UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 7, 2016

 

SNAP INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)

 

Delaware   000-52176   20-3191847
(State or other jurisdiction   (Commission File Number)   (IRS Employer
of incorporation)       Identification No.)

 

320 W. 37th Street, 13th Floor

New York, NY

  10018
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (212) 594-5050

 

(Former name or former address, if changed since last report)

Not Applicable

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     
 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     
 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

Section 1 — Registrant’s Business and Operations

 

Item 1.01. Entry into a Material Definitive Agreement.

 

The information set forth under the headings “Escrow Agreement” and “Registration Rights Agreement” under Item 2.01 of this Current Report on Form 8-K, and under the heading “Employment Agreements” under Item 5.02 of this Current Report on Form 8-K, is incorporated by reference herein.

 

Item 1.02 Termination of Material Definitive Agreement.

 

In connection with the entry by Snap Interactive, Inc. (the “ Company ”) into the Lerner Employment Agreement (as described under the heading “Employment Agreements” under Item 5.02 of this Current Report on Form 8-K), that certain Executive Employment Agreement, dated as of April 10, 2013, by and between Clifford Lerner and the Company, as it has been amended from time to time, was terminated.

 

Section 2 — Financial Information

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On October 7, 2016, pursuant to the previously announced Agreement and Plan of Merger (the “ Merger Agreement ”), dated September 13, 2016, by and among the Company, SAVM Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“ Merger Sub ”), A.V.M. Software, Inc. (d/b/a Paltalk), a New York corporation (“ Paltalk ”), and Jason Katz, as the Paltalk Representative, Merger Sub merged with and into Paltalk, with Paltalk surviving as a wholly owned subsidiary of the Company (the “ Merger ”).

 

The Merger

 

In connection with the Merger, without any action on the part of any shareholder, each issued and outstanding share of Paltalk’s common stock, other than shares to be cancelled pursuant to the Merger Agreement, was converted into the right to receive 148.3 shares of the Company’s common stock (the “ Exchange Ratio ”). Paltalk shareholders were not entitled to receive fractional shares in the Merger. Instead, a holder of Paltalk’s common stock that would otherwise have been entitled to receive a fractional share of the Company’s common stock in the Merger received one full additional share of the Company’s common stock.

 

In addition, in connection with the Merger, each outstanding Paltalk stock option was assumed by the Company and converted into a stock option representing the right to purchase shares of the Company’s common stock, with the number of shares underlying such stock option and the exercise price thereof being adjusted by the Exchange Ratio, with any fractional shares rounded down to the next lowest number of whole shares.

 

As a result of the Merger, the former Paltalk shareholders own approximately 77.9% of the outstanding shares of the Company’s common stock, including shares of the Company’s common stock held in escrow to secure the indemnification obligations of the former shareholders of Paltalk under the Merger Agreement.

 

The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “ SEC ”) on September 14, 2016 and is incorporated by reference herein.

 

Escrow Agreement

 

In accordance with the terms of the Merger Agreement, on October 7, 2016, the Company, Jason Katz, as the Paltalk Representative, and Corporate Stock Transfer, Inc., as escrow agent (the “ Escrow Agent ”), entered into an Escrow Agreement (the “ Escrow Agreement ”), pursuant to which the Company deposited 18,000,000 shares (the “ Escrow Shares ”) of its common stock with the Escrow Agent that would otherwise have been issued and delivered to the Paltalk shareholders in the Merger in order to secure the indemnification obligations of the former shareholders of Paltalk under the Merger Agreement. The Escrow Shares will be held in the escrow account until sixty days after the date on which the Company files with the SEC its consolidated audited financial statements for the fiscal year ended December 31, 2016. After such date, the Escrow Shares (minus any Escrow Shares issued in satisfaction of, or held pending resolution in connection with, any indemnification claims by the Company and certain of its affiliates) will be distributed to the former shareholders of Paltalk.

