EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of the March 1, 2000,
is entered into between MegaMedia Networks, Inc., (the "Company"), and Paul J.
Turcotte, (the "Executive").
RECITAL
WHEREAS, the Company desires to employ the Executive and the Executive desires
to be employed by the Company upon the terms and subject to the conditions set
forth in this Agreement,
NOW THEREFORE, in consideration of the Recital and of the mutual promises set
forth in this Agreement, the company and the Executive agree as follows:
AGREEMENT
1. EMPLOYMENT. The Company employs the President of the Company. Executive and
Company acknowledge that William A. Mobley is the current President of the
Company and that he shall resign as President and the Executive shall be
elected to President, effective no later than June 30, 2000. Reporting to
the Company's CEO, the Executive is responsible for all aspects of product
development, operations, marketing, sales, merchandising and customer
service for MegaMedia Networks, Inc.
The Executive's responsibilities as President of the Company include, but
are not limited to the following:
A. Acquistion of Content and development necessary to meet the strategic
and financial objectives of the Company, including; (i) Development
and maintenance of revenue sharing partnerships for content; (ii)
Acquisition of content syndication and/or distribution rights; (iii)
Development of co-production partnerships to create programming
content; (iv) Production of original sole-sourced content; (v)
Development and in-house production of original programming including
profitable operation of the MegaMedia studios; (vi) Development and
production of event and remote broadcast/programming opportunities;
(vii) Compliance assurance that all content appearing on the site
meets standards specified by the CEO and Board of Directors from time
to time.
B. Commerically viable site design and creative development of all
aspects of the site, including; (i) Planning and development of site
elements, editoral, commercial and merchandising strategies fro
implementation upon CEO approval; (ii) Design of site look, feel,
navigation, layout, structure and functionality; (iii) Graphic design
of visual site elements; (iv) Development of site copy and approval of
third-party copy presented on MegaMedia; (v) Management of all site
presentation activities and coordination with technical execution
staff; (vi) Design or approval of all advertising appearing on the
site; (vii) Development and maintenance of the MegaMedia information
pages including but not limited to business background, employment
opportunities, investor relations, and public relations/publicity
archives.
C. Marketing of services, capabilities and products to consumers and
appropriate businesses, including; (i) Performance of consumer
research to determine appropriate and effective marketing strategies
and to evaluate consumer attitudes and acceptance of MegaMedia
products; (ii) Performance of business-to-business oriented research
to define and refine offerings to business partners, advertisers, and
mechandisers to increase MegaMedia revenue potential; (iii)
Development and fostering of effective consumer brand positioning and
appeal; (iv) Development and fostering of effective
business-to-business brand positioning and appeal; (v) Development and
execution of effective advertising, promotion, publicity, and public
relations strategies, tactics and
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expenditures to increase audience exposure and revenues; (vi) Development
of effective customer service policies, procedures, standards and delivery
of performance against same.
D. Create and increase revenue opportunities through adverting, sales,
and merchandising to consumers and business, including: (i) Develop,
implement and manage effective advertising sales strategies and
programs to increase enterprise value; (ii) Manage and maintain
merchandising strategies including, but not limited to, merchandise
selection, display, promotion, fulfillment and partnerships to
increase revenues; (iii) Creation and maintenance of effective
strategic partnerships, sponsorship agreements and alliances in
concert with CEO activities in this area.
Executive hereby accepts such employment, upon the terms and subject to the
conditions set forth in the Agreement.
2. TERM. The term of this Agreement shall by three (3) years, commencing on
March1, 2000, and ending on February 28, 2003. Nothing herein shall be
construed as to limit in any manner the rights of the parties hereto to
terminate Executive's employment with the company in accordance with the
provisions for termination and for compensation upon termination that are
contained herein.
3. DUTIES. During the term of this Agreement, subject to the direction of the
Board of Directors and the Chief Executive Officer of the Company, the
Executive shall serve in the capacities set forth in Paragraph 1 hereof.
The Executive shall devote his full business time and energies to the
business and affairs of the Company and shall use his best efforts, skills
and abilities to promote the interests of the Company and to diligently and
competently perform his duties
4. COMPENSATION, STOCK OPTIONS AND BENEFITS:
A. Executive Compensation. Commencing with the start of employment
pursuant to this Agreement, Executive shall receive an annual salary
of $275,000.00 (two hundred fifty thousand dollars) with $175,000.00
of the annual salary being paid on a bi-weekly basis, and with (4)
payments of $25,000.00 each to be paid at the end of each quarter, on
June 1, September 1, December 1 and March 1 (February 28, 2003) of
each year during the term of this Agreement. .
B. Stock Rights and Options.
i. Upon execution of this Agreement and payment by Executive of an
aggregate purchase price of Two Thousand Dollars ($2,000.00),
Executive shall be issued 200,000 shares of the Company's common
stock, $0.01 par value, in his name, to be held by an Escrow
Agent, as provided in the Escrow Agreement of even date
herewith, as set forth in Exhibit A, which shares may not be
sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of and are subject to forfeiture as described
below ("Escrow Stock"). If Executive voluntarily terminates his
employment or his employment is terminated "for cause" (as
defined in paragraph 9D), prior to the occurrence of the
earliest event specified in subsections (a) through (f) below,
Executive shall forfeit all right, title and interest to the
Escrow Stock. Otherwise, complete ownership, subject to
restrictions set forth in the Securities Act of 1933 as amended,
and the rules and regulations promulgated from time to time by
the Securities and Exchange Commission, in all of the Escrow
Stock shall be delivered to Executive promptly on the earliest
to occur of the following:
a. March 1, 2001;
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b. Executive's death;
c. Executive's permanent disability as defined in paragraph 9B;
d. Termination of the Executive's employment by the Company
without cause as defined in paragraph 9D;
e. Termination by the Executive of his employment as a result
of Constructive Discharge as defined in paragraph 9C;
f. A "change in control" of the Company which shall be defined
as (i) a sale, purchase, merger or other business
combination which results in transfer to a third party of an
ownership interest of greater that 50% of the company or any
successor entity to the Company, (ii) a sale or other
disposition of all or substantially all of the Company's
assets, or (iii) election by the shareholders of the Company
of persons to serve as directors of the Company, comprising
more that one-half (1/2) the total number of directors,
persons who were not nominated or recommended to the
shareholders for election as directors by the Board's
nominating committee.
Provided that Executive has not voluntarily terminated his
employment or his employment has not been terminated "for cause"
(as defined in paragraph 9D), prior to the occurrence of the
earliest event specified in subsections (a) through (f) above,
upon the occurrence of the earliest event specified in
subsections (a) through (f) above, the Company shall instruct its
Escrow Agent to deliver a certificate or certificates in
Executive's name for the 250,00 shares of the Company's common
stock, $0.01 par value, to Executive.
ii. Upon execution of this Agreement , the company shall issue to
Executive two Stock Option Agreements as set forth in Exhibits B
and C, attached hereto and incorporated herein by reference,
providing Executive conditional rights to purchase up to 166,667
& 177,778 shares of fully paid, non-assessable common stock of
the Company in each Stock Option Agreement, respectively.
iii. Promptly upon the vesting of stock option rights as provided in
the Stock Option Agreements, the Company shall provide Executive
with a Notice of Vesting confirming such vesting of option
rights. The Notice of Vesting shall set forth the date of
vesting, the number, exercise price and term of the option
rights that have vested in Executive.
iv. The Escrow Stock and the Stock Options referenced herein shall
not be subject to any dilution as to percentage of ownership,
that differs from any dilution of percentage of ownership that
may be from time to time be appropriately approved and
undertaken by the Company and that is applicable to all issued
and outstanding stock of the Company. All shares acquired by
Executive under these provisions will be subject to statutory
restrictions, registration and to such lockup agreements as
Company may reasonably require of its executives. In the event
that the outstanding shares are changed into or exchanged for a
different number or kind of shares or securities of the Company,
or of any other corporation, by reason of reorganization,
merger, or other subdivision, consolidation. Recapitialization,
reclassification, stock split, stock divided or combination of
shares or similar event, the Company shall make an
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appropriate and equitable adjustment to the Escrow Stock or
Options so that Executive's proportionate interest shall be
maintained as before the occurrence of such event to the maximum
extent possible.
v. At the Executive's request and at the Company's expense,
following the Company's next public offering, the Company shall
effect a registration on Form S-8, or if necessary on Form S-3,
with respect to his exercise of his options and, if necessary,
with respect to the resale of any of his shares of common stock.
vi. Executive shall also be entitled to participate in all other
compensation and benefit plans provided by the Company to its
executives, including any stock option, retirement and savings
programs (e.g. a 401(k) plan).
