EXECUTIVE EMPLOYMENT AGREEMENT (Amendment 2)
Exhibit
10.6
EXECUTIVE EMPLOYMENT
AGREEMENT (Amendment 2)
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is an August 11, 2009
amendment to the agreement made and entered into and effective as of the 27th day of
September, 2007 (the "Effective Date"), and subsequently amended May 15, 2008,
between Onstream Media Corporation, a Florida corporation, whose principal place
of business is ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual whose address is
___________________, __________, Florida _____ (the "Executive").
RECITALS
A. The
Company is a Florida corporation and is principally engaged in the business of
providing managed services including webcasting, digital asset management,
collaboration and video and audio transport, storage and encoding (the
"Business").
B. The
Company presently employs the Executive and desires to continue to employ the
Executive and the Executive desires to continue in the employ of the
Company.
C. The
Company has established a valuable reputation and goodwill in the
Business.
D. The
Executive, by virtue of the Executive's employment with the Company has become
familiar with and possessed with the manner, methods, trade secrets and other
confidential information pertaining to the Company's business, including the
Company's client base.
E. Any
and all options granted to Executive preceding this Agreement shall continue and
not expire as a result of any options issued under this Agreement.
F. The
Change of Control excludes any Merger and any related financing occurring within
eighteen (18) months of the Effective Date.
NOW,
THEREFORE, in consideration of the mutual agreements herein made, the Company
and the Executive do hereby agree as follows:
1. Recitals. The
above recitals are true, correct, and are herein incorporated by
reference.
2. Employment. The
Company hereby employs the Executive, and the Executive hereby accepts
employment, upon the terms and conditions hereinafter set forth.
3. Authority and Power During
Employment Period.
a. Duties and
Responsibilities. . During the term of this
Agreement, the Executive shall serve as a Senior Vice President, Chief Marketing
Officer, of the Company, subject to the guidelines and direction of the Board of
Directors of the Company.
b. Time
Devoted. Throughout the term of the Agreement, the Executive
shall devote substantially all of the Executive's business time and attention to
the business and affairs of the Company consistent with the Executive's senior
executive position with the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in the Agreement shall preclude the
Executive from engaging in personal business including as a member of the board
of directors of related companies, charitable and community
affairs, provided that such activities do not interfere with the
regular performance of the Executive's duties and responsibilities under this
Agreement.
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4. Term. The
Term of employment hereunder will commence on the date as set forth above and
terminate three (3) years from the Effective Date, and such term shall
automatically be extended for successive one (1) year terms thereafter unless
(a) the parties mutually agree in writing to alter or amend the terms of the
Agreement; or (b) one or both of the parties exercises their right, pursuant to
Section 6 herein, to terminate this employment relationship. For
purposes of this Agreement, the Term (the "Term") shall include the initial term
and all renewals thereof.
5. Compensation and
Benefits.
a. Salary. The
Executive shall be paid a base salary (the "Base Salary"), payable semi-monthly,
at an annual rate of no less than One Hundred Ninety-Seven Thousand Two Hundred
Thirty Dollars ($197,230.00) for the first year, with annual incremental
increases of five (5%) percent per year. Notwithstanding this, the first annual
increase shall be ten percent (10%) since it was already agreed at this amount
for the unexpired fifteen months remaining in the predecessor employment
contract, and shall be effective December 27, 2007, with an additional raise of
7.08% (10% prorated monthly) occurring on the first anniversary date of the
Effective Date and 5% annually thereafter.
b. Performance Based
Bonus.
As additional compensation, the
Executive shall be entitled to receive a performance based bonus, based on
meeting revenue and cash flow objectives. The Executive shall be granted options
("Performance Options") to purchase an aggregate of 440,000 shares of Common
Stock, subject to anti-dilution provisions relating to adjustments in the event
that the Company, among other things, declares stock dividends, effects forward
or reverse stock splits, at an exercise price of the fair market value of the
date of the grant, and shall be exercisable for a period of four (4) years from
the date of vesting unless sooner terminated, as described herein. The date of
grant shall be the Effective Date of this Agreement. Up to one-half of these
shares will be eligible for vesting on a quarterly basis and the rest annually,
with the total grant allocated over a four-year period, starting with the
quarter ended December 31, 2007. Vesting of the quarterly portion is subject to
achievement of increased revenues over the prior quarter as well as positive and
increased net cash flow per share (defined as cash provided by operating
activities per the Company’s statement of cash flow, measured before changes in
working capital components and not including investing or financing activities)
for that quarter. Vesting of the annual portion is subject to meeting the above
cash flow requirements on a year-over-year basis, plus a revenue growth rate of
at least 30% for the fiscal year over the prior year, starting with the fiscal
year ended September 30, 2008 , or a revenue growth rate of at least 20% for the
fiscal year over the prior year, starting with the fiscal year ended September
30, 2010. The Executive and the Company will negotiate in good faith as to how
revenue increases from specific acquisitions are measured. Effective with the
quarter ended December 31, 2009 and the year ended September 30, 2010, one-half
of the applicable quarterly or annual bonus options will be earned/vested if the
cash flow target is met but not the revenue target. If in the event of quarter
to quarter decreases in revenues and or cash flow, the Performance Options shall
not vest for that quarter, the unvested quarterly Performance Options shall be
added to the available Performance Options for the year, vested subject to
achievement of the applicable annual goal. In the event Performance Options do
not vest based on the quarterly or annual goals, they shall immediately expire.
