-4-
* AT EACH PLACE WHERE INFORMATION HAS BEEN REDACTED, AN ASTERISK HAS BEEN
INSERTED. THIS CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT.
Exhibit 10.1
NARROWSTEP INC.
EMPLOYMENT AGREEMENT
OF
XXXXX X. XXXXXXX
This EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated June 8, 2007 (the
"EFFECTIVE DATE"), is made by and between Narrowstep Inc., a Delaware
corporation located at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000
(the "COMPANY") and Xxxxx X. XxXxxxx, a resident of the State of New Jersey,
United States of America (the "EXECUTIVE").
1. EMPLOYMENT.
1.1. The Company agrees to employ the Executive as Chief
Executive Officer and Chief Operating Officer of the Company and, so
long as this Agreement remains in force and Executive remains a member
of the Company's Board of Directors (the "Board"), Chairman of the
Board, rendering the services and performing the duties and
responsibilities consistent with such positions as may be determined and
directed by the Board, in its sole discretion, and subject to the
oversight and the authority of the Board.
1.2. The Executive agrees, to perform his duties faithfully
and to the best of his ability. Notwithstanding the foregoing but
subject to Section 7, the Executive may serve on the boards of other
organizations and be engaged in other businesses as a principal,
officer, director, consultant or advisor, provided that none of these
activities conflict or interfere with his duties or responsibilities
hereunder. The Company acknowledges that the Executive serves as the
Chairman and Chief Executive Officer of Xxxxxxxx XxXxxxx Capital, LLC
and Chairman and Chief Executive Officer of Xxxxxxxx XxXxxxx Acquisition
Corporation (together with any other entities controlled by the
Executive, the "XXXXXXXX COMPANIES") and that such activities shall not
violate this Agreement to the extent such activities do not relate to a
Restricted Business (as defined below). Notwithstanding the foregoing,
the Executive may, individually or through any of the Xxxxxxxx
Companies, participate in a transaction involving a Restricted Business
to the extent the Company is unable or unwilling to participate.
2. TERM. The term of employment of the Executive hereunder (the
"TERM") shall commence on the Effective Date and shall continue until November
30, 2009. Thereafter, the Term shall automatically renew for additional one (1)
year periods beginning on each December 1 thereafter unless the Company or the
Executive provides the other with written notice of non-renewal
-5-
not less than 90 days prior to the commencement of any such new one (1) year
period (a "NON-RENEWAL NOTICE"). Notwithstanding the foregoing, prior to the
expiration of the Term, the Agreement may be terminated in accordance with the
provisions of Section 5. The date of termination of this Agreement, either by
termination prior to the expiration of the Term or due to expiration of the
Term, shall be referred to herein as the "TERMINATION DATE".
3. COMPENSATION. The entirety of this Section 3 is subject to the
terms of Section 5.2 below.
3.1. NO INITIAL CASH COMPENSATION. The Company shall not
initially pay the Executive compensation for his services in the form of
cash. As of the Effective Date, except as provided in Section 4, all
initial compensation payable to the Executive shall be in the form of
equity in the Company and equity-based awards as provided in this
Section 3. Pursuant to Section 3.6 below, the Executive's cash
compensation treatment, if any, shall be reviewed by the Compensation
and Governance Committee of the Board (the "COMPENSATION COMMITTEE") no
less than annually, with cash compensation implemented in the discretion
of the Compensation Committee.
3.2. GRANT OF RESTRICTED STOCK UNITS AND RESTRICTED STOCK. On
the Effective Date, and as compensation for the Executive's services
through November 30, 2007, the Company shall grant to the Executive:
(i) 1,250,000 restricted stock units (each such restricted
stock unit an "RSU" and, collectively, the "RSUS"); such RSUs shall vest
as provided in Section 3.3 and each RSU shall entitle the Executive to
receive one share of the Company's Class A Common Stock ("COMMON STOCK")
on a date that is two years after its applicable vesting date or, if
earlier, upon the occurrence of certain events described in Section 3.7
or 5.2; and
(ii) 2,500,000 restricted shares of Common Stock (each such
restricted share a "RESTRICTED SHARE" and, collectively, the "RESTRICTED
SHARES"); such Restricted Shares shall vest as provided in Section 3.4
or, if earlier, upon the occurrence of certain events described in
Section 3.7 or 5.2. The Executive shall have the right to vote
Restricted Shares at any time after the grant thereof unless and until
such Restricted Shares are returned to the Company or have failed to
vest within the time period allotted for such vesting.
