Exhibit 10.5
ADDENDUM TO EMPLOYMENT CONTRACT
This Addendum to Employment Agreement ("Addendum") is made by and between The
Entertainment Internet, Inc., a Nevada corporation ("Corporation") and
Xxxxxxx Xxxxx ("Chairman").
I. EFFECTIVE DATE
This agreement is deemed effective as of the first date the Chairman provided
services to the Corporation.
II. BACKGROUND
The Corporation acknowledges that it may be unable to pay its financial
obligations to the Chairman. The Corporation, finding it in its best interests
to offer this Addendum to maintain positive relations with the Chairman, in
recognition of said Chairman's exceptional performance of his duties, and for
good consideration, the adequacy and sufficiency of which is hereby
acknowledged, enters into the following Addendum to the Employment Agreement
existing therewith, which is incorporated herein by reference.
III. CONVERSION OF DEBT
In the event Corporation is unable to remit funds to the Chairman any salary
owed (the Corporation's "debt"), the Chairman may, at his election, convert any
portion or whole of such debt into stock as follows:
Shares of common stock granted at a forty percent (40%) discount from the most
favorable trading rate ("FTR") of the Corporation's stock experienced during the
period extending from the first day of the completed calendar quarter prior to
the date such certificates are ordered through the date of transmittal of such
order.
For example, if the Corporation on June 1, 2000 owes Chairman $100,000, it
would be obligated to take the FTR from the period extending from January 1,
2000, through the date it orders stock certificates for Chairman, and
discount that rate by forty percent (40%) when calculating the number of
shares owed. If, for example, the FTR during the referenced period was one
dollar ($1.00) per share, Chairman would be entitled to convert any portion
of the date to shares at the rate of sixty cents $0.60/cents per share
($1.00-(1.00 x40%)=$0.60).
In the event, at any time within one (1) year after issuance of any certificate,
the daily strike price for the Corporation's lowest-valued common stock drops
more than ten percent (10%) from the non-discounted FTR used to convert debt
under this section, Corporation shall recalculate the conversion to reflect the
transaction as if calculated using the lowest FTR experienced during the period
since the share order was placed (up to but not more than one year), discounted
as provided for hereinabove.
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For example, if the Corporation owes Chairman six hundred dollars ($600) and
issues one thousand (1,000) shares of stock to on June 1, 2000, based upon a
FTR of one dollar ($1.00) and discount of forty percent (40%), and the strike
price within one year drops to fifty cents ($0.50), Corporation would
recalculate the transaction and issue one thousand (1,000) additional shares
to Chairman therefor ($.50-(0.50x40%)=$0.30; $600/$0.30 share=2,000 shares;
2,000 shares owed-1,000 shares issued=1,000 additional shares to issue).
Nothing in this Section shall mandate conversion of debt to stock by Chairman.
IV. FAVORED NATIONS
Corporation agrees and stipulates that the Chairman is to be treated as a
favored party with respect to all aspects of this Agreement and any
consideration due hereunder. Corporation agrees and stipulates that the Chairman
is to be treated no less favorably than any member of the Corporation's Board of
Directors; for this reason, this Agreement shall be deemed modified to favor,
reflect, and include any and all benefits relating to employment presently or
hereafter more favorably enjoyed by or offered to any member of the Board of
Directors including, but not limited to, stock incentives granted for execution
of any agreement to provide services, offer to buyback shares, conversion rates
applied, method of exercise of options, ownership date of stock, registration
rights, voting rights, and or treatment in the event of merger, reverse merger,
acquisition or sale.
V. STIPULATIONS REGARDING STOCK & OPTION ISSUANCE
The Corporation acknowledges, agrees, and stipulates that the value of any stock
and/or options granted under this Agreement is zero and shall be deemed
Corporation to be zero ($0.00) during the period of any restriction affecting
trade of the same. The Chairman shall be entitled to piggyback registration
rights on all shares.
VI. SEVERABILITY/INCONSISTENCY OR CONFLICT
The Corporation agrees that this contract shall continue and be given full force
and effect under California law regardless of any typographical or other error
which may have occurred in its drafting or preparation. The Corporation further
agrees that this document is severable and that if any provision hereof is found
unenforceable or unlawful, the offending provision(s) shall be considered
excised and the remainder of the contract shall continue in full force and
effect. In the event of any inconsistency or conflict between this Addendum and
the prior Employment Agreement existing between the parties, the language of
this Addendum shall supercede such prior Employment Agreement and be deemed
controlling in all cases; to the extent that the Employment Agreement is not
superceded by this Addendum, said Agreement shall remain in full force and
effect.
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VII. DURATION OF AGREEMENT
This Addendum shall remain effective through the expiration of the Employment
Agreement incorporated by reference herein and any extensions thereof.
VIII. ACCEPTANCE
I/We have read and understood the terms of the foregoing Agreement and agree to
them.
Signature: --------------------------
Xxxxxxx Xxxxxxx, President
The Entertainment Internet, Inc., a Nevada corporation
Signature: --------------------------
Xxxxxxx Xxxxx, Chairman, Board of Directors
The Entertainment Internet, Inc., a Nevada corporation
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