In the event this Agreement is not renewed or the Executive is terminated other
than for Cause, the Executive shall be entitled to register the stock underlying
the vested portion of the Performance Options provided hereunder on the terms
and conditions set forth in a registration rights agreement to be mutually
agreed upon by and between Executive and the Company. The Company
shall file such Registration Statement as promptly as practicable and at its
sole expense. The Company will use its reasonable best efforts through its
officers, directors, auditors and counsel in all matters necessary or advisable
to file and cause to become effective such Registration Statement as promptly as
practicable. Company and Executive agree that this bonus program will continue
after the initial four-year period, through the end of the Term, with the
specific bonus parameters to be negotiated in good faith between the parties at
least ninety (90) days before the expiration of the program then in place.
Granting of 220,000 of the 440,000 Performance Options agreed to hereunder is
subject only to the approval by the Company’s shareholders of a sufficient
increase in the number of authorized 2007 Plan options, at which time the
220,000 options will be granted and priced, which request for shareholder
authorization will be submitted by the Company no later than the time of the
next Annual Shareholder Meeting after August 11, 2009.
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c. Stock
Options. The Executive shall be granted options ("Options") to
purchase an aggregate of 400,000 shares of Common Stock at an exercise price of
the fair market value of the date of the grant, and shall be exercisable for a
period of four (4) years from the date of vesting unless sooner terminated, as
described herein. The date of grant shall be the Effective Date of this
Agreement. The Options shall vest in installments of 100,000 options
each, on each anniversary of the Effective Date of this Agreement, subject to
anti-dilution provisions relating to adjustments in the event that the Company,
among other things, declares stock dividends, effects forward or reverse stock
splits. In addition, the Options shall automatically vest upon
the happening of the following events: (i) change of control of the Company, as
defined herein; (ii) Constructive Termination, as defined herein, of the
Executive; and (iii) termination of the Executive other than for Cause, as
defined herein. The unvested Options shall automatically terminate
upon the happening of the following: (i) the Executive’s
termination for Cause, as defined herein; and (ii) the Executive’s
voluntary termination. In the event this Agreement is not renewed or
the Executive is terminated other than for Cause, the Executive shall be
entitled to register the stock underlying the Options provided hereunder on the
terms and conditions set forth in a registration rights agreement to be mutually
agreed upon by and between Executive and the Company. The Company
shall file such Registration Statement as promptly as practicable and at its
sole expense. The Company will use its reasonable best efforts through its
officers, directors, auditors and counsel in all matters necessary or advisable
to file and cause to become effective such Registration Statement as promptly as
practicable. Upon any termination of the Executive, or if there shall
be a Change in Control as defined in the Agreement, and if the 5 day average
closing stock price is equal to or greater than one dollar ($1.00) on the date
of termination or Change in Control, the Company will cancel the Options and
will issue fully paid shares in replacement of the Options (“Paid
Shares”). The Company will pay any and all income taxes incurred by
Executive from the issuance of the Paid Shares; such reimbursement to be made
within thirty (30) days of Executive’s request for reimbursement accompanied by
appropriate supporting paperwork, but in no event later than December 31 of the
calendar year following the year in which the Executive remits the applicable
taxes on the Paid Shares issued to him. If the 5 day average closing
stock price is less than one dollar ($1.00) on the date of termination or Change
in Control, the options will remain exercisable over the initial term. The
provisions of the three preceding sentences, as well as the accelerated vesting
provisions above, shall apply to any other options previously issued to the
Executive, during or before the Term of the Agreement.