3.3. TIME-BASED VESTING. RSUs shall vest over time as
follows: (i) 625,002 RSUs shall vest on the Effective Date, (ii) 104,167
RSUs shall vest on the last day of each calendar month beginning June
30, 2007 and ending October 31, 2007 and (iii) 104,163 RSUs shall vest
on November 30,
-6-
2007. Notwithstanding the foregoing, no RSUs shall vest after the Termination
Date except as expressly provided in Section 3.7 or 5.2.
3.4. PERFORMANCE-BASED VESTING THROUGH NOVEMBER 30, 2007. The
Restricted Shares granted pursuant to Section 3.2(ii) shall vest as
provided in this Section 3.4. Any such Restricted Shares not vested as
of November 30, 2007 shall expire on that date.
(i) From 0 to 950,000 Restricted Shares, upon achievement of
"Expected" level milestones as of November 30, 2007, shall vest upon,
and to the extent of, the Executive's achievement (such achievement to
be measured beginning December 1, 2006), as determined by the
Compensation and Governance Committee of the Board (the "COMPENSATION
COMMITTEE") in its sole discretion, of certain milestones as set forth
on SCHEDULE 1 attached hereto;
(ii) Up to an additional 950,000 Restricted Shares, upon
achievement of "Maximum" level milestones as of November 30, 2007, shall
vest upon, and to the extent of, the Executive's achievement (such
achievement to be measured beginning December 1, 2006), as determined by
the Compensation Committee in its sole discretion, of certain milestones
as set forth on SCHEDULE 1 attached hereto; and
(iii) Up to an additional 600,000 Restricted Shares shall
vest, to the extent determined by the Compensation Committee in its sole
discretion, upon _____________________*. The Compensation Committee may,
in its sole discretion, make additional equity awards to the Executive
upon ___________________*. In the event the Executive does not then hold
sufficient unvested Restricted Shares to vest the amount required by
this Section 4.3(iii) upon __________________* on or before November 30,
2007, the Executive shall be granted additional Restricted Shares, as
necessary, to provide the Executive with the intended benefit of this
Section 4.3(iii) and the appropriate number of Restricted Shares shall
vest on November 30, 2007.
3.5. ADJUSTMENT. In the event of any equity investment made
by any third party in the Company, the Executive shall be offered the
right to participate in such financing, on terms no less favorable to
the Executive as those provided to such third party, to the extent
necessary to maintain the fully diluted percentage interest in the
Company represented by the RSUs and Bonus Restricted Shares prior to
such financing.
-7-
3.6. FUTURE COMPENSATION. The equity and equity-based
compensation granted to the Executive, as well as the Executive's cash
compensation treatment, if any, shall be reviewed by the Compensation
Committee from time to time (but not less than annually) with increases
thereto (but not decreases) made in its sole discretion. In the event
the Company makes equity-based grants or implements cash-based
compensation programs for the senior executives of the Company generally
during the Term, the Executive shall be entitled to receive similar
equity-based grants and similar participation in cash-based programs, at
a level commensurate with his position as determined by the Compensation
Committee in its sole discretion.
For each of the years of the Term beginning December 1, 2007 and
December 1, 2008, respectively, the Compensation Committee shall
determine base compensation payable to the Executive for each such year,
including a vesting schedule with respect to any equity-based
compensation, which shall be equal to the amount and type of
compensation provided in Section 3.2(i).
