EXECUTIVE EMPLOYMENT AGREEMENT (Amended)
EXECUTIVE
EMPLOYMENT AGREEMENT (Amended)
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is a May 15, 2008 amendment
to
the agreement made and entered into and effective as of the 27th
day of
September, 2007 (the "Effective Date"), between Onstream Media Corporation,
a
Florida corporation, whose principal place of business is 0000 X.X. 00xx Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx 00000 (the "Company") and Xxxxx Xxxxxx, an individual
whose address is 0000 X.X. 00xx Xxxxx, Xxxxxxxxxx Xxxxx, XX 00000 (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 President, Chairman
and
Chief Executive Officer of the Company and shall have general executive
operating supervision over the property, business and affairs of the Company,
its subsidiaries and divisions, subject to the guidelines and direction of
the
Board of Directors of the Company. It is further the intention of the parties
that at all times during the "Term," as hereinafter defined, of the Agreement,
the Executive shall serve as a member of the Board of Directors of the Company,
in accordance with the Bylaws 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. In the event Executive shall,
at any time, not be on the Board of Directors of the Company and serving as
Chairman of such Board, it shall be presumed (if Executive so elects) that
the
Executive has been terminated other than for cause and Executive shall have
all
of the rights specified in Section 6(h) of this Agreement just as if the
Executive had been terminated "Without Cause."
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 Two Hundred Fifty Three Thousand Dollars
($253,000.00) 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 May 15, 2008, with an additional raise of 3.33% (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 220,000 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 two-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. In the event of quarter to quarter decreases in revenues and or cash
flow, the Performance Options shall not vest for that quarter but 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 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 two-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.
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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 the exercise price ($2.50) of the option 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 the exercise price ($2.50) of the option 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.
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.
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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 0000 X.X. 00xx Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx 00000, 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.
4
(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.
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.
5
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.
6
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.
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.
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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
Xxxxxxxxxxxx Xxxxxxxxxxx Xxxx" xx Xxxxxxx Xxxxx, Xxxxxxx.
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.
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.
9
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.
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.
10
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.
23 Construction.
This
Agreement shall be construed within the fair meaning of each of its terms and
not against the party drafting the document.
11
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 $2.50 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 excess of the Company
Sale Price over the Current Capitalization, 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 (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 less than $2.00. 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 earned. 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.
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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The
Company:
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Witnesses:
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ONSTREAM
MEDIA CORPORATION
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By:
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/s/ Xxxx Xxxxxxxxxx | ||
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Witness:
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The
Executive
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By:
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/s/
Xxxxx Xxxxxx
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Xxxxx
Xxxxxx
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