Executive and/or his designee will vest in
100% of the option shares as and when issued.
5. Benefits. During the Term, the Company shall provide the
Executive with a full benefits package,
whether the Executive is retained as a Consultant or an Employee.
Benefits shall include, but shall not be limited to, without
limitation, medical, dental, vision, disability, life insurance, legal
and flexible-spending account plans, all at no cost or expense to the
Executive. The Company further agrees to pay or reimburse the
executive, with tax gross-up, for the cost of a [$2/$1] million Life
Insurance policy to benefit a beneficiary of the Executive's choice in
the event of his death, and for the cost of a Long-Term Disability plan
to provide the executive with a minimum of $96,000 per year.
6. Expenses. Company shall pay Executive the sum of $2,500.00 per
month to be used by Executive for such personal, business, financial,
club, automobile and/or other expenses as he, in his sole discretion,
shall determine. Such amount shall be in addition to any other
reimbursement to which the Executive is or may be entitled to
hereunder. The Company shall also reimburse Executive for travel,
entertainment or other expenses incurred by Executive in the
furtherance of or in connection with the performance of Executive's
duties hereunder,
7. Indemnification and Insurance.
(a) The Company shall indemnify the Executive with respect to
matters relating to the Executive's services as an officer and/or
director of the Company or any of its Affiliates (as hereinafter
defined). The Company shall also cover the Executive under a policy of
officers' and directors' liability insurance providing coverage that is
comparable to that provided now or hereafter to any other executive
officer or director of the Company. The provisions of this Section
shall survive the termination of the Executive's relationship for any
reason and the term of this Agreement. "Affiliate" means, with respect
to the Company, each individual, corporation, trust, partnership,
limited partnership, association, limited liability company, joint
stock association or other legal entity which controls, is
controlled by, or is under common control with the Company.
(b) The Company shall obtain and pay for a Key Man Insurance
Policy covering the death or disability of the Executive in such amount
as mutually agreed upon by and between the Executive and the Company.
However any such policy amount shall be sufficient to insure that the
Company shall provide for any and all obligations to the Executive
and/or his heirs under this agreement.
8. Vacation & Holidays. Executive will be entitled to six (6)
weeks (Thirty (30) working days) paid vacation per year, with the
timing and duration of specific vacations mutually and reasonably
agreed to by the parties hereto. In addition, Executive will be
entitled to eight National (8) Holidays and three (3) floating holidays
per year.
Media & Xxxxxxxxxxxxx.xxx, Inc.
Letter Employment Agreement
Page 2 of 5
9. Supplemental Retirement Plan:
(a) Company to provide supplemental retirement benefit to
Executive equal to 50% of the highest year's base compensation plus
bonus upon retirement for any reason after 4/1/2002. Company shall
also continue to provide medical, dental, vision, disability and life
insurance benefits as described in paragraph 5, all at no cost or
expense to the Executive. All benefits to be payable and/or provided
to Executive and then to spouse if she survives for their joint lives.
(b) Base compensation and bonus to be amounts set forth above
upon retirement during the five (5) year period ending September 30,
2006. Thereafter base and bonus to be determined using standard
formulas as mutually agreed upon by the Executive and the Board (like
average of top three years in last five years before retirement).
(c) Company to use best efforts to fund the retirement obligation
if no material adverse effect other than cash cost.
(d) Company may credit against supplemental retirement benefit
any social security benefits to which executive is entitled and any
other retirement benefits earned while retained and/or employed by the
company.
10. Severance.
(a) Termination without Cause: If Executive's relationship with
the Company terminates other than for "Cause" (as hereinafter defined
in paragraph 12(a)), and Executive signs and does not revoke a standard
release of claims with the Company, then, subject to paragraph 14,
Executive shall be entitled to receive continuing payments of severance
pay at a rate equal to his Base compensation rate plus Bonus as
described in Section 4, for a period equal to the full remaining
balance of the then term, to be paid, in Executive's discretion, (i)
periodically in accordance with the Company's normal practice or (ii)
in a lump-sum within thirty (30) days of such termination. Company to
pay excise taxes, if any, plus full gross-up to cover tax liability of
Executive.
(b) Termination for Cause. If Executive's relationship with the
Company terminates for Cause by the Company, then Executive will only
be eligible for Supplemental Retirement Plan (or the equivalent
thereof) and any existing Stock Options..
11. Change of Control Benefits. In the event of a "Change of
Control" (as defined below) that occurs prior to the Executive's
termination of service to the Company, any Stock Options not yet vested
will have its vesting accelerated so as to become 100% vested.
Thereafter, the Option will continue to be subject to the terms,
definitions and provisions of the Option Plan and Option Agreement.
12. Definitions.
(a) Cause: For purposes of this Agreement, "Cause" is defined as
(i) willful and repeated failure to comply with the lawful
directions of the Board,
(ii) gross negligence or willful misconduct in the
performance of executives duties to the Company,
(iii) commission of any act of fraud against the Company or
(iv) participation in a fraud against the Company which
adversely affects the Company in a material way;
provided that the action or conduct described in clauses (i), (ii),
(iii) and/or (iv) above will constitute "Cause" only if determined in
good faith by a 75% majority vote of the Board and such action or
conduct continues after the Board has provided Executive with written
notice thereof and a reasonable opportunity (to be not less than 90
days nor more than 180 days) to cure the same.