For the year of the Term beginning December 1, 2007 and for each year
beginning on each December 1 thereafter, the Compensation Committee
shall determine milestones and related bonus compensation available to
the Executive based on achievement of certain Company goals, including
vesting criteria with respect to any equity-based compensation. For each
of the years of the Term beginning December 1, 2007 and December 1,
2008, respectively, the bonus compensation available to the Executive
shall be in the form of Restricted Shares and, for each such year, not
less than 250,000 Restricted Shares shall be available for vesting upon
Executive's achievement of milestones set by the Compensation Committee
in accordance with this Section 3.6. The term "BONUS RESTRICTED SHARES"
shall mean, at any time, the outstanding Restricted Shares then
available for vesting upon achievement of milestones set in accordance
with this Section 3.6. If applicable, for the year of the Term beginning
December 1, 2009 and for each year beginning on each December 1
thereafter, the Compensation Committee shall determine bonus
compensation in its sole discretion.
3.7. EFFECT OF CHANGE IN CONTROL. Upon the consummation of a
Change in Control, (i) all unvested RSUs, all unvested Bonus Restricted
Shares (up to the "Expected" level with respect to each milestone unless
the Compensation Committee, in its sole discretion, determines that a
higher level of achievement has been reached, in which case such higher
level of unvested Bonus Restricted Shares shall vest), and all other
unvested equity-based awards granted to the Executive shall accelerate
and become fully vested and paid to the Executive and (ii) to the extent
the Executive holds vested stock options, he shall have three (3) years
following the Termination
-8-
Date in which to exercise such options or, if longer, the applicable
period for exercise as provided in the agreement granting such options.
In the event of any Change in Control, the Company shall pay to the
Executive, in cash, the amount of any U.S. federal excise tax payable by
the Executive on any "excess parachute payment" (as such term is defined
in the U.S. Internal Revenue Code and which shall include any payment
made pursuant to this paragraph) paid by the Company to the Executive
pursuant to this Agreement.
3.8. CHANGE IN CONTROL DEFINED. A "Change of Control" shall
be deemed to have occurred if:
(i) any "person" (as defined in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")),
other than the Company, becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of
the combined voting power of the Company's then outstanding securities;
or
(ii) any of the following shall occur: (A) the complete
liquidation of the Company, (B) the sale or disposition of the Company,
(C) the sale or disposition of all or substantially all of the Company's
assets, or (D) the Company consummates a plan of merger or consolidation
of the Company with any other corporation, except for a merger or
consolidation in which the security holders of the Company immediately
prior to the merger or consolidation continue to own at least seventy
percent (70%) of the voting securities of the new, continued or
surviving entity immediately after such merger or consolidation.
3.9. REGISTRATION. In the event the Company files a new
registration statement under the Securities Act of 1933 covering the
offer and sale by it or any of its equity holders of equity in the
Company for cash, the Company shall make commercially reasonable efforts
to include in such registration, at the expense of the Company, any
Common Stock then held by the Executive and any unissued Common Stock
subject to issuance upon the vesting and/or exercise of outstanding
equity-based awards granted to the Executive, subject to cutback by the
Board if and to the extent the Board, in its sole discretion, determines
that inclusion of the Executive's Common Stock in such registration will
have an adverse effect upon such offering.
3.10. WITHHOLDING. At the Executive's sole election, the
Executive may satisfy the tax withholding obligations, for the Company's
minimum income and employment withholding obligations with respect to
the Executive, arising from the vesting of any Restricted Share, or the
vesting or
-9-
distribution of shares related to any other equity-based award, by
paying cash to the Company (either directly or through withholding from
cash compensation, if any) or by withholding stock units or shares of
Common Stock, as appropriate.
4. EXECUTIVE BENEFITS. In the event the Company, in the sole
discretion of the Compensation Committee, provides retirement or welfare
benefits and/or other perquisites to senior executives of the Company generally,
the Executive shall be entitled to receive the same benefits and perquisites
during the Term. In addition, the Executive shall be entitled to receive the
following employee benefits (collectively, with the benefits contemplated by
this Section 4, the "BENEFITS"):
4.1. The Company shall reimburse the Executive from time to
time for the reasonable business expenses incurred by the Executive in
connection with the performance of his obligations hereunder upon
presentation of reasonable and appropriate documentation of such items.