 

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The foregoing description of the Escrow Agreement does not purport to be complete and is qualified in its entirety by reference to the Escrow Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Registration Rights Agreement

 

Pursuant to the terms of the Merger Agreement, on October 7, 2016, the Company entered into a registration rights agreement (the “ Registration Rights Agreement ”) with Clifford Lerner. The Registration Rights Agreement provides that, subject to certain limitations, Mr. Lerner may demand that the Company register for resale under the Securities Act of 1933, as amended (the “ Securities Act ”), all or a portion of his shares of the Company’s common stock. In addition, the Registration Rights Agreement provides Mr. Lerner with certain incidental “piggy-back” registration rights, which generally allow Mr. Lerner to participate in registered offerings of the Company’s common stock that are initiated by the Company or on behalf of other holders of the Company’s securities.

 

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

 

As previously reported, on February 13, 2015, as part of a private placement, the Company issued a 12% senior secured convertible note in the principal amount of $3,000,000 to Sigma Opportunity Fund II, LLC (the “ Note ”). Pursuant to the terms of the Note, the Note matures on the earlier to occur of (i) February 13, 2017 and (ii) a Change of Control Transaction (as defined in the Note).

 

The consummation of the Merger constituted a Change of Control Transaction and, accordingly, the Note became due and payable on October 7, 2016. On October 7, 2016, the Company initiated a wire transfer to repay the Note in full.

 

Further, as previously reported, on July 18, 2016, the Company entered into a subordinated multiple advance term note (the “ Term Note ”) with Paltalk, pursuant to which Paltalk agreed to advance to the Company, upon the Company’s request and subject to the terms and conditions set forth in the Term Note, up to $250,000. The Term Note matures on July 18, 2017, subject to certain exceptions, and advances under the Term Note shall bear interest at a rate of 8.0% per annum. As of the date of the Merger, the Company had borrowed $200,000 available under the Term Note. Upon consummation of the Merger, the indebtedness represented by the Term Note was deemed repaid in full.

 

Section 3 — Securities and Trading Markets

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth under the heading “The Merger” under Item 2.01 is incorporated by reference herein. The shares of the Company’s common stock issued in the Merger were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder as a transaction by an issuer not involving any public offering.

 

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Section 5 — Corporate Governance and Management

 

Item 5.01. Change in Control of Registrant.

 

The information set forth under the heading “The Merger” under Item 2.01 is incorporated by reference herein.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Appointment of Directors

 

Pursuant to the Merger Agreement, in connection with the Merger, Jason Katz, Lance Laifer and John Silberstein, each of whom was a member of Paltalk’s Board of Directors immediately prior to the Merger, and Yoram “Rami” Abada and Michael Levit were appointed to the Company’s Board of Directors (the “ Board ”). Alexander Harrington and Clifford Lerner, each of whom was a member of the Board immediately prior to the Merger, will continue to serve as members of the Board. Each of the members of the Board will serve until the Company’s 2017 annual meeting of stockholders or until his earlier death, resignation or removal.

 

In connection with the appointment of the new members of the Board, the Board previously adopted resolutions to increase the size of the Board from five directors to seven directors, to be effective upon consummation of the Merger. Additionally, pursuant to the Merger Agreement and in order to accommodate the appointment of the new directors, each of Neil Foster, Dr. Steven Fox and Judy Krandel delivered a resignation letter pursuant to which he or she resigned from the Board upon consummation of the Merger. These resignations were required under the Merger Agreement and were not the result of any disagreements with the Company on any matter relating to the Company’s operations, policies or practices.

 

Other than the Merger Agreement, there are no arrangements or understandings between any of the new members of the Board and any other persons pursuant to which such individuals were selected as directors. In addition, there are no transactions between the Company and any of the new members of the Board or their respective immediate family members requiring disclosure under Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.