d. Executive
Benefits. The Executive shall be entitled to participate in
all benefit programs of the Company currently existing or hereafter made
available to executives and/or other salaried employees, including, but not
limited to, pension and other retirement plans, group life insurance,
hospitalization, surgical and major medical coverage, personal and sick leave,
short and long-term disability and salary continuation, vacation and holidays,
cellular telephone and all job-related costs and expenses, educational and
licensing expenses and other fringe benefits. In addition the
executive will be entitled to receive $1500 monthly as part of a compensation
plan for the executive’s retirement savings. The $1500 monthly
“retirement savings” payment will be paid directly to Executive each month or
contributed to the Company's 401(k) plan or other investment/retirement plan on
Executive's behalf, as Executive shall elect from time to time.
e. Vacation. During
each fiscal year of the Company, the Executive shall be entitled to reasonable
vacation time and to utilize such vacation as the Executive shall determine;
provided however, that the Executive shall evidence reasonable judgment with
regard to appropriate vacation scheduling. Notwithstanding the
foregoing, Executive shall be entitled to four (4) weeks vacation per year, with
unused vacation accruing to the following year in accordance with the Company’s
policy.
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f. Business Expense
Reimbursement. During the Term of employment, the Executive
shall be entitled to receive proper reimbursement for all reasonable,
out-of-pocket expenses incurred by the Executive (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in performing services hereunder, provided the Executive properly
accounts therefore.
g. Automobile
Expenses. The Company shall provide the Executive with an
automobile allowance not to exceed $1,000 per month. The Company
shall pay all insurance premiums and maintenance for the automobile that is the
subject of the automobile allowance.
h. Memberships, Dues and
Charitable Contributions. The Company shall provide to the
Executive, in the Executive's sole discretion (i) a membership in a social,
charitable or religious organization or club, which membership shall
be either in the name of the Executive or in the name of the Company, as
determined by the Executive; or (ii) an equivalent dollar amount of charitable
donations or contributions shall be made, which amounts and which charities
shall be determined in the sole discretion of the Executive; provided that such
Membership, Dues and Charitable Contributions shall not exceed Five Thousand
Dollars ($5,000) per year.
i. Place of Employment - Moving
Allowance. This Agreement is entered into on the basis that
the principal place of business of the Company, and the location from which
Executive is to be based for the performance of his services hereunder, is
Pompano Beach, Florida. In the event that the Company shall change
the location of Company's principal office, or otherwise require Executive to be
based and/or to operate from another location which is more than fifty (50)
miles further from Executive's then-current residence to the Company's current
headquarters office at ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Company shall reimburse Executive for all moving and relocation expenses paid or
incurred in connection with Executive's relocation to a new residence closer to
Company's new principal office.
j. 409A Expense Payment
Date. Notwithstanding anything to the contrary herein
provided, any amounts payable or reimbursable to Executive under paragraphs
5(f), (g), (h) and (i) above shall be paid to Executive promptly after submitted
for payment or reimbursement, but in any event not later than the last day of
the calendar year following the calendar year in which the expense was incurred
by Executive.
6. Consequences of Termination
of Employment.
a. Death. In
the event of the death of the Executive during the Term, salary shall be paid to
the Executive's designated beneficiary, or, in the absence of such designation,
to the estate or other legal representative of the Executive for a period of one
(1) year from and after the date of death. The Company shall also be
obligated to pay to the Executive's estate or heirs, as the case may be, any
amount of bonus or other compensation amount or benefit then payable or that
would have been otherwise considered vested or earned under this Agreement
during the one-year period from and after the date of death, including the
amounts set forth in Sections 5(b), 24 and 25 of this Agreement. Other death
benefits will be determined in accordance with the terms of the Company's
benefit programs and plans.
b. Disability.
(1) In
the event of the Executive's disability, as hereinafter defined, the Executive
shall be entitled to compensation in accordance with the Company's disability
compensation practice for senior executives, including any separate arrangement
or policy covering the Executive, but in all events the Executive shall continue
to receive the Executive's salary and benefits for a period, at the annual rate
in effect immediately prior to the commencement of disability, of not less than
180 days from the date on which the disability has been deemed to occur as
hereinafter provided below. The Company shall also be obligated to pay to the
Executive any amount of bonus or other compensation amount or benefit then
payable or that would have been otherwise considered vested or earned under this
Agreement during the one-year period from and after the date of Disability,
including the amounts set forth in Sections 5(b), 24 and 25 of this
Agreement. Any amounts provided for in this Section 6(b) shall
not be offset by other short or long-term disability benefits provided to the
Executive by the Company.
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(2) "Disability,"
for the purposes of this Agreement, shall be deemed to have occurred in the
event (A) the Executive is unable by reason of sickness or accident to perform
the Executive's duties under this Agreement for an aggregate of 180 days or more
in any twelve-month period or (B) the Executive has a guardian of the person or
estate appointed by a court of competent jurisdiction or (C) if it is determined
that the Executive has a physical or mental impairment, as confirmed by a
licensed physician but subject to reasonable challenge by the Company (including
obtaining as second opinion), which is expected to render Executive unable to
perform the Executive’s duties for the foreseeable
future. Termination due to disability shall be deemed to have
occurred upon the first day of the month following the determination of
Disability as defined in the preceding sentence.