4.2. Upon execution and delivery of this Agreement by each
party, the Company will reimburse the Executive for the reasonable
attorneys fees and expenses actually incurred by the Executive related
to the preparation and review of this Agreement, up to a maximum amount
of $20,000.
4.3. Nothing contained herein is intended or shall be
construed to require the Company to institute or retain any particular
plan, insurance or benefit. Notwithstanding anything in this Agreement
to the contrary, the Company may from time to time change, terminate or
substitute a plan or program under which one or more of the Benefits are
provided to the Executive.
5. TERMINATION DATE; CONSEQUENCES FOR COMPENSATION AND BENEFITS
5.1. DEFINITION OF TERMINATION DATE. The first to occur of
the following events shall be the Termination Date:
5.1.1. The Executive's disability, with the nature and
extent of such disability being determined by an examination by
an independent physician mutually selected by the Board and the
Executive (or, if the parties cannot agree on a physician, then
each shall select an independent physician who shall together
select a third independent physician who shall make the
determination of disability (the fees for each of such
physicians to be paid by the Company)), causing a material,
detrimental effect on the Executive's ability to perform his
duties under this Agreement for a period of time lasting longer
than three (3) consecutive months or six (6) months total in any
twelve (12) month period; PROVIDED, however, that no termination
under this paragraph shall be effective until
-10-
either: (i) the Company has provided the Executive with written
notice of its intent to terminate this Agreement and the
Executive has failed to return to performing his duties without
such material, detrimental effect within 30 days of such notice
or (ii) the Executive has failed to perform his duties without
such material, detrimental effect upon such return for an
additional consecutive 60 day period and, after such consecutive
60 day period, the Company has provided the Executive with
written notice of his termination due to disability;
5.1.2. The Executive's death;
5.1.3. Voluntary resignation by the Executive after one
of the following events shall have occurred ("RESIGNATION WITH
GOOD REASON"), which event shall be specified to the Company by
the Executive in a written notice at the time of such
resignation:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's status as
Chairman and CEO of the Company (including by
reason of the Company becoming a subsidiary of
another company) or an adverse alteration in the
nature or status of the Executive's title or
responsibilities;
(ii) (ii) the material non-performance or material
breach of this Agreement by the Company,
including failure to permit the Executive to
participate in equity-based compensation plans,
or other benefit or compensation plans, provided
to senior executives in accordance with Section
3.6, which is not cured within thirty (30) days
after written notice from the Executive to the
Board setting forth the nature of the
non-performance or breach; or
(iii) the delivery to Executive by the Company of a
valid Non-renewal Notice.
5.1.4. Voluntary resignation by the Executive that is
not a Resignation with Good Reason ("GENERAL RESIGNATION"),
which resignation shall not take effect sooner than 30 days
after the giving of such notice to the Company or such lesser
period as the Company, in its sole discretion, shall determine
after receipt of such notice;
5.1.5. Discharge of the Executive by the Company after
one or more of the following events shall have occurred
("DISCHARGE FOR CAUSE"), which event shall be specified to the
Executive by the Company in a written notice at the time of
discharge:
(i) the Executive's conviction of, or entry of a
plea of guilty or nolo contendere to, any
felony;
-11-
(ii) the Executive's commission of any unlawful act
involving embezzlement, fraud, misappropriation
of Company property or diversion of a corporate
opportunity of the Company to a Restricted
Business;
(iii) the Executive willfully engaging in conduct
which is demonstrably and materially injurious
to the Company; or
(iv) material non-performance or material breach of
this Agreement by the Executive which is not
cured within thirty (30) days (the "CURE
PERIOD") after written notice from the Board to
the Executive setting forth the nature of the
non-performance or breach; PROVIDED, however,
that the Company may terminate the Executive's
employment under this paragraph prior to the end
of the Cure Period if the Board determines, in
its sole discretion, that Executive failed to
conduct himself strictly in accordance with
Section 1 of this Agreement during the Cure
Period.