C. Benefits: During the term of this Agreement, the Executive shall be
entitled to participate in or benefit from, in accordance with the
eligibility and other provisions thereof such medical, insurance,
pension, retirement, life insurance, profit sharing and other fringe
benefit plans or policies as the company may make available to, or
have in effect for, its other senior executives and Executive's
participation shall not be less that that of any other executive
officer of the Company. The Company retains the right to terminate or
alter any such plans or policies from time to time. Participation of
Executive's family in medical insurance plans may be elected at
Executive's expense.
D. Reimbursement of Business Expenses: During the term of this Agreement
upon submission of appropriate supporting documentation, the Executive
shall be reimbursed by the Company for all reasonable business
expenses actually and necessarily incurred by the Executive on behalf
of the Company in connection with the performance of services under
this Agreement.
E. Reimbursement of Other Expenses: During the term of this Agreement,
the Executive shall receive an auto allowance of $500.00 per month and
shall participate in any other reimbursements (i.e. cellular phone,
pager, etc.) offered to other senior executives at a level that shall
not be less than that of any other executive officer of the Company.
F. Vacation: During the term of this Agreement Executive shall be
eligible for fifteen (15)-business days paid vacation per employment
year (i.e., March 1 through February 28). Vacation days are not
cumulative and will not carry over from year to year.
G. Sick Leave: Executive will be eligible for 5 (five) paid sick days per
year. Paid sick days can be used for any purpose during the employment
year. Sick days are not cumulative and will not carry over from year
to year.
5. REPRESENTATION OF EXECUTIVE: The Executive represents and warrants that he
is not a party to, or bound by, any agreement or commitment, or subject to
any restriction, including but not limited to agreements related to
previous employment containing confidentiality or non-compete covenants,
which in the future may have a possibility of adversely affecting or
interfering with the business of the Company, the full performance by the
Executive of his duties under this Agreement or the exercise of his best
efforts hereunder.
6. CONFIDENTIALITY:
A. Confidential Information. The Executive acknowledges that as a result
of his employment with the Company, the Executive will have knowledge
of and access to, all proprietary and confidential
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information of the company, including, without limitation, all
"Confidential Information" (as defined herein), and that such
information, even though it may be contributed, developed or acquired
by the Executive, and whether or not the foregoing information is
actually novel or unique, constitute valuable assets of the Company
developed at great expense which are the exclusive property of the
company or its affiliates. Accordingly, the Executive shall not, at
any time, either during or subsequent to the terms of this Agreement,
use, revel, report, publish, transfer or otherwise disclose to any
person, corporation or other entity (a "person"), any of the
Confidential Information without the prior written consent of the
Company's Board of Director's, except to appropriate officers and
executives of the Company and other appropriate persons who are in a
contractual or fiduciary relationship with the company and who have a
need for such information for purposes in the best interests of the
company, and except for such information which is or becomes generally
available to the public other than as a result of an unauthorized
disclosure by the Executive. As used in this Agreement, "Confidential
Information" shall mean any and all studies, plans, reports, surveys,
analysis, sketches, drawings, specifications, notes, records,
memoranda, computer-generated data, computer programs, algorithms, or
documents, and all other non-public information relating to the
business activities of the Company, including, without limitation, all
methods, processes, techniques, equipment, research data, experiments,
marketing and sales information, personnel data, customer lists,
pricing data, executive lists, supplier lists, merchandising systems,
financial data, trade secrets, and the like which presently or, in the
future, are in the possession of the Company. Said Confidential
Information may be in either human or computer readable form,
including, but not limited to, software, source code, hex code, or any
other form. Confidential Information shall not include any information
that is available to the general public or that is generally know or
available in the industry.
B. Return of Confidential Information. Upon the termination of the
Executive's employment with the Company, the Executive shall promptly
deliver to the Company all manuals. Letters, notes, notebooks, reports
and copies thereof and all other materials relating to the Company's
business, including without limitation any materials incorporating
Confidential Information, which are in the Executive's possession or
control.
7. NON-COMPETITION: The Executive acknowledges that his services to be
rendered hereunder are of a special and unusual character and have a unique
value to the Company, the loss of which cannot be adequately compensated by
damages in any court of law. In view of the unique value to the Company of
the services of the Executive, the Executive hereby covenants and agrees
that so long as he remains employed by the Company (whether under this
Agreement or any other written or oral agreement or arrangement) and for a
period of one (1) year after the termination or expiration of any such
employment for any reason, the Executive shall not directly or indirectly
engage in or have an active interest in, anywhere in the world, alone or in
association with others, as principal, officer, agent, executive,
consultant, independent contractor, director, partner or stockholder, or
through the investment of capital lending of money or property, rendering
of services or otherwise any business competitive with the business engaged
in by the Company, the Executive hereby acknowledging that the company
conducts business and distributes its products, or contemplates conducting
business and distributing its product(s), on a worldwide basis; provided,
however, that this paragraph 7 shall not prevent the Executive from
acquiring, solely as investment and through market purchases, up to ten
percent (10%) of the securities of any issuer that are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended,
and that are listed or admitted for trading on any United States national
securities exchange or that are quoted on the National Association of
Securities Dealers Automated Quotations System. The business in which the
Company is engaged and from which the Executive shall refrain from engaging
in following the termination of his employment shall be specified in
Exhibit E to this Agreement. The description of the Company's business
shall be revised as often as necessary, (but not less than every six (6)
months) to reflect the scope and nature of the Company's business from time
to time, and such revisions to Exhibit E
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shall be the responsibility of the Executive and of the Chief Executive
Officer of the Company, as approved by the Board of Directors. So long as
Executive remains employed by the Company (whether under this Agreement or
any other written or oral agreement or arrangement) and for a period of one
(1) year after the termination or expiration of any such employment for any
reason, the Executive shall not, and shall not permit, cause or authorize
any of his executives, agents or others under his control to, directly or
indirectly, on behalf of himself or any other person, to recruit or
otherwise solicit or induce any person who is an executive of; or otherwise
engaged by, the Company or any successor to the business of the company or
any affiliate of the Company to terminate his or her employment or other
relationship with the Company or such successor or affiliate. The Executive
shall not at any time, directly or indirectly, use or purport to authorize
any person to use any name, mark, logo, trade dress or other identifying
words or images which are the same as or similar to those used at any time
by the Company or any affiliate in connection with any product or service,
whether or not such use would be in a business competitive with that of the
Company. This Restrictive Covenant on the part of the Executive is given
and made by the Executive to induce MegaMedia to employ the Executive and
to enter into this Employment Agreement with the Executive, and the
Executive hereby acknowledges the sufficiency of the consideration for this
Restrictive Covenant.
This Restrictive Covenant is not executory or otherwise subject to
rejection under the Bankruptcy Code. This Restrictive Covenant is a
reasonable an necessary restraint of trade and does not violate the Sherman
Antitrust Act, the Florida Antitrust Act, or the common law; it is
supported by valid business interests, including the protection of
MegaMedia trade secrets and confidential business information and the
protection of MegaMedia's relationships with its customers and prospective
customers, at the one (1) year restriction is essential to the full
protection of those valid business interests. If any portion of this
Restrictive Covenant is held by a court of competent jurisdiction to be
unreasonable, arbitrary, or against public policy for any reason, this
Restrictive Covenant shall be considered divisible as to line of business,
time, and geographic area; if a court of competent jurisdiction should
determine the specified lines of business, the specified period, or the
specified geographic area to be unreasonable, arbitrary, or against public
policy for any reason, a narrower line of business, a lesser period, or a
smaller geographic area that is determined to be reasonable, non-arbitrary,
and not against public policy for any reason, may be enforced by MegaMedia
against the Executive.