Anything
herein to the contrary notwithstanding, if, following a termination of
employment hereunder due to disability as provided in the preceding paragraph,
the Executive becomes reemployed, whether as an Executive or a consultant to the
Company, any salary, annual incentive payments or other benefits earned by the
Executive from such reemployment shall offset any salary continuation due to the
Executive hereunder commencing with the date of re-employment.
c. Termination by the Company
for Cause.
(1) Nothing
herein shall prevent the Company from terminating Employment for "Cause," as
hereinafter defined. The Executive shall continue to receive salary
only for the period ending twenty (20) days after the date of such termination
plus any accrued Bonus through such date of termination. Any rights
and benefits the Executive may have in respect of any other compensation shall
be determined in accordance with the terms of such other compensation
arrangements or such plans or programs.
(2) "Cause"
shall mean and include those actions or events specified below in subsections
(A) through (E) to the extent the same occur, or the events constituting the
same take place, subsequent to the date of execution of this
Agreement: (A) Committing or participating in an injurious
act of fraud, gross neglect or embezzlement against the Company; (B) committing
or participating in any other injurious act or omission wantonly, willfully,
recklessly or in a manner which was grossly negligent against the Company,
monetarily or otherwise; (C) engaging in a criminal enterprise involving
moral turpitude; (D) conviction of an act or acts constituting a felony under
the laws of the United States or any state thereof; or (E) any assignment of
this Agreement by the Executive in violation of Section 14 of this
Agreement. No actions, events or circumstances occurring or taking
place at any time prior to the date of this Agreement shall in any event
constitute or provide any basis for any termination of this Agreement for
Cause;
(3) Notwithstanding
anything else contained in this Agreement, this Agreement will not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a notice of termination stating that the Executive committed
one of the types of conduct set forth in this Section 6(c) contained in this
Agreement and specifying the particulars thereof and the Executive shall be
given a thirty (30) day period to cure such conduct, if
possible.
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d. Termination by the Company
Other than for Cause. The foregoing notwithstanding, the
Company may terminate the Executive's employment for whatever reason it deems
appropriate; provided, however, that in the event such termination is not based
on Cause, as provided in Section 6(c) above, the Company may terminate this
Agreement upon giving three (3) months' prior written notice. During
such three (3) month period, the Executive shall continue to perform the
Executive's duties pursuant to this Agreement, and the Company shall continue to
compensate the Executive in accordance with this
Agreement. Subsequent to such 3 month period, the Executive shall be
entitled to all Compensation and Benefits as set forth in Subsection 6(h) of
this Agreement.
e. Voluntary
Termination. In the event the Executive terminates the
Executive's employment on the Executive's own volition (except as provided in
Section 6(f) and/or Section 6(g)) prior to the expiration of the Term of this
Agreement, including any renewals thereof, such termination shall constitute a
voluntary termination and in such event the Executive shall be limited to the
same rights and benefits as provided in connection with a termination for Cause
as provided in Section 6(c).
f.
Constructive Termination of
Employment. A termination of employment by Executive shall be
deemed to be a Constructive Termination of employment upon the occurrence of one
or more of the following events without the express written consent of the
Executive. In such event, the Executive shall be entitled to all
Compensation and Benefits as set forth in Subsection 6(h) of this
Agreement:
(1) a
material adverse change in the nature or scope of the authorities, powers,
functions, duties or responsibilities attached to Executive's position as
described in Section 3; or
(2) a
change in the Executive's principal office to a location outside of Broward
County or Palm Beach County; or
(3) any
material reduction in the Executive's base salary, bonus or other benefits;
or
(4) a
material breach of the Agreement by the Company.
Anything
herein to the contrary notwithstanding, the Executive shall be required to give
written notice to the Board of Directors of the Company that the Executive
believes an event has occurred which would result in a Constructive Termination
of the Executive's employment under this Section 6(f) within ninety (90) days of
the initial occurrence, which written notice shall specify the particular act or
acts, on the basis of which the Executive intends to so terminate the
Executive's employment, and the Company shall then be given the opportunity,
within thirty (30) days of its receipt of such notice, to cure said
event. Executive's termination shall not be considered to be a
Constructive Termination unless such termination occurs on or before two (2)
years after the initial existence of the condition or event giving rise to the
Constructive Termination.
g. Termination Following a
Change of Control.