 

Appointment of Officers

 

Pursuant to the Merger Agreement, upon consummation of the Merger, the following individuals were appointed to the office(s) set forth opposite such individual’s name below:

 

Name   Title
Alexander Harrington   Chief Executive Officer and interim Chief Financial Officer
Jason Katz   Chairman of the Board, President and Chief Operating Officer
Arash Vakil   Chief Product Officer
Eric Sackowitz   Chief Technology Officer
Clifford Lerner   Chief Product Innovation Officer (non-executive officer role)

 

Jason Katz , 53, is a member of the Board and the Company’s Chairman of the Board, President and Chief Operating Officer. Mr. Katz is the founder of Paltalk, and has served as its Chief Executive Officer and as a member of its Board of Directors since 1998. In his capacity as an executive officer and director of Paltalk, Mr. Katz oversees the strategic direction of Paltalk and its subsidiaries, and also manages its system infrastructure. Mr. Katz is an authority on instant messaging as well as web-based voice and video. Mr. Katz has appeared at numerous industry forums as well as on Bloomberg Radio and CNN Radio. Prior to Paltalk, Mr. Katz co-founded MJ Capital, a money management firm. Earlier in his career, Mr. Katz was a corporate lawyer at the New York office of Fulbright & Jaworski. Mr. Katz earned a JD from the New York University School of Law (1988) and a BA in Economics from the University of Pennsylvania (1985).

 

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Alexander Harrington , 44, is a member of the Board and the Company’s Chief Executive Officer and interim Chief Financial Officer. Mr. Harrington has served as the Company’s Chief Executive Officer since October 2015 and previously served as its Chief Financial Officer from March 2014 to October 2016. Mr. Harrington also served as the Company’s Chief Operating Officer from February 2014 until his appointment as the Company’s Chief Executive Officer in October 2015. In addition, Mr. Harrington has served on the Board since June 2014. Mr. Harrington previously served as Chief Executive Officer of MeetMoi, LLC from June 2009 to November 2013, a social dating mobile platform, prior to the sale of MeetMoi, LLC to Match.com, LLC. Prior to that, Mr. Harrington served as the Senior Vice President of Strategy and Operations for Zagat Survey, LLC from 2004 to 2008, where he oversaw a transformation of the digital business which ultimately culminated in the company’s sale to Google Inc. In prior roles, Mr. Harrington served as the Senior Director of New Business Development at Sony BMG Entertainment and as an associate and analyst in investment banking at The Beacon Group and Smith Barney, respectively. Mr. Harrington holds a Master of Business Administration degree from the Wharton School at the University of Pennsylvania and a Bachelor’s degree in History from Williams College.

 

Employment Agreements

 

Pursuant to the Merger Agreement, on October 7, 2016, the Company entered into an amendment to Mr. Harrington’s existing employment agreement and entered into new employment agreements with each of Messrs. Katz and Lerner, each of which became effective upon consummation of the Merger. Each employment agreement sets forth, among other things, such individual’s employment responsibilities, term of employment and base salary.

 

Harrington Employment Agreement Amendment . The amendment to Mr. Harrington’s employment agreement (the “ Harrington Employment Agreement Amendment ”) amended the terms of Mr. Harrington’s existing employment agreement to increase Mr. Harrington’s base salary from $265,000 per year to $285,000 per year. In addition, the Harrington Employment Agreement Amendment amended the provisions relating to Mr. Harrington’s annual bonus to provide that, for the 2016 calendar year, Mr. Harrington would be eligible to receive an annual incentive bonus of up to $150,000, with $50,000 of such bonus being guaranteed and the remaining portion of such bonus being payable based on the achievement of performance metrics to be decided by the Board, in its sole discretion. The payment of Mr. Harrington’s annual incentive bonus is contingent on him being employed by the Company on the date that such bonus is paid.

 

The Harrington Employment Agreement Amendment also provides that, as soon as administratively practicable following the effective date of the Harrington Employment Agreement Amendment and subject to Board approval, Mr. Harrington will be awarded a stock option representing the right to purchase 1,000,000 shares of the Company’s common stock. The exercise price of the stock option will be the fair market value of the Company’s common stock on the date of grant, and the stock option will vest in four equal installments on each anniversary of the date of grant.