8. REMEDIES: The Executive acknowledges that the Company would not enter into
this Agreement without the covenants set forth in Paragraphs 6,7 and 8 of
this Agreement and that such covenants are given as an integral part of and
incident to this Agreement. MegaMedia and the Executive agree that, in the
event of a breach by the Executive of the Restrictive Covenants set forth
in Paragraphs 6 and 7, above, such a breach would irreparably injure
MegaMedia and would leave MegaMedia with no adequate remedy at law, and
MegaMedia and the Executive further agree that if legal proceedings
(including arbitration proceedings) should be brought by MegaMedia, against
the Executive to enforce the Restrictive Covenant, MegaMedia shall be
entitled to all civil remedies, including without limitation, preliminary
and permanent injunctive relief restraining the Executive from violating,
directly or indirectly, either as an individual on his own account or as a
partner, joint venture, employee, agent, salesman, contractor, officer,
director, or stockholder or otherwise, the restrictions of Paragraph 6 and
7, above.
Nothing in this Employment Agreement shall be construed as prohibiting
MegaMedia from pursuing any other legal or equitable remedies available to
it fro breach or threatened breach of the Restrictive Covenants. MegaMedia
agrees that it shall bring an appropriate action to enforce its rights
under Paragraphs 6 and 7, within 60 days of that date when facts material
to the right of action are known or reasonably should have been known to
MegaMedia.
Should legal proceedings be brought by MegaMedia against the Executive to
enforce the Restrictive Covenants, the period of restriction shall be
deemed to being running on the date of entry of an order granting MegaMedia
preliminary injunctive relief and shall continue uninterrupted for the next
succeeding
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one (1) year; the Executive acknowledges that such purposes and effect
would be frustrated by measuring the period of restriction from the date of
termination of employment where the Executive failed to honor the
Restrictive Covenant until directed to do so by court order. MegaMedia and
the Executive agree that, if MegaMedia is granted preliminary injunctive
relief under this Agreement, an injunction bond of no more than
$275,000.00, shall be sufficient to indemnify the Executive for any costs
or damages that he might incur if the Court ultimately determines that the
Executive was wrongfully enjoined. If the Executive breaches any of the
provisions of Paragraphs 6 or 7, in addition to its other rights and
remedies, the Company shall have the right to require the Executive to
account for and pay over to the Company all compensation, profits, money,
accruals, and other benefits derived or received, directly or indirectly,
by the Executive from the action constituting such breach.
9. TERMINATION: This Agreement may be terminated prior to the expiration of
the term set forth in Paragraph 2 upon the occurrence of any of the events
set forth in, and subject to the terms of this Paragraph 9.
A. Death. This Agreement will terminate immediately and automatically
upon the death of the Executive. In the event of Executive's death,
Executive's estate or his designated beneficiary shall be paid by the
Company all of the compensation and benefits due to Executive through
the date of his death, including without limitation, the Escrow Stock
and stock option benefits to which Executive was entitled as of the
date of his death.
B. Disability. This Agreement may be terminated at the Company's option,
immediately upon written notice to the Executive, if the Executive
shall suffer a permanent disability. For the purposes of this
Agreement, the term "permanent disability" shall mean the Executive's
inability to perform his duties under this Agreement for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any twelve (12) month period, due to illness, accident
or any other physical or mental condition, as determined by the Board
of Directors of the Company. In the event of a permanent disability,
Executive shall be paid by the Company all of the compensation and
benefits due to Executive through the date of his permanent
disability, including without limitation, the Escrow Stock and stock
option benefits to which Executive was entitled as of the date of his
permanent disability. All stock options vested as of the date
Executive's employment is terminated due to permanent disability shall
remain exercisable for the full duration of the option exercise
period.
C. Voluntary termination by Executive.This Agreement may be terminated by
Executive upon the giving of 60 days written notice to the Board of
Directors. In the event that Executive voluntarily terminates this
Agreement, except for "Constructive Discharge" as hereinafter defined,
he shall be paid by the Company all of the compensation and benefits
due to Executive through the date of termination and all stock options
vested as of that date shall remain exercisable for the full duration
of the option exercise period. In the event that Employee is
Constructively Discharged, his termination shall be treated as if made
by Company without cause and Executive shall receive all the
compensation and benefits specified in paragraph 9E below. For
purposes of this Agreement, "Constructive Discharge" shall mean:
i. any reduction of compensation, stock options or other benefits
set forth in Paragraph 4 hereof;
ii. a material reduction in Executive's job function, duties or
responsibilities, or a similar change in Executive's reporting
relationships, it being agreed and understood that Executive's
failure to win re-election to the Board of Directors (after his
election to an initial term as provided in Paragraph 19 hereof)
shall not constitute "Constructive
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Discharge" so long as the shareholders bound by the Voting
Agreement attached hereto as Exhibit D shall have voted in
accordance with the terms of that agreement;
iii. a required relocation of Executive more than 35 miles from the
Company's offices at 57 West Pine Street, Orlando, Florida
32801; or,
iv. any breach of any of the material terms of this Agreement by the
Company which is not fully cured within 15 (fifteen) days of
Company's receipt of written notice thereof from Executive.
D. Cause. This Agreement may be terminated at the Company's option,
immediately upon written notice to the Executive, upon (i)
"Misconduct" which includes, but is not limited to, the following,
which shall not be construed in pari materia with each other: (a)
Conduct evincing such willful or wanton disregard of an employer's
interests as is found by the Company's Board of Directors to be in
deliberate violation or disregard of standards of behavior which the
employer has the right to expect of the Executive; or (b) Carelessness
or negligence of such a degree or recurrence as is found by the
Company's Board of Directors to manifest culpability, wrongful intent,
or evil design, or to show an intentional and substantial disregard of
an employer's interests or of the Executive's duties and obligations
to the employer, or (ii) fraud, criminal conduct (as evidenced by a
plea of no contest or guilty or upon conviction of the Executive for
any felony) or embezzlement by the Executive. In the event that
Executive is terminated for cause, he shall be paid by the Company all
compensation and benefits due through the date of written notice of
termination, including without limitation all stock option benefits
vested prior to the date of written notice of termination hereunder.
All stock options vested as of the date Executive's employment is
terminated for cause shall remain exercisable for the full duration of
the option exercise period.
E. Without Cause. This Agreement may be terminated at the Company's
option without cause immediately upon notice to the Executive. In the
event the Company elects to terminate this Agreement without cause
pursuant to this subsection, or the Executive is Constructively
Discharged as specified in Paragraph 9C above, the Company shall:
i. Pay to Executive as wages in lieu of notice the sum of
$275,000.00, to be paid in four payments of $68,750.00 each, with
the first payment paid immediately upon termination and
subsequent payments of $68,750.00 being paid on the 30th, 60th
and 90th day after termination, until paid in full.
ii. Immediately vest all of Executive's Escrow Stock and stock option
rights as provided in the Stock Option Agreements as though he
remained employed for the entire three year term of this
Agreement.
iii. Simultaneous with delivery of the Executive's general release
referenced in paragraph 9F, Company shall deliver to Executive or
Executive's estate a general release, in form substantially
similar to Executive's Release, releasing the Executive and/or
his estate from any and all rights, claims, demands, judgments,
obligations, liabilities and damages, whether accrued or
unaccrued, asserted or unasserted, and whether known or unknown,
relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement
without cause except Executive's future performance of his duties
and obligations under Paragraphs 6 and 7 of this Agreement.
F. Upon the termination of Executive's employment by the Company without
cause, simultaneously with the receipt of the first installment of the
wages in lieu of notice, and as a condition to the
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receipt thereof, the Executive or his estate, shall deliver to the
Company a general release form acceptable to the Company releasing the
Company form any and all rights, claims, demands, judgments,
obligations, liabilities and damages, whether accrued or unaccrued,
asserted or unasserted, and whether known or unknown, relating to the
Company which ever existed, then existed, or may thereafter exist, by
reason of termination of this Agreement without cause, except payment
of $275,000.00 wages in lieu of notice and the Escrow Stock and the
vested stock options.
G. Effect of Termination. In the event of any termination under this
Paragraph 9, the Company shall have no further obligation under this
Agreement to make any payment to, or bestow any benefits on, the
Executive from and after the date of the termination other than
payments or benefits accrued and due and payable to Executive as
provided herein.