(1) In
the event that a "Change in Control" of the Company shall occur at any time
during the Term hereof, the Executive shall have the right to terminate the
Executive's employment under this Agreement upon thirty (30) days written notice
given at any time within one year after the occurrence of such event, and such
termination of the Executive's employment with the Company pursuant to this
Section 6(g)(1), and, in any such event, such termination shall be deemed to be
a Termination by the Company other than for Cause and the Executive shall be
entitled to such Compensation and Benefits as set forth in Subsection 6(h) of
this Agreement.
(2) For
purposes of this Agreement, a "Change in Control" of the Company shall mean a
change in ownership of the Company (as defined in Treasury Regs.
§1.409A-3(i)(5)(v)), a change in effective control of the Company (as defined in
Treasury Regs. §1.409A-3(i)(5)(vi)) or a change in the ownership of a
substantial portion of the assets of the Company (as defined in Treasury Regs.
§1.409A-3(i)(5)(vii)). However, the change in ownership percentage threshhold
used for this purpose shall be no less than 50%, unless otherwise agreed between
the parties.
Anything
herein to the contrary notwithstanding, this Section 6(g)(2) will not apply
where the Executive gives the Executive's explicit written waiver stating that
for the purposes of this Section 6(g)(2) a Change in Control shall not be deemed
to have occurred. The Executive's participation in any negotiations
or other matters in relation to a Change in Control shall in no way constitute
such a waiver which can only be given by an explicit written waiver as provided
in the preceding sentence.
(3) In
the event that, within twelve (12) months of any Change in Control of the
Company, the Company terminates the employment of the Executive under this
Agreement, other than for Cause as defined in Section 6(d), or the Executive's
employment is terminated for reasons constituting a Constructive Termination as
defined in Section 6(f), then, in any such event, such termination shall be
deemed to be a Termination by the Company other than for Cause and the Executive
shall be entitled to such Compensation and Benefits as set forth in Subsection
6(h) of this Agreement.
h. Compensation and Benefits
Upon Termination of Executive Employment. In the event of any
termination of Executive's employment other than for Cause under Section 6(d),
or any termination of Executive's employment pursuant to Section 6(f) or Section
6(g), on the effective date of any such termination, the Executive shall be
entitled to receive the following:
(1) All
life, disability, health insurance and all other benefits pursuant to Section 5,
to which he was entitled to continue to receive thirty (30) days prior to the
Effective Date of such termination, for a period equal to the lesser of (A) the
date of termination until a date one year after the end of the initial
employment contract term, or (B) three (3) years from the date of termination,
and which benefits shall be made for such period (as determined herein)
following the effective date of such termination; provided that the Executive
shall receive the cash equivalent of all or any part of such life, disability,
health insurance and all other benefits from the Company (in lieu of receiving
such benefits) in the event such benefits can not be provided to Executive
in-kind; plus
(2) An
immediate payment equal to (3) times the Executive's annual Base Salary, based
upon the greater of the Executive's Base Salary (i) immediately prior to the
effective date of termination or (ii) as of ninety (90) days prior to the
effective date of termination.
The
provisions of this Section 6.h notwithstanding, the Compensation and Benefits to
be received by the Executive pursuant to this Section 6.h shall not exceed the
amount set forth in Section 162(m) of the Internal Revenue Code, or its
successor provision.
i.
Notwithstanding anything to the contrary
herein provided, if Executive is considered a "specified employee" (as defined
in Treasury Regs. §1.409A-1(i)) as of the date of his termination of employment,
no "deferred compensation payments" shall be made to Executive hereunder before
the date which is six (6) months after the date of Executive's termination of
employment (or upon the Executive's death, if earlier) (the "Restricted
Period"). Any deferred compensation payments which would otherwise be
required to be made to Executive during the Restricted Period shall be retained
by the Company and paid to Executive on the first day after the end of the
Restricted Period. The foregoing restriction on the payment of
amounts to Executive during the Restricted Period shall not apply to the payment
of employment taxes. The term "deferred compensation payments" shall
mean any payment or series of payments which is considered to be non-qualified
deferred compensation under Treasury Regs. §1.409A-1(a) and otherwise subject to
the requirements of Treasury Regs. §1.409A-3(i)(2). Notwithstanding the above,
in the event there is a material change in the law relaxing the applicability of
the six-month waiting period or further limiting the nature of compensation
subject such waiting period, that this Agreement will be automatically modified
to comply with those changes.