 

The Harrington Employment Agreement Amendment also provides that Mr. Harrington shall not take certain actions unless such actions have first been approved by either (i) Mr. Katz or (ii) the Board (including the affirmative vote of Mr. Katz, provided that he is a serving as a member of the Board when such approval is sought). Such restricted actions include:

 

the incurrence (or guarantee) by the Company of indebtedness for borrowed money or indebtedness outside the ordinary course of business, in each case in excess of $50,000;

 

the settlement of any claim, debt, demand, suit, proceeding or judgment against or on behalf of the Company in excess of $50,000;

 

the appointment or removal of any executive officer of the Company (defined as an individual who has been, or is required to be, identified as an executive officer in the Company’s SEC filings), or the entry into any employment agreement with an annual salary greater than $100,000;

 

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the entry into any new agreement, arrangement or understanding that would require payments by the Company in excess of $100,000 per annum, or that would materially limit the ability of the Company to operate its business, subject to certain exceptions;

 

the engagement, on behalf of the Company, of attorneys, accountants, underwriters or placement agents, subject to certain exceptions, or the removal of any of the Company’s current such advisors or consultants; and

 

the engagement, on behalf of the Company, of any other professional advisors or consultants to the Company outside the ordinary course of business, subject to certain exceptions, or the removal of any of the Company’s current such advisors or consultants.

 

Pursuant to the Harrington Employment Agreement Amendment, if Mr. Harrington’s employment is terminated (i) by the failure of the Company to renew Mr. Harrington’s employment agreement for a renewal term, (ii) by the Company without “cause” (as defined in the Harrington Employment Agreement Amendment) or (iii) by Mr. Harrington for “good reason” (as defined in the Harrington Employment Agreement Amendment), then subject to certain limitations and Mr. Harrington’s compliance with certain conditions, the Company shall pay Mr. Harrington severance equal to eight months’ base salary, payable in eight equal monthly installments. In addition, the Company shall continue to pay the Company’s portion of Mr. Harrington’s monthly health insurance premiums, if Mr. Harrington is eligible and elects to continue health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), for the earlier of (i) eight months following Mr. Harrington’s termination of employment or (ii) the date that Mr. Harrington’s coverage under such group health plan terminates for any reason. If Mr. Harrington’s employment is terminated by the Company without cause or by Mr. Harrington for good reason on or prior to the first anniversary of the effectiveness of the Harrington Employment Agreement Amendment, Mr. Harrington’s severance benefits for base salary and health insurance premium payments by the Company shall increase from eight months to ten months.

 

Katz Employment Agreement . The Company’s employment agreement with Mr. Katz (the “ Katz Employment Agreement ”) provides for a one year term with automatic successive one year renewals unless earlier terminated in accordance with its terms. Under the Katz Employment Agreement, Mr. Katz is entitled to receive a base salary of $180,000 per year and, for the 2016 calendar year, a guaranteed annual incentive bonus of at least $25,000, with any additional bonus amount being payable based on the achievement of performance metrics to be decided by the Board, in its sole discretion. Mr. Katz’s annual incentive bonuses in subsequent calendar years shall be determined by the Board, based on criteria to be established jointly by the Board and Mr. Katz. The payment of Mr. Katz’s annual incentive bonus is contingent on him being employed by the Company on the date that such bonus is paid.

 

Pursuant to the Katz Employment Agreement, if Mr. Katz’s employment is terminated (i) by the failure of the Company to renew Mr. Katz’s employment agreement for a renewal term, (ii) by the Company without “cause” (as defined in the Katz Employment Agreement) or (iii) by Mr. Katz for “good reason” (as defined in the Katz employment Agreement), then subject to certain limitations and Mr. Katz’s compliance with certain conditions, the Company shall pay Mr. Katz severance equal to three months’ base salary, payable in three equal monthly installments. In addition, the Company shall continue to pay the Company’s portion of Mr. Katz’s monthly health insurance premiums, if Mr. Katz is eligible and elects to continue health insurance under COBRA, for the earlier of (i) three months following Mr. Katz’s termination of employment or (ii) the date Mr. Katz’s coverage under such group health plan terminates for any reason. Mr. Katz would be entitled to the same severance benefits in the event that his employment is terminated prior to, in connection with or following a Change in Control (as defined in the Katz Employment Agreement).

 

In addition, the Katz Employment Agreement contains customary provisions relating to confidentiality, non-solicitation and non-competition.