10. INVENTIONS, IDEAS, PROCESSES AND DESIGNS: All inventions, ideas, processes,
programs, software, and designs (including all improvements) (i) conceived
(whether or not actually conceived during regular business hours) or made
by the Executive during the course of his employment with MegaMedia and for
a period of six (6) month subsequent to the termination of such employment
with MegaMedia, and (ii) integrally related to the business of MegaMedia,
shall be disclosed in writing promptly to MegaMedia and shall be the sole
and exclusive property of MegaMedia. The Executive shall cooperate with
MegaMedia and its attorneys in the preparation of patent and copyright
applications for such developments and shall promptly assign all such
inventions, ideas, processes, and designs to MegaMedia. The decision to
file for patent or copyright protection or to maintain such development as
a trade secret shall be in the sole discretion of MegaMedia, and the
Executive shall be bound by such decision. The Executive shall provide, on
the back of this Employment Agreement, a complete list of all inventions,
ideas, processes, and designs, if any, patented or unpatented, copyrighted
or uncopyrighted, including a brief description, which he or she made or
conceived prior to his or her employment with MegaMedia and which therefore
are excluded from the scope of this Agreement.
11. CONSIDERATION. The Executive expressly acknowledges and agrees that the
execution by MegaMedia of this Employee Agreement constitutes full,
adequate, and sufficient consideration to the Executive from MegaMedia for
the duties, obligations, and covenants of the Executive under this
Agreement, including, by way of illustration and not by way of limitation,
the agreements, covenants, and obligations of the Executive under
Paragraphs 6 and 7 of this Agreement. MegaMedia expressly acknowledges and
agrees similarly with respect to the consideration received by it from the
Executive under this Agreement.
12. INDEBTEDNESS. If, during the course of the Executive's employment under
this Employment Agreement, the Executive becomes indebted to MegaMedia for
any reason, MegaMedia may, if it so elects, set off any sum due to
MegaMedia from the Executive and collect from the Executive any remaining
balance.
13. TRAINING EXPENSES. MegaMedia shall pay for all reasonable training expenses
incurred by the Executive while he is employed under this Employment
Agreement.
14. CONSENT TO PERSONAL JURISDICTION AND VENUE; WAIVER OF JURY TRIAL. The
Executive and Company hereby consent to personal jurisdiction and venue,
for any action brought by either party arising out of a breach or
threatened breach of this Employment Agreement, exclusively in the United
States District Court for the Middle District of Florida, Orlando Division,
or in the Circuit Court in and for Orange County, Florida; the Executive
and Company hereby agree that any action brought by either party, alone or
in combination with others, against the other party, whether arising out of
this Agreement or otherwise, shall be brought exclusively in the United
States District Court for the Middle District of Florida, Orlando Division,
or in the Circuit Court in and for Orange County, Florida. The Executive
and Company hereby agree that any controversy which may arise under this
Agreement would involve complicated and difficult factual and legal issues.
Therefore, if a court of law determines for any reason that the arbitration
clause of
Page 9 of 27
<PAGE>
Paragraph 15 of the Agreement is unenforceable, then any action brought by
MegaMedia against the Executive, alone or in combination with others,
against MegaMedia, whether arising out of this Agreement or otherwise,
shall be determined by a Judge sitting without a jury.
15. SERVICE OF PROCESS - MEGAMEDIA. If the Executive institutes legal
proceedings against MegaMedia, the signatories to this Employment Agreement
agree that service of process by registered and certified U.S mail of the
complaint and summons to the national headquarters of MegaMedia, currently
located at 57 West Pine Street, Orlando, Florida 32801, is reasonably
calculated to apprise MegaMedia of any legal proceedings instituted against
it by the Executive. The above-described method for service of process
shall not constitute by MegaMedia to the exercise of personal jurisdiction
by any court except the United States District Court for the Middle
District of Florida, Orlando Division or the Circuit Court for Orange
County, Florida, in connection with any controversy or dispute between the
signatories to this Agreement.
16. SERVICE OF PROCESS - EXECUTIVE. If MegaMedia institutes legal proceedings
against the Executive, the parties agree that, except as provided below,
MegaMedia shall server process by process server upon the Executive at his
last known residence address located in the United States. The Executive
shall notify MegaMedia in writing of any change in his residence address
within ten (10) calendar days of the change. If the Executive changes his
U.S. residence address and fails to notify MegaMedia in writing within ten
(10) calendar days of the change, the signatories agree that the following
specified method of service of process is reasonably calculated to reach
the Executive and to apprise the Executive of the legal proceedings
instituted by MegaMedia:
MegaMedia shall (i) serve copies of the summons and complaint by certified
and registered U.S. Mail to the Executive's last known residence located in
the United States and (ii) place a public notice in a newspaper of general
circulation in the geographic area of the Executive's last known residence
address for a period of two (2) consecutive weeks following commencement
(i.e., filing) of the proceedings. The Executive expressly acknowledges
that the above-described method for service of process is (i) reasonably
calculated to apprise him of any legal proceedings instituted against him
by MegaMedia and (ii) sufficient for the court issuing the summons or the
American Arbitration Association to exercise personal jurisdiction over
him.
17. ACKNOWLEDGEMENTS. The Executive hereby acknowledges that he has been
provided with a copy of this Employment Agreement for review prior to
signing it, that he has been given the opportunity to have this Agreement
reviewed by his own attorney prior to signing it, that he understands the
purposes and effects of this Agreement, and that he has been given a signed
copy of this Agreement for his own records. The parties hereto acknowledge
that this Agreement and all matters contemplated herein, have been
negotiated between both of the parties hereto and their respective legal
counsel and that both parties have participated in the drafting and
preparation of this Agreement from the commencement of negotiation at all
times through the executive hereof.
18. WAIVER. The waiver by either party of a breach or threatened breach of this
employment Agreement by the other party shall not be construed as a waiver
of any subsequent breach. The refusal or failure of MegaMedia to enforce
the Restrictive Covenants or prohibitions of this Agreement (or any similar
Agreement) against any other executive, agent, or independent contractor,
for any reason shall not constitute a defense to the enforcement by
MegaMedia of the Restrictive Covenants or the prohibitions of this
Agreement, nor shall it give rise to any claim or cause of action by such
executive, agent, or independent contractor or consulting against
MegaMedia.
19. BOARD OF DIRECTORS. MegaMedia agrees that the Board of Directors shall be
increased from the current number of two (2) directors and that one of the
new board positions shall be filled by the Executive pursuant to the Voting
Agreement attached hereto as Exhibit D and that the Executive shall be
elected to an
Page 10 of 27
<PAGE>
initial term on the Board of Directors by June, 2000. This section shall be
deemed to be a material provision of this Agreement.
20. INDEMNIFICATION. The Company shall indemnify Executive to the fullest
extent permitted by applicable law against damages and expenses (including
fees and disbursements of counsel) in connection with his status or arising
out of the ordinary and proper conduct of his duties as an employee,
officer and director of the Company.
21. RELOCATION. The Executive and Company agree that Executive shall relocate
from his current residence in Rye, New York to Orlando, Florida where he
will be employed at the Company's main offices in Orlando, Florida. In
conjunction with Executive's relocation, Company agrees to pay for:
A. Two, one week house hunting trips for Executive and his family (or
trips for some members of Executive's family of equivalent value).
B. Packing and shipment of personal goods.
C. Storage of goods at new location (if necessary) for up to 90 days.
D. Temporary housing allowance of up to $6,000.00.
E. 50% of the Real Estate broker's commission (not to exceed 3.5% of the
sale price) upon the sale of Executive's Rye, New York residence (the
"Residence") subject to the following conditions:
i. Executive shall have reasonably offered the Residence for sale on
customary terms and at a price comparable to other similarly
situated properties; and,
ii. Executive shall have used his best efforts to sell the Residence
on such term and at such a price, for a period of 90 days; and,
iii. A contract for the sale of the Residence has not been submitted
to Executive offering to purchase the Residence at a price equal
to or higher than the price and on comparable terms, at which the
Residence was offered for sale by Executive, within the first 90
days after initially advertising and offering the Residence for
sale as set out above; and,
iv. Executive shall have entered into a real estate sales listing
agreement with a real estate broker of Executive's choice for the
sale of the Residence.