5.1.6. Discharge of the Executive by the Company that
is not a Discharge for Cause ("GENERAL DISCHARGE"), which
discharge shall take effect immediately upon the giving of
notice thereof to the Executive by the Company unless otherwise
provided by the Company therein.
5.1.7. Expiration of the Term in accordance with
Section 2 following a timely Non-renewal Notice ("EXPIRATION").
5.2. CONSEQUENCES OF TERMINATION WITH RESPECT TO COMPENSATION
AND BENEFITS.
5.2.1. DEATH OR DISABILITY. If the Termination Date
occurs by reason of the Executive's death or disability as set
forth in Sections 5.1.1 or 5.1.2 above, then:
(i) the Executive, or his Beneficiary (as defined
below), shall receive any vested but unpaid
rights or benefits the Executive may have
accrued as of the Termination Date under any
Benefit plans of the Company provided in Section
4 above or under any compensation plan, whether
equity-based or cash-based, payable in
accordance with the respective terms of the
plans, practices and arrangements under which
such Benefits
-12-
or compensation were accrued (the "VESTED
ARRANGEMENTS");
(ii) all unvested RSUs shall accelerate and become
fully vested, and the shares of Common Stock
underlying all then vested RSUs shall be
delivered to the Executive, upon the Termination
Date;
(iii) as determined by the Compensation Committee in
its sole discretion, a number of unvested Bonus
Restricted Shares and all other unvested
equity-based awards granted to the Executive
shall accelerate and become fully vested upon
the Termination Date based upon the level of
achievement by the Executive of applicable
milestones as of the Termination Date and all
remaining unvested Bonus Restricted Shares shall
be returned to the Company;
(iv) to the extent the Executive holds vested stock
options (whether vested on or prior to the
Termination Date), he or his Beneficiary shall
have three (3) years following the Termination
Date in which to exercise such options, or, if
longer, the length of time provided for
post-termination exercise per the award
agreement granting such option; and
(v) to the extent the Executive (and any eligible
dependents) was receiving health benefits
immediately prior to the Termination Date, he
(and any eligible dependents) shall continue to
receive such health benefits for a period of
twelve (12) months thereafter.
5.2.2. NON-SEVERANCE EVENT. If the Termination Date
occurs by reason of General Resignation, Discharge for Cause or
Expiration (provided that such Expiration is not preceded by a
Resignation for Good Reason based upon Subsection 5.1.3(iii)
above), as set forth in Sections 5.1.4, 5.1.5 or 5.1.7 above,
then:
(i) the Executive shall receive the Vested
Arrangements;
(ii) all unvested RSUs shall be returned to the
Company;
(iii) all unvested Bonus Restricted Shares shall be
returned to the Company; and
-13-
(iv) to the extent the Executive holds vested stock
options, he or his Beneficiary shall have three
(3) years following the Termination Date in
which to exercise such options, or, if longer,
the length of time provided for post-termination
exercise per the award agreement granting such
option.
5.2.3. SEVERANCE EVENT. If the Termination Date occurs
by reason of Resignation with Good Reason or General Discharge
as set forth in Sections 5.1.3 or 5.1.6 above, then:
(i) the Executive shall receive the Vested
Arrangements;
(ii) all unvested RSUs shall accelerate, become fully
vested and be delivered to the Executive;
unvested Bonus Restricted Shares in an amount
equal to (A) the number of whole months elapsed
in a year, beginning on December 1 and ending on
the next subsequent November 30, for which such
Bonus Restricted Shares are available,
multiplied by (B) 104,167 shall accelerate and
become fully vested upon the Termination Date;
all remaining unvested Bonus Restricted Shares
shall be returned to the Company upon the
Termination Date; and all other unvested
equity-based awards granted to the Executive
shall accelerate and become fully vested upon
the Termination Date;
(iii) to the extent the Executive holds vested stock
options, he shall have three (3) years following
the Termination Date in which to exercise such
options, or, if longer, the length of time
provided for post-termination exercise per the
award agreement granting such option; and
(iv) to the extent the Executive (and any eligible
dependents) was receiving health benefits
immediately prior to the Termination Date, he
(and any eligible dependents) shall continue to
receive such health benefits for a period of
twelve (12) months thereafter.