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7. Covenant Not to Compete and
Non-Disclosure of Information.
a. Covenant Not to
Compete. The Executive acknowledges and recognizes the highly
competitive nature of the Company's business and the goodwill, continued
patronage, and specifically the names and addresses of the Company's Clients (as
hereinafter defined) constitute a substantial asset of the Company having been
acquired through considerable time, money and effort. Accordingly, in
consideration of the execution of this Agreement, in the event the Executive's
employment is terminated by reason of disability pursuant to Section 6(b) or for
Cause pursuant to Section 6(c), then the Executive agrees to the
following:
i.That during the Restricted Period (as
hereinafter defined) and within the Restricted Area (as hereinafter defined),
the Executive will not, individually or in conjunction with others, directly or
indirectly, engage in any Competitive Business Activities (as hereinafter
defined), whether as an officer, director, proprietor, employer, partner,
independent contractor, investor (other than as a holder solely as an investment
of less than 1% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor or agent.
ii. That
during the Restricted Period and within the Restricted Area, the Executive will
not, directly or indirectly, compete with the Company by soliciting, inducing or
influencing any of the Company's Clients which have a business relationship with
the Company at the time during the Restricted Period to discontinue or reduce
the extent of such relationship with the Company.
b. Non-Disclosure of
Information. In the event Executive's employment has been
terminated pursuant to either Section 6(b) or Section 6(c) hereof, Executive
agrees that, during the Restricted Period, Executive will not use or disclose
any Proprietary Information of the Company for the Executive's own purposes or
for the benefit of any entity engaged in Competitive Business
Activities. As used herein, the term "Proprietary Information" shall
mean trade secrets or confidential proprietary information of the Company which
are material to the conduct of the business of the Company. No
information can be considered Proprietary Information unless the same is a
unique process or method material to the conduct of Company's Business, or is a
customer list or similar list of persons engaged in business activities with
Company, or if the same is otherwise in the public domain or is required to be
disclosed by order of any court or by reason of any statute, law, rule,
regulation, ordinance or other governmental requirement. Executive
further agrees that in the event his employment is terminated pursuant to
Sections 6(b) or 6(c) above, all Documents in his possession at the time of his
termination shall be returned to the Company at the Company's principal place of
business.
c. Documents. "Documents"
shall mean all original written, recorded, or graphic matters whatsoever, and
any and all copies thereof, including, but not limited to: papers;
books; records; tangible things; correspondence; communications; telex messages;
memoranda; work-papers; reports; affidavits; statements; summaries; analyses;
evaluations; client records and information; agreements; agendas;
advertisements; instructions; charges; manuals; brochures; publications;
directories; industry lists; schedules; price lists; client lists; statistical
records; training manuals; computer printouts; books of account, records and
invoices reflecting business operations; all things similar to any of the
foregoing however denominated. In all cases where originals are not
available, the term "Documents" shall also mean identical copies of original
documents or non-identical copies thereof.
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d. Company's
Clients. The "Company's Clients" shall be deemed to be any
partnerships, corporations, professional associations or other business
organizations for whom the Company has performed Business
Activities.
e. Restrictive
Period. The "Restrictive Period" shall be deemed to be twelve
(12) months following termination of this Agreement pursuant to Sections 6(b) or
6(c) of this Agreement.
f. Restricted
Area. The "Restricted Area" shall, if this Agreement has been
terminated pursuant to Section 6(b) or 6(c), be the area commonly included as
part of the "Standard ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇" ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇.
g. Competitive Business
Activities. The term "Competitive Business Activities" as used
herein shall be deemed to mean the Business.
h. Covenants as Essential
Elements of this Agreement. It is understood by and between
the parties hereto that the foregoing covenants contained in Sections 7(a) and
(b) are essential elements of this Agreement, and that but for the agreement by
the Executive to comply with such covenants, the Company would not have agreed
to enter into this Agreement. Such covenants by the Executive shall
be construed to be agreements independent of any other provisions of this
Agreement. The existence of any other claim or cause of action,
whether predicated on any other provision in this Agreement, or otherwise, as a
result of the relationship between the parties shall not constitute a defense to
the enforcement of such covenants against the Executive.
i. Survival After Termination
of Agreement. Notwithstanding anything to the contrary
contained in this Agreement, the covenants in Sections 7(a) and (b) shall
survive the termination of this Agreement and the Executive's employment with
the Company.
j. Remedies.
i.The Executive acknowledges and agrees
that the Company's remedy at law for a breach or threatened breach of any of the
provisions of Section 7(a) or (b) herein would be inadequate and a breach
thereof will cause irreparable harm to the Company. In recognition of
this fact, in the event of a breach by the Executive of any of the provisions of
Section 7(a) or (b), the Executive agrees that, in addition to any remedy at law
available to the Company, including, but not limited to monetary damages, all
rights of the Executive to payment or otherwise under this Agreement and all
amounts then or thereafter due to the Executive from the Company under this
Agreement may be terminated and the Company, without posting any bond, shall be
entitled to obtain, and the Executive agrees not to oppose the Company's request
for equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available to the Company.
ii.The Executive acknowledges that the
granting of a temporary injunction, temporary restraining order or permanent
injunction merely prohibiting the use of Proprietary Information would not be an
adequate remedy upon breach or threatened breach of Section 7(a) or (b) and
consequently agrees, upon proof of any such breach, to the granting of
injunctive relief prohibiting any form of competition with the
Company. Nothing herein contained shall be construed as prohibiting
the Company from pursuing any other remedies available to it for such breach or
threatened breach.