22. MISCELLANEOUS.
A. Entire Agreement. This Employment Agreement, together with Exhibits A,
B, C, D & E constitutes the entire agreement between its signatories
pertaining to the subject matters of the Agreement, and it supersedes
all negotiations, preliminary agreements, and all prior and
contemporaneous discussions and understandings of the signatories in
connection with the subject matters of the Agreement. Except as
otherwise herein provided, no covenant, representation, or condition
not expressed in this Agreement, or in an amendment made and executed
in accordance with the provisions of subparagraph (b) of this
paragraph, shall be binding upon the signatories or shall affect or be
effective to interpret, change, or restrict the provisions of this
Agreement.
B. Amendments. No change, modification, or termination of any of the
terms, provisions, or conditions of this Agreement shall be effective
unless made in writing and signed or initialed by all signatories to
this Agreement.
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<PAGE>
C. Governing Law. This Agreement shall be governed and construed in
accordance with the statutory and decisional law of the State of
Florida governing contracts to be performed in their entirety in
Florida.
D. Separability. If any paragraph, subparagraph, or provision of this
Agreement, or the application of such paragraph, subparagraph or
provision, is held invalid by a court of competent jurisdiction, the
remainder of the Agreement, and the application of such paragraph,
subparagraph, or provision to persons or circumstances other than
those with respect to which is held invalid, shall not be affected.
E. Headings and Captions. The titles and captions of paragraphs and
subparagraphs contained in this Agreement are provided for convenience
of reference only, and they shall not be considered a part of this
Agreement for purposes of interpreting or applying this Agreement;
such titles or captions are not intended to define, limit, extend,
explain or describe the scope or extent of this Agreement or any of
its terms, provisions, representations, warranties, or conditions in
any manner or way whatsoever.
F. Attorney's Fees. In the event it shall be necessary for any party to
seek arbitration or court intervention in order to enforce or defend
its rights hereunder, the prevailing party in any such action shall
recover from the non-prevailing party or parties, all reasonable
attorneys' and paralegal fees in the trail and appellate courts and in
all arbitration, including expert witness fees, deposition costs
(appearance fees and transcript charges), injunction bond premiums,
travel and lodging expenses, arbitration fees and charges, and all
other reasonable costs and expenses.
G. Continuance of Agreement. The rights, responsibilities, and duties of
the signatories to this Agreement, and the covenants and agreements
contained in this Agreement, shall continue to bind the signatories,
shall continue in full force and effect until each and every
obligation of the signatories pursuant to this Agreement (and any
document or agreement incorporated hereby by reference) shall have
been fully performed, and shall be binding upon the successors and
assigns of the signatories.
H. Successors and Assigns. Neither party shall have the right to assign
this personal Agreement, or assign any rights or delegate any
obligations hereunder, without the consent of the other party;
provided, however, that upon the sale of all or substantially all of
the assets, business and goodwill of the Company to another company,
this Agreement shall inure to the benefit of; and be binding upon,
both Executive and the company purchasing such assets, business and
goodwill, or surviving such merger or consolidation, as the case may
be, in the same manner and to the same extent as though such other
company were the Company, subject to the Executive's rights hereunder.
Subject to the foregoing, this Agreement shall inure to the benefits
of; and be binding upon, the parties hereto and their legal
representatives, heirs, successors and assigns.
I. Additional Acts. The Executive and the Company each agrees to execute,
acknowledge and deliver and file, or cause to be executed,
acknowledged and delivered and filed, any and all further instruments,
agreements or documents as may be necessary or expedient in order to
consummate the transactions provided for in this Agreement and do any
and all further acts and things as may be necessary or expedient in
order to carry out the purposes and intent of this Agreement.
J. Notices. Any notice or other communication under this Agreement, other
than as provided above, shall be delivered personally or sent by
certified mail, return receipt requested, postage prepaid, or sent by
facsimile or prepaid overnight courier to the parties at the addresses
set forth below (or at such other addresses as shall be specified by
the parties by like notice). Such notices, demands,
Page 12 of 27
<PAGE>
claims and other communications shall be deemed given when actually
received or (a) in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for
delivery, (b) in the case of facsimile, the date upon which the
transmitting party received confirmation of receipt by facsimile,
telephone or otherwise.
To the Company: To the Executive:
MegaMedia Networks, Inc. Paul J. Turcotte
57 West Pine Street 100 Allendale Drive
Orlando, Florida 32801 Rye, New York 10580
Attn: Legal Department
Fax: 407-245-2943
K. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, together, will
constitute one and the same agreement. Any facsimile version of a
manually executed signature page delivered by one party to the other
shall be deemed manually executed and delivered original.
L. Rights as Stockholder. Executive shall have no rights as a stockholder
for which options have not been exercised.
----------------------------------- ------------------------------
Witness Executive - Paul J. Turcotte
----------------------------------- ------------------------------
Attest: By Mark R. Dolan, Secretary MegaMedia Networks, Inc.
By William A. Mobley, Jr., President
Page 13 of 27
<PAGE>
ESCROW AGREEMENT
EXHIBIT A
THIS ESCROW AGREEMENT (the "Escrow Agreement") is dated as of January
10, 2000, by and among MegaMedia Networks, Inc., (the "Company"), Paul J.
Turcotte (the "Executive"), and Christopher P. Flannery, an attorney who
practices law in the Commonwealth of Pennsylvania, as Escrow Agent (the "Escrow
Agent").
WHEREAS, the Stockholders of the Company have transferred shares of
common stock of the Company (the "Shares") to the Escrow Agent to support stock
rights granted or to be granted to current or new employees, including Paul J.
Turcotte as the Company's President utilizing an escrow arrangement as described
in this Escrow Agreement; and,
WHEREAS, the terms and conditions of Executive's employment with the
Company are set forth in an employment agreement between them, dated as of March
1, 2000, (the "Employment Agreement"), attached hereto and incorporated herein
by reference; and,
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth below, and intending to be legally bound, the parties
hereto hereby agree as follows:
1. ESCROW ACCOUNT
1.1 DEPOSIT. The Stockholders have delivered the Shares to the Escrow
Agent along with blank stock powers with Medallion guaranteed signatures (the
"Escrow") to be held by the Escrow Agent in a separate account (the "Escrow
Account") subject to the terms and provisions of this Escrow Agreement. The
Shares deposited in the Escrow Account, are commingled and no longer the
property of the Stockholders. The Shares in the Escrow Account will be used to
support stock rights granted or to be granted to the Company's executives.
1.2 TRANSFER TO EXECUTIVE. Upon execution of the Employment Agreement
between Executive and the Company and payment to the Escrow Agent of Two
Thousand Dollars ($2,000.00), 200,000 of the shares in the Escrow Account shall
be transferred on the books of the Company to Executive and a certificate for
those 200,000 shares shall be issued in Executive's name. Executive shall
thereupon be a stockholder in the Company with respect to those shares and shall
have the rights of a stockholder with respect to all such shares, including the
rights to vote such shares and to receive any dividend or other distributions
paid with respect to such shares, but shall not be able to sell, exchange,
transfer, pledge, hypothecate or otherwise dispose of the shares until the
conditions specified in paragraph 4(B)(i) of the Employment Agreement have been
met.
1.3 STOCK POWER. In aid of the restrictions on transfer of the Shares,
Executive's execution of the Employment Agreement shall acknowledge his
agreement to have the certificate evidencing his shares held by Escrow Agent as
security for Executive's performance of the Employment Agreement until the
conditions specified in paragraph 4(B)(i) of the Employment Agreement have been
met. Executive shall also execute a stock power agreement with a Medallion
guaranteed signature, endorse in blank, a copy of which is attached hereto as
Attachment A, and deposit it with the Escrow Agent until the conditions in
paragraph 4(B)(i) have been met or until the shares are forfeited a specified in
the Employment Agreement.