Notwithstanding the foregoing, the acceleration of any
Restricted Shares pursuant to this Section 5.2.3 shall be
subject to the Executive executing and delivering a release of
the Company covering all actions of the Company up to and
including the Termination Date.
6. INDEMNIFICATION; D&O INSURANCE.
-14-
6.1. INDEMNIFICATION. The Company shall indemnify the
Executive against all loss, cost, liability and expense arising from the
Executive's service to the Company or any Affiliate, whether as officer,
director, employee, fiduciary of any employee benefit plan or otherwise,
upon terms at least as favorable to the Executive as those provided by
the Certificate of Incorporation and By-laws of the Company on the date
hereof. Such indemnity shall not apply where the Executive's gross
negligence or willful misconduct have given rise to a claim for
indemnification.
6.2. D&O INSURANCE. The Company shall maintain, for the
benefit of the Executive, director and officer liability insurance in
form at least as comprehensive as, and in an amount that is at least
equal to, that maintained by the Company for any of its officers or
directors at such time, or, if more favorable, that maintained by the
Company for any of its officers or directors as of December 1, 2006. In
addition, the Company acknowledges that the Executive has secured a
certain supplemental director and officer liability insurance policy for
the benefit of himself and the Company shall, from time to time,
promptly reimburse the Executive for the premiums to maintain such
policy upon presentment of reasonable receipts showing payment of such
premiums by the Executive.
7. AGREEMENT NOT TO COMPETE. During the period of employment and
for six (6) months following the Termination Date (which applicable period will
automatically be extended by a period of time equal to any period in which the
Executive is in breach of any obligations under this Section 7, including any
such extension (the "RESTRICTED PERIOD")), the Executive will not engage,
directly or indirectly, as a proprietor, equityholder, investor (except as a
passive investor holding less than 2% of the outstanding capital stock of a
company or mutual fund), lender, partner, director, officer, employee,
consultant, or representative, or in any other capacity, in any Restricted
Business (except as expressly allowed in Section 1.2), in the United States,
Canada, the European Union or in any other geographic area in which the Company
or any of its subsidiaries are doing business on or prior to the Termination
Date. "RESTRICTED BUSINESS" shall mean a business providing or seeking to
provide video and audio streaming via the internet in a manner the same as, or
similar to, the Company's telvOS platform.
8. AGREEMENT NOT TO SOLICIT.
8.1. NON-SOLICITATION OF EMPLOYEES, ETC. For a period of six
(6) months after the Termination Date, without the express, prior,
written consent of a majority of the disinterested members of the Board,
the Executive will not directly or indirectly recruit, solicit, induce,
or attempt to induce any of the employees or independent contractors of
the Company or any of its subsidiaries (except for such persons who had
prior relationships with any of the Xxxxxxxx Companies prior to their
relationship with the Company) to terminate their employment or
contractual relationship with the
-15-
Company or such subsidiary; and will not knowingly assist any other
person or entity to do so.
8.2. NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. For a
period of twelve (12) months after the Termination Date, without the
express, prior, written consent of a majority of the disinterested
members of the Board, the Executive will not directly or indirectly
divert, take away, or attempt to divert or take away, from the Company
or any of its subsidiaries any of the vendors, suppliers, customers,
clients, or accounts in connection with any Restricted Business, or
induce or attempt to induce any such person or entity to reduce the
amount of business it does with the Company or any of its subsidiaries,
and the Executive will not knowingly assist any other person or entity
to do so; PROVIDED, however, that nothing in this Section 8.2 shall be
deemed to prohibit the Executive from calling upon or soliciting a
customer or supplier during such period if such action relates solely to
a business which is not a Restricted Business.