(b) Without Cause: For purposes of this Agreement, "Termination
without Cause" includes a termination of any or all positions and/or
services by the Executive (resignation) for any of the following
reasons or after the occurrence of any of the following events:
(x) the voluntary temporary or permanent vacating by the
Executive, of any or all of the Executive's current positions (Officer,
Director, etc. as previously described in Paragraph 1) when, in the
opinion of the Executive and the Board, it is in the best interests of
the Company to do so. However, it is agreed that if such should occur,
the Executive may continue to provide services to the Company on a
Consulting basis
(y) the assignment of any duties to Executive inconsistent
with, or reflecting an adverse change in, Executive's position, duties,
responsibilities or status with the Company, or the removal of
Executive from, or failure to reelect Executive to, any of such
positions; or
(z) the relocation of the Company's principal executive
offices, or relocating Executive's principal place of business,
(c) Change of Control. For purposes of this Agreement, "Change of
Control" of the Company is defined as:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50%
or more of the total voting power represented by the Company's then
outstanding voting securities; or
(ii) a change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a majority of
the directors are Incumbent Directors. "Incumbent Directors" will mean
directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or
Media & Xxxxxxxxxxxxx.xxx, Inc.
Letter Employment Agreement
Page 3 of 5
(iii) the date of the consummation of a merger or
consolidation of the Company with any other corporation that has been
approved by the stockholders of the Company, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of
the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company; or
(iv) the date of the consummation of the sale or disposition
by the Company of all or substantially all the Company's assets.
13. Confidential Information. Executive agrees to enter into
a standard Confidential Information and Invention Assignment Agreement
("Confidential Information Agreement") with the Company as and when
requested to do so by the Company.
14. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of the
Company's business is such that if Executive were to become retained,
engaged, employed by, or substantially involved in, the business of a
direct competitor of the Company during the twelve (12) months
following the termination of the Executive's relationship with the
Company, it would be very difficult for the Executive not to rely on or
use the Company's trade secrets and confidential information. Thus, to
avoid the inevitable disclosure of the Company's trade secrets and
confidential information, Executive agrees and acknowledges that
Executive's right to receive the severance payments set forth in
Section 10 shall be conditioned upon the Executive not directly or
indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, stockholder, corporate officer,
director or otherwise), nor having any ownership interested in or
participating in the financing, operation, management or control of,
any person, firm, corporation or business that is in direct competition
with Company. Upon any breach of this section, all severance payments
pursuant to this Agreement shall immediately cease.
15. Assignment. This Agreement will be binding upon and inure
to the benefit of (a) the heirs, executors and legal representatives of
Executive upon Executive's death and (b) any successor of the Company.
Any such successor of the Company will be deemed substituted for the
Company under the terms of this Agreement for all purposes. For this
purpose, "successor" means any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company. None of the rights of Executive
to receive any form of compensation payable pursuant to this Agreement
may be assigned or transferred except by the Executive personally, or
by will or the laws of descent and distribution.
16. Notices: All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be
deemed given (i) on the date of delivery if delivered personally, (ii)
one (1) day after being sent by a well established commercial overnight
service, or (iii) four (4) days after being mailed by registered or
certified mail, return receipt requested, prepaid and addressed to the
parties or their successors at the following addresses, or at such
other addresses as the parties may later designate in writing:
If to the Company:
Media & Xxxxxxxxxxxxx.xxx, Inc.
000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
If to Executive:
at the last residential address known by the Company.
17. Severability: In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement will continue in full
force and effect without said
provision.
18. Arbitration:
(a) Executive agrees that any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or
termination thereof, shall be
settled by binding arbitration to be held in California in accordance
with the National Rules for the Resolution of Employment Disputes then
in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator will be final, conclusive
and binding on the parties to the arbitration. Judgment may be entered
on the arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) will apply California law to the merits of
any dispute or claim, without reference to rules of conflicts of law.
The arbitration proceedings will be governed by federal arbitration law
and by the Rules, without reference to state arbitration law. The Company
and the Executive hereby consents to the personal jurisdiction of the state
and federal courts located in California for any action or proceeding
arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
19. Integration: This Agreement, together with the Option
Plan, Option Agreement and the Confidential Information Agreement if
any, represents the entire agreement and understanding between the
parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement
will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
Media & Xxxxxxxxxxxxx.xxx, Inc.
Letter Employment Agreement
Page 4 of 5
20. Time: Time is of this essence of this agreement.
21. Governing Law: This Agreement will be governed by the
laws of the State of California (with the exception of its conflict of
laws provisions).
22. Confidentiality of Terms: The Executive and the Company
mutually agree not disclose, either directly or indirectly, any
information, including any of the terms of this agreement, regarding
compensation, salary, bonuses, or stock purchase or option allocations
to any person, including other employees and/or consultants of the
Company; provided, however, that Executive may discuss such terms with
members of his immediate family and any legal, tax or accounting
specialists who provide individual legal, tax or accounting advice.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by their duly authorized
officers, as of the day and year first above written.
For MEDIA and XXXXXXXXXXXXX.XXX, INC. The EXECUTIVE,_________________
By:___________________________________ _______________________________
Name:________________________________
Title:__________________________________ Date:__________________________
Date:__________________________________
Media & Xxxxxxxxxxxxx.xxx, Inc.
Letter Employment Agreement
Page 5 of 5