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<PAGE>
2. DISBURSEMENT OF ESCROW.
2.1 DELIVERY OF ESCROW STOCK TO EXECUTIVE. Provided that Executive has
not voluntarily terminated his employment or employment has not been terminated
"for cause" (as defined in paragraph 9D of the Employment Agreement) prior to
the occurrence of the earliest event specified in paragraphs 4(b)(i)(a) through
(f) of the Employment Agreement, upon the occurrence of the earliest event
specified in the paragraph 4(b)(i)(a) through (f), of the Employment Agreement
the Escrow Agent shall promptly deliver to Executive, both the certificate or
certificates held by him in Executive's name and the executed stock power
agreement.
2.2 CANCELLATION OF ESCROW STOCK. In the event Executive has
voluntarily terminated his employment or his employment has been terminated "for
cause" (as defined in paragraph 9D of the Employment Agreement) prior to the
occurrence of the earliest event specified in paragraphs 4(b)(i)(a) through (f)
of the Employment Agreement, Escrow Agent is authorized and directed to send the
executed stock power agreement with Medallion guaranteed signature, endorsed in
blank, together with the stock certificate or certificates evidencing ownership
of the 200,000 shares of the Company's common stock, $0.01 par value, held by
Escrow Agent in Executive's name to the Transfer Agent and to direct the
Transfer Agent to cancel the Escrow Stock.
2.3 CONTROVERSIES. If any controversy arises between two or more of the
parties, or between any of the parties and any person not a party, as to whether
or not or to whom the Escrow Agent shall deliver the Escrow or any portion
thereof or as to any other matter arising out of or relating to this Escrow
Agreement, the Escrow Agent shall not be required to determine the same and need
not make any delivery of the Escrow concerned or any portion thereof but may
retain the same until the rights of the parities to the dispute shall have been
finally determined by agreement or by final judgment of a court of competent
jurisdiction after all appeals have been finally determined (or the time for
further appeals has expired without an appeal having been made). The Escrow
Agent shall deliver that portion of the Escrow concerned covered by such
agreement or final order within five (5) days after the Escrow Agent receives a
copy thereof. The Escrow Agent shall assume that no such controversy has arisen
unless and until it receives written notice from the Company or the Executive
that such controversy has arisen, which refers specifically to this Agreement
and identifies the adverse claimants to the controversy.
2.4 NO OTHER DISBURSEMENTS. No portion of the Escrow shall be disbursed
or otherwise transferred except in accordance with this Escrow Agreement.
3. ESCROW AGRENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Escrow Agent:
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any
property deposited with or held by him.
3.2 The Escrow Agent shall be protected in acting upon any written
notice, certificate, instruction, request or other paper or document believed by
him to genuine and to have been signed or presented by the proper party or
parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder
except in the case of its willful misconduct or bad faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
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<PAGE>
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto. The
Escrow Agent shall not be prohibited from owning an equity interest in the
Company or any third party that is in any way affiliated with or conduct
business with the Company.
3.6 The company and the Executive acknowledge that the Escrow Agent is
practicing attorney and may have worked with the Company, the Stockholders, the
Executive or affiliates of them on other unrelated transactions, and that they
and each of them has specifically requested that the Escrow Agent draft the
documents for this transaction and act as Escrow Agent. Each party represents
that the Escrow Agent draft the documents for this transaction and act as Escrow
Agent. Each party represents that it has retained legal and other counsel of its
choosing with respect to the transactions contemplated herein and is satisfied
in its sole discretion with the form and content of the documentation drafted by
the Escrow Agent. The parties hereby waive any objection to the Escrow Agent so
acting based upon conflict of interest or lack of impartiality. The Escrow Agent
agrees to act impartially and in accordance with the terms of this Agreement and
with the parties' respective instructions, so long as they are not in conflict
with the terms of this Escrow Agreement.
4. TERMINATION. This Agreement shall terminate on the earlier of (a)
the date on which the certificate or certificates for the 200,000 shares shall
have been transferred to Executive, or (b) the next business day after the
expiration of Executive's stock rights under paragraph 4B(i) of the Employment
Agreement.
5. MISCELLANEOUS.
5.1 INDEMNIFICATION OF ESCROW AGENT.
(a) The Company and the Executive each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without willful misconduct or bad faith on the Escrow Agent's part,
arising out of or in connection with the administration of this Agreement,
including the cost and expenses of defending himself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The indemnification shall not apply to a party with respect to
a direct claim against the Escrow Agent by such party alleging in good faith a
breach of this Escrow Agreement by the Escrow Agent, which claim result in a
final non-appealable judgment against the Escrow Agent with respect to such
claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Executive, the Company or the Escrow Agent hereunder, the
Escrow Agent may at any time or from time to time interplead, deposit and/or pay
all or any part of the Escrow Account with or to a court of competent
jurisdiction sitting in Philadelphia, Pennsylvania or in any appropriate federal
court, in accordance with the procedural rules thereof. The Escrow Agent shall
give notice of such action to the Company and the Executive. Upon such
interpleader, deposit or payment, the Escrow Agent shall immediately and
automatically be relieved and discharged from all further obligations and
responsibilities hereunder, including the decision to interplead, deposit or pay
such funds.
5.2 AMENDMENTS. This Escrow Agreement may be modified or amended only
by a written instrument executed by each of the parties hereto.
5.3 NOTICES. All communications required to be given under this
agreement to any party shall be sent by first class mail or facsimile to such
party at the address listed below or such other addresses as shall be specified
by the parties by like notice.
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<PAGE>
5.4 SUCCESSORS AND ASSIGNS. This Escrow Agreement shall bind and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however that the Escrow Agent shall not assign its duties
under this Escrow Agreement.
5.5 GOVERNING LAW. This Escrow Agreement shall be governed by and
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania.
5.6 COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
------------------------------- ------------------------------------
Executive - Paul J. Turcotte MegaMedia Networks, Inc.,
100 Allendale Drive By William A. Mobley, Jr., President
Rye, New York 10580 57 West Pine Street
Orlando, Florida 32801
ESCROW AGENT:
-------------------------------
Christopher P. Flannery, Esq.
Astor Weiss, Kaplan, Watters & Strong, LLP
The Belleveue, 6th Floor
Broad Street at Walnut
Philadelphia, PA 19103
Page 17 of 27
<PAGE>
EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT as of March 1, 2000, by and between MegaMedia
Networks, Inc. (the "Company"), and Paul J. Turcotte, (the "Optionee").
-----------------------
In consideration for the Optionee signing an Employment Agreement of
even date herewith (the "Employment Agreement") with the Company and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
company hereby grants the Optionee the option to acquire shares or the common
stock of the Company upon the following terms and conditions:
1. GRANT OF OPTION
A. The Company hereby grants to the Optionee the right and option
(the "Option") to purchase up to 166,667 fully paid and
non-assessable shares of Common Stock par value $.01 per share
of the Company (the "Shares"), subject to the vesting
provisions described below.
B. This Option shall vest in Executive on the earliest to occur
of the following:
(i) On February 28, 2002, provided that Executive remains
employed by Company, a parent or subsidiary
corporation of Company; or
(ii) Upon termination of Executive's employment by Company
without "Cause" as defined in paragraph 9D of the
Employment Agreement prior to February 28, 2002; or
(iii) Upon Executive's voluntary termination of his
employment for "Constructive Discharge" as defined
paragraph 9C of the Employment Agreement, prior to
February 28, 2002; or
(iv) A "change in control" of the Company, prior to
February 28, 2002. A "change in control" of the
Company shall be defined as (i) a sale, purchase,
merger or other business combination which results in
transfer to a third party of an ownership interest of
greater than 50% of the company or any successor
entity to the Company, (ii) a sale or other
disposition of all or substantially all of the
Company's assets, or (iii) election by the
shareholders of the Company of persons to serve as
directors of the Company, comprising more than
one-half (1/2) the total number of directors, persons
who were not nominated or recommended to the
shareholders for election as directors by the Board's
nominating committee.
C. The date on which the Option vest under this paragraph shall
be know as the "Vesting Date".
D. The Option once vested, may be exercised during the period
("Option Period") commencing on the Vesting Date and expiring
at 5:00 p.m. Eastern Standard Time on the date that is exactly
ten (10) years after the Vesting Date. For example, if the
Vesting Date is February 28, 2002, the Option Period shall
expire at 5:00 p.m. on February 28, 2012. Upon expiration of
the Option Period the Optionee shall have no further right to
purchase any shares not then purchased. The Company shall at
all times during the Option Period have available such number
of Shares as will be sufficient to satisfy the Option.