9. NON-DISPARAGEMENT.
9.1 EXECUTIVE. For a period of eighteen (18) months
following any Termination Date, regardless of the reason, the Executive
shall not publicly or privately disparage the Company or any of its
employees or directors, or products or other assets in any communication
to or with any third party.
9.2 COMPANY. For a period of eighteen (18) months following
any Termination Date, regardless of the reason, the Company shall not
publicly or privately disparage the Executive in any communication to or
with any third party.
10. CONFIDENTIAL INFORMATION. Both during and following the term of
this Agreement and the Executive's employment with the Company, the Executive
will maintain the confidentiality of all confidential or proprietary information
of the Company and/or any of its subsidiaries (including without limitation all
such information acquired by the Executive before the date hereof), all of which
will be and remain the exclusive property of the Company and/or its respective
subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information (including office
practices and procedures) that has otherwise become public or generally known in
the industry in which the Company operates through no action or omission on the
part of the Executive, will not disclose any such information to any third
party, or use it for any purpose other than in the discharge of his employment
duties and responsibilities hereunder. The Executive shall not have any
obligation hereunder to keep confidential any information to the extent
disclosure of such information is required by law, or determined in good faith
by the
-16-
Executive, on the advice of counsel, to be necessary or appropriate to comply
with any legal or regulatory order, regulation or requirement; provided,
however, that in the event disclosure is required by law, the Executive shall
provide the Company with reasonable notice of such requirement so that the
Company may seek an appropriate protective order. Upon the termination of the
Executive's employment with the Company, the Executive will promptly return to
the Company all Company property, including without limitation all documents and
other tangible media that contain or reflect any confidential or proprietary
information of the Company and/or its subsidiaries (including all copies,
reproductions, digests, abstracts, analyses, and notes) in his possession or
control, and will destroy any related files (whether stored electronically,
magnetically, optically, or otherwise) containing confidential or proprietary
information on any equipment not owned by the Company or its subsidiaries.
11. COMPLIANCE WITH BOARD AND COMPANY POLICIES. The
Executive agrees that he will abide by all Company policies in all material
respects, including policies set by the Board, including without limitation
policies regarding ethics, integrity and personal conduct. The Executive agrees
to use his best efforts to conduct himself and the business of the Company in
good faith and in accordance with the highest standards of compliance with all
laws and regulations applicable in the United States, the United Kingdom and all
jurisdictions in which the Company does business.
12. ARBITRATION. In the event that any party hereto has any
claim hereunder, the party shall promptly notify the other party of such claim.
If within 30 days of the receipt of such notice of claim, the parties cannot
agree on a resolution of such claim, the parties agree to submit such dispute to
binding arbitration to be held in New York, New York under the employment rules
of the American Arbitration Association. Any such arbitration shall be conducted
by three arbitrators, one of whom shall be selected by the Executive or his
estate, one of whom shall be selected by the Company, and one of whom shall be
selected by the arbitrators so selected. The expenses of any such arbitration
shall be paid by the non-prevailing party, as determined by the final order of
the arbitrators.
-17-
13. NOTICES. All notices, requests, payments, instructions
or other documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) sent by a reputable, established
courier service that provides evidence of delivery and guarantees next business
day delivery (effective the next business day), or (iii) sent by telecopier
followed within 24 hours by confirmation by one of the foregoing methods
(effective upon receipt of the telecopy in complete, readable form), addressed
as follows (or to such other address as the recipient party may have furnished
to the sending party for the purpose of this Section 13):
(a) If to the Company, to:
Xxxx X. Xxxxx
Narrowstep Inc., Chairman Compensation and Governance Committee
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: 000.000.0000
with a copy sent at the same time and by the same means to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
(b) If to the Executive, to:
Xxxxx X. XxXxxxx
at the then-current address on file for the Executive in the
Company's records
with a copy sent at the same time and by the same means to:
Xxxxx X. Xxxxx, Esq.
Xxxxxx Price Xxxxxxx & Kammholz, P.C.
