Employment Agreement - Interactive Telecom Network Inc. and Jerry D. Howard
REVISED EMPLOYMENT AGREEMENT
This Revised Employment Agreement ("Revised Agreement") is entered into
by and between Jerry D. Howard ("Howard") and Interactive Telecom Network, Inc.
("ITN"). For the purposes of Section II of this Revised Agreement, the term ITN
shall include New Frontier Media, Inc. ("NFM") and any NFM subsidiary.
Regardless of when this Revised Agreement is executed, the effective date of
this Revised Agreement shall be July 21, 2001.
I. RECITALS
WHEREAS, Howard and ITN entered into an Employment Agreement
("Agreement") dated October 27, 1999;
Disputes have arisen between Howard and ITN regarding their respective
rights and obligations under the Agreement; and
In amicable settlement of their differences, Howard and ITN have agreed
that the terms of this Revised Agreement shall supersede and replace the terms
of the Agreement previously entered into by Howard and ITN.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Howard and ITN agree that Howard shall be
employed by ITN in accordance with the following terms and conditions:
II. TERMS AND CONDITIONS OF EMPLOYMENT
A. Compensation and Benefits
1. From August 1, 2001 through March 31, 2003, Howard shall receive a
salary, to be paid in equal installments on a bi-weekly basis, at the annual
rate of One Hundred Thousand Dollars ($100,000) a year.
2. ITN shall pay Howard, on January 2, 2002, the unpaid balance of the
incentive bonus accrued by Howard through March 31, 2001. Howard shall not be
entitled to any kind of bonus for any period after March 31, 2001 (hereinafter
"the unpaid balance"). The amount of the unpaid bonus is $140,457.04; however,
Howard has received advances amounting to $51,426.00. The amount of the
advances, plus applicable taxes, shall be deemed paid out of the unpaid bonus
monies on October 15, 2001. The remainder of the unpaid bonus monies shall be
paid to Howard in two equal installments on ITN's first regular pay date in
January 2002 and on ITN's first regular pay date in February 2002. In paying the
remainder of the unpaid bonus monies in 2002, ITN shall withhold such amounts as
are required to be withheld by federal, state, or local tax withholding
requirements.
3. Howard shall continue to receive medical, dental and life insurance
as provided by policies and programs of ITN to the extent applicable to
executives of ITN occupying peer positions to that formerly occupied by Howard.
4. Howard shall continue to receive, until July 31, 2001, 401k plan
matching contributions on the same basis as received by Howard under the
Agreement.
5. ITN shall pay Howard, on January 2, 2002, for 200 hours of vacation
time accrued by Howard through July 31, 2001. Howard shall not accrue any paid
vacation time for any periods after July 31, 2001.
6. During the term of Howard's employment with ITN, ITN shall reimburse
Howard for employment related expenses reasonably incurred by Howard while
performing services at the direction of ITN. ITN shall not be obligated,
however, to provide or reimburse Howard for a car allowance.
7. Howard shall be entitled to retain the computer and two chairs
located in his office.
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B. Work Obligations
1. Howard shall make himself available to work for ITN for up to 20
hours a month and shall perform such services as may be required by ITN. Such
services shall include, but shall not be limited to, cooperation with ITN in any
company investigation, in the prosecution or defense of any lawsuit, and in any
other matter. The time spent by Howard cooperating with ITN shall be credited
toward Howard's 20-hour per month requirement.
2. Howard may seek other employment provided that such activities do
not materially interfere with his services to ITN or create any conflict of
interest. Howard shall not be required to offset any income earned from other
employment against monies payable under this Revised Agreement.
3. To the extent Howard's 20-hour per month requirement is not fully
used by ITN, the unused hours shall accumulate and may be used by ITN in later
months, up until March 31, 2003, except that in no instance shall Howard be
obligated to provide more than 40 hours per month of services to ITN.
C. Stock Options
Howard, prior to the execution of this Revised Agreement, received
options for the purchase of NFM stock as follows: a) options to acquire 75,000
shares at $4.138 a share; and b) options to acquire 40,000 shares at $2.00 a
share. These stock options shall vest in accordance with the schedule set forth
in the respective stock option plans, and the termination of the Agreement by
virtue of this Revised Agreement shall have no effect on Howard's rights with
respect to the foregoing options.
D. Termination of Employment
Howard's employment with ITN, and ITN's obligation to compensate Howard
as provided above, shall cease on March 31, 2003 except as provided below:
1. This Revised Agreement shall terminate automatically upon the death
of Howard any time prior to March 31, 2003.
2. ITN may terminate Howard's employment if ITN determines that Howard
has become disabled. For the purposes of this paragraph, the term "disabled"
shall mean that Howard has been unable to work, even with reasonable
accommodation, as a result of incapacity due to mental or physical illness, for
one hundred eighty (180) consecutive business days.
3. ITN may terminate Howard's employment for cause. For the purposes of
this paragraph, the term "cause" shall mean (a) the conviction of Howard for
committing an act of fraud, embezzlement, theft or other act constituting a
felony or the entry of a guilty or nolo contendere plea of Howard to such act or
felony; or (b) a material act of dishonesty or breach of trust by Howard, during
the term of the Agreement or this Revised Agreement, resulting or tending to
result directly or indirectly in material personal gain or enrichment at the
expense of ITN.
E. Termination and Release of Rights Under October 27, 1999 Agreement
This Revised Agreement shall replace and supersede the Agreement
between Howard and ITN dated October 27, 1999 and all rights and obligations
under that Agreement are hereby terminated and extinguished. Howard and ITN
hereby release each other from any and all claims, rights and liabilities
arising out of the Agreement which either may have against the other.
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F. Miscellaneous
1. This Revised Agreement shall survive any change in the control of
ITN.
2. Any legal action arising out of this Revised Agreement shall be
brought in the County of Los Angeles, State of California, and shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts executed and performed within the State of California.
INTERACTIVE TELEVISION NETWORK, INC.
NEW FRONTIER MEDIA, INC.
By /s/ Michael Weiner Date: December 4, 2001
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Michael Wiener
/s/ Jerry D. Howard Date: December 4, 2001
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Jerry D. Howard
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