Page 18 of 27
<PAGE>
E. It is not intended that these Options qualify as Incentive
Stock Options within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
2. EXERCISE PRICE
The exercise price of the Option (the "Exercise Price") shall be Three
Dollars ($3.00) per Share, and shall be payable by certified or bank
check payable to the order of the Company at the time of the exercise.
As an alternative, Optionee may present Shares already owned by the
Optionee with a market value at least equal to the aggregate Exercise
Price of the Options which Optionee seeks to exercise.
3. EXERCISE OF OPTION
The Optionee may exercise this Option in whole or in part, by providing
notice to the Company, in the form attached as Exhibit A, by registered
or certified mail, return receipt requested, or by overnight mail or
personal delivery, addressed to its principal office, signed by
Optionee, indicating the number of Options which he desires to
exercise. The notice shall be accompanied by payment of the Exercise
Price as specified in Paragraph 2 above. As soon as practicable after
the receipt of such notice of exercise, the Company shall cause the
Company's transfer agent to issue to the Optionee certificates issued
in the Optionee's name evidencing the Shares purchased by the Optionee.
4. DEATH OF OPTIONEE
In the event of the death of the Optionee, any unexercised portion of
his Option shall be exercisable (to the extent that such Option was
exercisable at the time of his death) for one hundred and twenty (120)
days after the Optionee's death only by his personal representative or
such persons to whom the deceased Optionee's rights shall pass under
the Optionee's will or by the laws of descent and distribution.
5. NON-TRANSFERABILITY OF OPTION
The Optionee may not give, grant, sell exchange, transfer legal title,
pledge, assign or otherwise encumber or dispose of the Option or any
interest therein, otherwise than by will or the laws of descent and
distribution and, except as provided in this paragraph and paragraph 4,
the Option shall be exercisable only by the Optionee. Upon any attempt
to so transfer the Option, or upon the levy or attachment or similar
process of the Option, the Option shall automatically become null and
void.
6. RESTRICTION ON ISSUANCE OF SHARES - INVESTMENT REPRESENTATION
By accepting the Option, the Optionee agrees for himself, his heirs and
legatees that any and all Shares purchased upon the exercise of the
Option shall be acquired for investment and not for distribution. All
shares acquired by Executive under these provisions will be subject to
statutory restrictions, registration and to such lockup agreements as
Company may reasonably require of its executives. Upon the issuance of
any or all of the Shares subject to the Option, the Company, in its
discretion, may require the Optionee, or his heirs or legatees
receiving such Shares to deliver to the company a representation in
writing, in a form satisfactory to the Board of Directors, that such
Shares are being acquired in good faith for investment and not for
distribution. The Company may place a "stop transfer" order with
respect to such Shares with its transfer agent and will place and
appropriate restrictive legend on the certificate(s) evidencing such
Shares. The Company agrees to register the Shares as part of any Form
S-8 registration by the Company for so long as any Shares subject to
Options remain outstanding.
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<PAGE>
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
A. The Stock Option referenced herein shall not be subject to any
dilution as to percentage of ownership that may be from time
to time be appropriately approved und undertaken by the
company and that is applicable to all issued and outstanding
stock of the Company. In the event that the outstanding shares
are changed into or exchanged for a different number or kind
of shares or securities of the Company, or of any other
corporation, by reason of reorganization, merger, or other
subdivision, consolidation. Recapitalization,
reclassification, stock split, stock divided or combination of
shares or similar event, the Company shall make an appropriate
and equitable adjustment to the Stock Option or to the
Purchase Price so that Executive's Proportionate interest
shall be maintained as before the occurrence of such event to
the maximum extent possible.
B. Any adjustment in the number of Shares shall apply
proportionately to only the then unexercised portion of the
Option. If fractional Shares would result from any such
adjustment, the adjustment shall be revised to the next higher
whole number.
8. NO RIGHTS AS STOCKHOLDER
The Optionee shall have no rights as a stockholder in Shares as to
which the Option has not been exercised.
9. TAXES
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection
with the exercise of the Option granted hereby. The Company may further
require notification from the Optionee upon any disposition of Shares
acquired pursuant to the exercise of the Options granted hereunder.
10. BINDING EFFECT
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto,
their legal representatives and assigns.
11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to agreement made and to be
performed wholly within the State of Florida
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
------------------------------------ ------------------------------------
Witness: MegaMedia Networks, Inc.
--------------------------- By William A. Mobley, Jr., President
------------------------------------ ------------------------------------
Witness: Optionee:
--------------------------- ---------------------------
Page 20 of 27
<PAGE>
EXERCISE FORM
(To be Executed If Optionee Desires to Exercise the Options)
TO: MegaMedia Networks, Inc.
The undersigned, being the Optionee of certain options ("Options") to
purchase shares of common stock of MegaMedia Networks, Inc. (the "Company" and
the "Shares"), under the conditions thereof, hereby exercises Options to
purchase Shares evidenced by the within Option Agreement, and Herewith makes
payment of the exercise price in full in cash or immediately available fund or
by delivery of shares already owned by the Optionee with a market value at least
equal to the aggregate exercise price due. Kindly issue all Shares to the
undersigned and deliver them to the undersigned at the address stated below. If
such number of Shares shall not be all of the Shares purchasable under the
within Option Agreement, please issue a new Option Agreement of like tenor for
the balance of the remaining Shares purchasable hereunder to be delivered to the
undersigned at the address stated below.
By signing below, the Undersigned acknowledges that he has received
0uch financial and other information to his satisfaction regarding the Company
as he requires to make an informed investment decision. The Undersigned has had
the opportunity to ask questions and receive answers from the Company regarding
the Shares and the Company. The Undersigned further acknowledges that he is
aware that the Shares issued pursuant to this exercise may be restricted from
transfer.
Name
------------------------------------
(Please Print)
Address
---------------------------------
Signature
-------------------------------
Dated
--------------------
Page 21 of 27
<PAGE>
EXHIBIT C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT as of March 1, 2000, by and between MegaMedia
Networks, Inc. (the "Company"), and Paul J. Turcotte, (the "Optionee").
-----------------------
In consideration for the Optionee signing an Employment Agreement of
even date herewith (the "Employment Agreement") with the Company and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
company hereby grants the Optionee the option to acquire shares or the common
stock of the Company upon the following terms and conditions:
1. GRANT OF OPTION
F. The Company hereby grants to the Optionee the right and option
(the "Option") to purchase up to 177,778 fully paid and
non-assessable shares of Common Stock par value $.01 per share
of the Company (the "Shares"), subject to the vesting
provisions described below.
G. This Option shall vest in Executive on the earliest to occur
of the following:
(i) On February 28, 2003, provided that Executive remains
employed by Company, a parent or subsidiary
corporation of Company; or
(ii) Upon termination of Executive's employment by Company
without "Cause" as defined in paragraph 9D of the
Employment Agreement prior to February 28, 2003; or
(iii) Upon Executive's voluntary termination of his
employment for "Constructive Discharge" as defined
paragraph 9C of the Employment Agreement, prior to
February 28, 20003; or
(iv) A "change in control" of the Company, prior to
February 28, 2003. A "change in control" of the
Company shall be defined as (i) a sale, purchase,
merger or other business combination which results in
transfer to a third party of an ownership interest of
greater than 50% of the company or any successor
entity to the Company, (ii) a sale or other
disposition of all or substantially all of the
Company's assets, or (iii) election by the
shareholders of the Company of persons to serve as
directors of the Company, comprising more than
one-half (1/2) the total number of directors, persons
who were not nominated or recommended to the
shareholders for election as directors by the Board's
nominating committee.
H. The date on which the Option vest under this paragraph shall
be know as the "Vesting Date".
I. The Option once vested, may be exercised during the period
("Option Period") commencing on the Vesting Date and expiring
at 5:00 p.m. Eastern Standard Time on the date that is exactly
ten (10) years after the Vesting Date. For example, if the
Vesting Date is February 28, 2003, the Option Period shall
expire at 5:00 p.m. on February 28, 2013. Upon expiration of
the Option Period the Optionee shall have no further right to
purchase any shares not then purchased. The Company shall at
all times during the Option Period have available such number
of Shares as will be sufficient to satisfy the Option.