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8. Indemnification.
a. The
Executive shall continue to be covered by the Articles of Incorporation and/or
the Bylaws of the Company with respect to matters occurring on or prior to the
date of termination of the Executive's employment with the Company, subject to
all the provisions of Florida and Federal law and the Articles of Incorporation
and Bylaws of the Company then in effect. Such reasonable expenses,
including attorneys' fees, that may be covered by the Articles of Incorporation
and/or Bylaws of the Company shall be paid by the Company on a current basis in
accordance with such provision, the Company's Articles of Incorporation and
Florida law. To the extent that any such payments by the Company
pursuant to the Company's Articles of Incorporation and/or Bylaws may be subject
to repayment by the Executive pursuant to the provisions of the Company's
Articles of Incorporation or Bylaws, or pursuant to Florida or Federal law, such
repayment shall be due and payable by the Executive to the Company within twelve
(12) months after the termination of all proceedings, if any, which relate to
such repayment and to the Company's affairs for the period prior to the date of
termination of the Executive's employment with the Company and as to which
Executive has been covered by such applicable provisions.
b. The
Company specifically acknowledges and agrees that the Executive has personally
guaranteed certain obligations on behalf of the Company and further that the
Executive is personally liable for certain obligations of the
Company. The Company shall indemnify and hold the Executive harmless
from any and all obligations that the Executive may incur, including, without
limitation, costs and attorneys fees in connection with such guaranties or
personal liabilities. Any costs or expenses that may be incurred by
the Executive in connection with such liabilities or guaranties shall be
reimbursed to the Executive, upon receipt by the Company of documented evidence
of such liabilities, within three (3) business days of the receipt of such
documented evidence.
9. Withholding. Anything
to the contrary notwithstanding, all payments required to be made by the Company
hereunder to the Executive or the Executive's estate or beneficiaries shall be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of withholding
such amounts, the Company may accept other arrangements pursuant to which it is
satisfied that such tax and other payroll obligations will be satisfied in a
manner complying with applicable law or regulation.
10. Certain Tax
Matters. The Company shall indemnify and hold the Executive
harmless from and against (i) the imposition of excise tax (the "Excise Tax")
under Section 4999 of the Internal Revenue Code of 1986, as amended (or any
successor provision thereto, the ACode@),
on any payment made under this Agreement (including any payment made under this
paragraph) and any interest, penalties and additions to tax imposed in
connection therewith, and (ii) any federal, state or local income tax imposed on
any payment made pursuant to this paragraph. The Executive shall not take the
position on any tax return or other filing that any payment made under this
Agreement is subject to the Excise Tax, unless, in the opinion of independent
tax counsel reasonably acceptable to the Company, there is no reasonable basis
for taking the position that any such payment is not subject to the Excise Tax
under U.S. tax law then in effect. If the Internal Revenue Service makes a claim
that any payment or portion thereof is subject to the Excise Tax, at the
Company's election, and the Company's direction and expense, the Executive shall
contest such claim; provided, however, that the Company shall advance to the
Executive the costs and expenses of such contest, as incurred. For the purpose
of determining the amount of any payment under clause (ii) of the first sentence
of this paragraph, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation applicable to individuals
in the calendar year in which such indemnity payment is to be made and state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the jurisdiction in which the Executive is
resident, net of the reduction in federal income taxes that is obtained from
deduction of such state and local taxes.
11 Notices. Any
notice required or permitted to be given under the terms of this Agreement shall
be sufficient if in writing and if sent postage prepaid by registered or
certified mail, return receipt requested; by overnight delivery; by courier; or
by confirmed telecopy, in the case of the Executive to the Executive's last
place of business or residence as shown on the records of the Company, or in the
case of the Company to its principal office as set forth in the first paragraph
of this Agreement, or at such other place as it may designate.
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12 Waiver. Unless
agreed in writing, the failure of either party, at any time, to require
performance by the other of any provisions hereunder shall not affect its right
thereafter to enforce the same, nor shall a waiver by either party of any breach
of any provision hereof be taken or held to be a waiver of any other preceding
or succeeding breach of any term or provision of this Agreement. No
extension of time for the performance of any obligation or act shall be deemed
to be an extension of time for the performance of any other obligation or act
hereunder.