000 X. XxXxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
14. GOVERNING LAW. This Agreement shall be deemed a contract made
and performed in the State of Delaware, and shall be governed by the laws of the
State of Delaware.
-18-
15. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement of the parties and may be altered or amended or any provision
hereof waived only by an agreement in writing executed by the party against whom
enforcement of any alteration, amendment, or waiver is sought. No waiver by any
party of any breach of this Agreement shall be considered as a waiver of any
subsequent breach.
16. BINDING OBLIGATIONS. This Agreement shall be binding upon and
inure to the benefit of the Company and the Executive and their respective
successors and assigns.
17. ASSIGNABILITy. Neither this Agreement nor any benefits payable
to the Executive hereunder shall be assigned, pledged, anticipated, or otherwise
alienated by the Executive, or subject to attachment or other legal process by
any creditor of the Executive, and notwithstanding any attempted assignment,
pledge, anticipation, alienation, attachment, or other legal process, any
benefit payable to the Executive hereunder shall be paid only to the Executive
or to his estate. Notwithstanding the foregoing, the Executive shall be
permitted to transfer to a spouse, child or a trust for the benefit of the
Executive or such individuals any securities issued to him pursuant to this
Agreement and, upon vesting (in the case of Restricted Stock) or delivery (in
the case of Restricted Stock Units), Common Stock issued to the Executive
pursuant to this Agreement shall be freely transferable by the Executive,
subject to applicable securities laws, rules and regulations.
18. ATTORNEY'S FEES. In the event that any action is brought to
enforce any of the provisions of this Agreement, or to obtain money damages for
the breach thereof, and such action results in the award of a judgment for money
damages or in the granting of any injunction in favor of one of the parties to
this Agreement, all expenses, including reasonable attorneys' fees, shall be
paid by the non-prevailing party.
19. BENEFICIARY. The term "Beneficiary" as used herein shall mean
the beneficiary named by the Executive in a writing delivered to the Company
(and which may be changed from time to time), or, if there is no such named
beneficiary or if such beneficiary does not survive the Executive, then
"Beneficiary" shall mean the Executive's surviving spouse, or, if there no
surviving spouse, then the Executive's estate. Upon the death of the Executive,
any payments or benefits due to the Executive from the Company shall be paid to
the Executive's Beneficiary.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-19-
IN WITNESS WHEREOF, the Company, by its director hereunto duly
authorized, and the Executive have signed and sealed this Agreement as of the
date first written above.
NARROWSTEP INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Director and Chairman of the
Compensation and Governance Committee
/s/ Xxxxx X. XxXxxxx
-------------------------------
Xxxxx X. XxXxxxx
[Signature page to Employment Agreement]
-20-
Schedule 1
----------
SCHEDULED VESTING OF 2007 BONUS RESTRICTED SHARES
Number of Restricted
Shares Schedules to
Milestones Vest
---------- --------------------
1. ________________________________________________*:
Threshold: 10,000 0
Expected: 20,000 200,000
Maximum: 30,000 400,000
2. ________________________________________________*
Threshold: 0
Expected: 200,000
Maximum: 400,000
3. ________________________________________________*
Threshold: 0
Expected: 350,000
Maximum: 700,000
4. ________________________________________________*
Threshold: 0
Expected: 200,000
Maximum: 400,000
Totals
Threshold: 0
Expected: 950,000
Maximum: 1,900,000
NOTE: Each milestone listed above represents the opportunity to achieve vesting
of a number of 2007 Bonus Restricted Shares indicated above with respect to each
milestone depending on the level of achievement. The "Maximum" level indicated
for each milestone
-21-
is not in addition to any vesting resulting from meeting a lower performance
level but, instead, represents an absolute cap on vesting of 2007 Bonus
Restricted Shares with respect to such milestone. Performance at or above the
"Maximum" level for a milestone will result in the vesting of the indicated
Maximum number of 2007 Bonus Restricted Shares for that milestone. Proportionate
adjustments will be calculated for performance achieved between "Threshold" and
"Expected" levels and between "Expected" and "Maximum" levels.