Page 22 of 27
<PAGE>
J. It is not intended that these Options qualify as Incentive
Stock Options within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
2. EXERCISE PRICE
The exercise price of the Option (the "Exercise Price") shall be Three
Dollars ($4.50) per Share, and shall be payable by certified or bank
check payable to the order of the Company at the time of the exercise.
As an alternative, Optionee may present Shares already owned by the
Optionee with a market value at least equal to the aggregate Exercise
Price of the Options which Optionee seeks to exercise.
3. EXERCISE OF OPTION
The Optionee may exercise this Option in whole or in part, by providing
notice to the Company, in the form attached as Exhibit A, by registered
or certified mail, return receipt requested, or by overnight mail or
personal delivery, addressed to its principal office, signed by
Optionee, indicating the number of Options which he desires to
exercise. The notice shall be accompanied by payment of the Exercise
Price as specified in Paragraph 2 above. As soon as practicable after
the receipt of such notice of exercise, the Company shall cause the
Company's transfer agent to issue to the Optionee certificates issued
in the Optionee's name evidencing the Shares purchased by the Optionee.
4. DEATH OF OPTIONEE
In the event of the death of the Optionee, any unexercised portion of
his Option shall be exercisable (to the extent that such Option was
exercisable at the time of his death) for one hundred and twenty (120)
days after the Optionee's death only by his personal representative or
such persons to whom the deceased Optionee's rights shall pass under
the Optionee's will or by the laws of descent and distribution.
5. NON-TRANSFERABILITY OF OPTION
The Optionee may not give, grant, sell exchange, transfer legal title,
pledge, assign or otherwise encumber or dispose of the Option or any
interest therein, otherwise than by will or the laws of descent and
distribution and, except as provided in this paragraph and paragraph 4,
the Option shall be exercisable only by the Optionee. Upon any attempt
to so transfer the Option, or upon the levy or attachment or similar
process of the Option, the Option shall automatically become null and
void.
6. RESTRICTION ON ISSUANCE OF SHARES - INVESTMENT REPRESENTATION
By accepting the Option, the Optionee agrees for himself, his heirs and
legatees that any and all Shares purchased upon the exercise of the
Option shall be acquired for investment and not for distribution. All
shares acquired by Executive under these provisions will be subject to
statutory restrictions, registration and to such lockup agreements as
Company may reasonably require of its executives. Upon the issuance of
any or all of the Shares subject to the Option, the Company, in its
discretion, may require the Optionee, or his heirs or legatees
receiving such Shares to deliver to the company a representation in
writing, in a form satisfactory to the Board of Directors, that such
Shares are being acquired in good faith for investment and not for
distribution. The Company may place a "stop transfer" order with
respect to such Shares with its transfer agent and will place and
appropriate restrictive legend on the certificate(s) evidencing such
Shares. The Company agrees to register the Shares as part of any Form
S-8 registration by the Company for so long as any Shares subject to
Options remain outstanding.
Page 23 of 27
<PAGE>
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
C. The Stock Option referenced herein shall not be subject to any
dilution as to percentage of ownership that may be from time
to time be appropriately approved und undertaken by the
company and that is applicable to all issued and outstanding
stock of the Company. In the event that the outstanding shares
are changed into or exchanged for a different number or kind
of shares or securities of the Company, or of any other
corporation, by reason of reorganization, merger, or other
subdivision, consolidation. Recapitalization,
reclassification, stock split, stock divided or combination of
shares or similar event, the Company shall make an appropriate
and equitable adjustment to the Stock Option or to the
Purchase Price so that Executive's Proportionate interest
shall be maintained as before the occurrence of such event to
the maximum extent possible.
D. Any adjustment in the number of Shares shall apply
proportionately to only the then unexercised portion of the
Option. If fractional Shares would result from any such
adjustment, the adjustment shall be revised to the next higher
whole number.
12. NO RIGHTS AS STOCKHOLDER
The Optionee shall have no rights as a stockholder in Shares as to
which the Option has not been exercised.
13. TAXES
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection
with the exercise of the Option granted hereby. The Company may further
require notification from the Optionee upon any disposition of Shares
acquired pursuant to the exercise of the Options granted hereunder.
14. BINDING EFFECT
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto,
their legal representatives and assigns.
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to agreement made and to be
performed wholly within the State of Florida
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
------------------------------------ ------------------------------------
Witness: MegaMedia Networks, Inc.
--------------------------- By William A. Mobley, Jr., President
------------------------------------ ------------------------------------
Witness: Optionee:
--------------------------- ---------------------------
Page 24 of 27
<PAGE>
EXERCISE FORM
(To be Executed If Optionee Desires to Exercise the Options)
TO: MegaMedia Networks, Inc.
The undersigned, being the Optionee of certain options ("Options") to
purchase shares of common stock of MegaMedia Networks, Inc. (the "Company" and
the "Shares"), under the conditions thereof, hereby exercises Options to
purchase _________ Shares evidenced by the within Option Agreement, and Herewith
makes payment of the exercise price in full in cash or immediately available
fund or by delivery of shares already owned by the Optionee with a market value
at least equal to the aggregate exercise price due. Kindly issue all Shares to
the undersigned and deliver them to the undersigned at the address stated below.
If such number of Shares shall not be all of the Shares purchasable under the
within Option Agreement, please issue a new Option Agreement of like tenor for
the balance of the remaining Shares purchasable hereunder to be delivered to the
undersigned at the address stated below.
By signing below, the Undersigned acknowledges that he has received
such financial and other information to his satisfaction regarding the Company
as he requires to make an informed investment decision. The Undersigned has had
the opportunity to ask questions and receive answers from the Company regarding
the Shares and the Company. The Undersigned further acknowledges that he is
aware that the Shares issued pursuant to this exercise may be restricted from
transfer.
Name
------------------------------------
(Please Print)
Address
---------------------------------
Signature
-------------------------------
Dated
--------------------
Page 25 of 27
<PAGE>
STOCK POWER
ATTACHMENT A
For full and adequate consideration received, Paul J. Turcotte, hereby sells,
assigns, and transfers to MEGAMEDIA NETWORKS, INC., Two Hundred Thousand
(200,000) shares of legend restricted common stock of MegaMedia Networks, Inc.,
now registered in the name of Paul J. Turcotte, on the books of the Corporation,
Certificate # and hereby irrevocably constitutes and appoints Atlas Stock
Transfer Company, or its successors, agent and attorney to transfer the
aforesaid stock on the books of the Corporation, with full power of substitution
in the premises.
Dated: .
---------------------
--------------------------------
Paul J. Turcotte
--------------------------------
SIGNATURE MEDALLION GUARANTEED
Page 26 of 27
<PAGE>
DESCRIPTION OF BUSINESS
EXHIBIT E
MegaMedia Networks, Inc. is a global internet entertainment portal specializing
in commercial "on-demand" selection and delivery of high-quality programming
including, but not limited to: movies, music, television and sports. MegaMedia
Networks markets and distributes entertainment content to consumers on a per
view, subscription, membership, or free basis; builds one-to-one customer
intimacy marketing profiles to enhance revenues; offers targeted and general
merchandise, services and advertising to consumers; builds corporate
relationships in the form of sponsor and strategic alliance programs;
MegaMedia Networks engages in several critical areas of activity including:
content acquisition through purchase, partnerships, Licensing and production;
encoding of content into such form as may be transmitted through electronic of
wireless distribution networks; organization, development and presentation of a
compelling consumer-oriented site or sites incorporating marketing, advertising,
sales and merchandising targeted to individual and broad consumer preferences;
commercial fulfillment, packaging and shipping; and design, assemblage and
operation of technical hardware and software platforms suitable for the delivery
of all aspects of MegaMedia Networks content monetization program and consumer
monetization program briefly described above including hosting, serving and
distribution through global digital transmission networks.
------------------------------- ------------------------------------
Executive - David A. Gust MegaMedia Networks, Inc.,
13543 Banana Bay Drive By William A. Mobley, Jr., President
Winter Garden, Florida 34787 57 West Pine Street
Orlando, Florida 32801
Page 27 of 27