13 Completeness and
Modification. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties or, in the case of a waiver, by the party to be
charged.
14 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute but one
agreement.
15 Binding
Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and
assigns. This Agreement shall not be assignable by the Executive but
shall be assignable by the Company in connection with the sale, transfer or
other disposition of its business or to any of the Company's affiliates
controlled by or under common control with the Company.
16 Governing
Law. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made
and entered into in the State of Florida and shall be governed and construed
under and in accordance with the laws of the State of
Florida. Anything in this Agreement to the contrary notwithstanding,
the Executive shall conduct the Executive's business in a lawful manner and
faithfully comply with applicable laws or regulations of the state, city or
other political subdivision in which the Executive is located.
17 Further
Assurances. All parties hereto shall execute and deliver such
other instruments and do such other acts as may be necessary to carry out the
intent and purposes of this Agreement.
18 Headings. The
headings of the sections are for convenience only and shall not control or
affect the meaning or construction or limit the scope or intent of any of the
provisions of this Agreement.
19 Survival. Any
termination of this Agreement shall not, however, affect the ongoing provisions
of this Agreement which shall survive such termination in accordance with their
terms.
20 Severability. The
invalidity or unenforceability, in whole or in part, of any covenant, promise or
undertaking, or any section, subsection, paragraph, sentence, clause, phrase or
word or of any provision of this Agreement shall not affect the validity or
enforceability of the remaining portions thereof.
21 Enforcement. Should
it become necessary for any party to institute legal action to enforce the terms
and conditions of this Agreement, the successful party will be awarded
reasonable attorneys' fees at all trial and appellate levels, expenses and
costs.
22 Venue. Company
and Executive acknowledge and agree that the U.S. District for the Southern
District of Florida, or if such court lacks jurisdiction, the 15th Judicial
Circuit (or its successor) in and for Palm Beach County, Florida, shall be the
venue and exclusive proper forum in which to adjudicate any case or controversy
arising either, directly or indirectly, under or in connection with this
Agreement and the parties further agree that, in the event of litigation arising
out of or in connection with this Agreement in these courts, they will not
contest or challenge the jurisdiction or venue of these courts.
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23 Construction. This
Agreement shall be construed within the fair meaning of each of its terms and
not against the party drafting the document.
24. Compensation for Sale of
Company. In the event the Company is sold for a Company Sale Price in
excess of the Current Capitalization during the Term of the Agreement, and the
Company Sale Price represents at least $1.00 per share (adjusted for
recapitalization including but not limited to splits and reverse splits), the
Executive will receive cash compensation of two and one-half percent (2.5%) of
the Company Sale Price, payable in immediately available funds at the time of
closing such transaction. The Current Capitalization is defined as the sum of
(i) the number of common shares issued and outstanding, (ii) the common stock
equivalent shares related to paid for but not converted preferred shares and
other convertible securities, to the extent such preferred shares and
convertible securities are “in the money” and (iii) the number of common shares
underlying “in-the-money” warrants and options, such sum multiplied by the
market price per share and then reduced by the proceeds payable upon exercise of
the “in-the-money” warrants and options, all determined as of the date of this
Agreement but the market price per share used for this purpose to be no more
than $1.00. The Company Sale Price is defined as the number of common shares
outstanding at the time the Company is sold multiplied by the price per share
paid in such Company sale transaction.
25. Change of Control Waiver and
AntiDilution. In consideration of the Executive’s agreement that the
Change of Control excludes any Merger and any related financing within eighteen
(18) months of the Effective Date, which agreement represents a concession from
the predecessor employment contract, as well as to address dilution of the
Executive’s current options as a result of that Merger and any related
financing, the Company agrees to grant the Executive fully vested options for
shares equivalent to 1% of the total number of shares to be issued in connection
with that Merger and/or any related financing including any contingent shares,
once issued. These options will be granted at the time of the closing of a
Merger or related financing, exercisable over four years from the date of such
grant and with an exercise price equal to the fair value at the date of grant
but no less than $1.00. The Company agrees to register these and all other
shares or options held by Executive, whether issued during or prior to the Term
of this Agreement, with or simultaneously to any shares registered in connection
with that Merger and/or any related financing.
THE
EXECUTIVE ACKNOWLEDGES THAT THE EXECUTIVE HAS READ ALL OF THE TERMS OF THIS
AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of date set forth
in the first paragraph of this Agreement.
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ONSTREAM
MEDIA CORPORATION
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Witness:
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The
Executive
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