 

Lerner Employment Agreement . The Company’s employment agreement with Mr. Lerner (the “ Lerner Employment Agreement ,” and collectively with the Harrington Employment Agreement Amendment and the Katz Employment Agreement, the “ New Employment Agreements ”) provides for an at-will employment relationship that can be terminated by the Company or Mr. Lerner at any time, for any reason or for no reason, with or without notice, or with or without cause. Under the Lerner Employment Agreement, Mr. Lerner is entitled to receive a base salary of $150,000 per year through the first anniversary of the closing of the Merger. After the first anniversary of the closing of the Merger, Mr. Lerner’s annual base salary shall be reduced to $75,000 per year. The Lerner Employment Agreement also provides that Mr. Lerner will be eligible to receive an annual discretionary incentive bonus, the amount of which shall be determined by the Company in its sole discretion. The payment of Mr. Lerner’s annual incentive bonus is contingent on him being employed by the Company on the date that such bonus is paid.

 

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Pursuant to the Lerner Employment Agreement, if Mr. Lerner’s employment is terminated prior to the one-year anniversary of the closing of the Merger (i) by the Company without “cause” (as defined in the Lerner Employment Agreement) or (ii) by Mr. Lerner for “good reason” (as defined in the Lerner Employment Agreement), then subject to certain limitations and Mr. Lerner’s compliance with certain conditions, the Company shall, for a period beginning on the date of termination and ending on the earlier of (a) the one-year anniversary of Mr. Lerner’s termination or (b) the one-year anniversary of the closing of the Merger, continue to pay Mr. Lerner’s base salary and, if Mr. Lerner is eligible and elects to continue health insurance under COBRA, pay Mr. Lerner an amount sufficient to reimburse him for a portion of his health insurance premiums incurred during the time period described in (a) or (b) above, as applicable, which amount shall not exceed the amount the Company would pay on behalf of its other employees generally.

 

In addition, the Lerner Employment Agreement contains customary provisions relating to confidentiality, non-solicitation and non-competition.

 

The foregoing description of the New Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the Harrington Employment Agreement Amendment, the Katz Employment Agreement and the Lerner Employment Agreement, copies of which are filed as Exhibits 10.3, 10.4 and 10.5, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

 

Amendments to Restricted Stock Award Agreements

 

Pursuant to the Merger Agreement, on October 7, 2016, the Company entered into amendments to (i) a restricted stock award agreement, by and between the Company and Mr. Lerner, dated March 3, 2016, related to the award of 5,000,000 shares of restricted common stock of the Company to Mr. Lerner and (ii) a restricted stock award agreement, by and between the Company and Mr. Lerner, dated December 14, 2011, related to the award of 4,250,000 shares of restricted common stock of the Company to Mr. Lerner (together, the “ Restricted Stock Award Amendments ”).

 

Prior to entering into the Restricted Stock Award Amendments, Mr. Lerner’s restricted stock awards would have vested on the earlier of (i) the tenth anniversary of the respective award’s date of grant, (ii) the date of a Change in Control (as defined in the applicable restricted stock award agreement and which would have included the closing of the Merger), (iii) the date of Mr. Lerner’s termination of employment by the Company without cause or (iv) the date of Mr. Lerner’s termination of employment due to his death or total and permanent disability, provided, in each case, that Mr. Lerner was providing services to the Company on the applicable date. The Restricted Stock Award Amendments amend the vesting schedule of Mr. Lerner’s restricted stock awards to provide that (x) Mr. Lerner’s restricted stock shall vest 40% upon the first anniversary of the closing of the Merger and 30% on each of the second and third anniversaries of the closing of the Merger, provided, in each case, that Mr. Lerner is employed by the Company on such dates, and (y) the consummation of the Merger shall not cause the vesting of such restricted stock to accelerate.

 

The Restricted Stock Award Amendments also provide that, within 90 days following the date that Mr. Lerner’s restricted stock vests, the Company shall have the right to require payment from Mr. Lerner to cover any applicable taxes due upon the vesting of such restricted stock, which payment may be made in the manner set forth in the Restricted Stock Award Amendments; provided, that with respect to the restricted stock that vests 40% upon the first anniversary of the closing of the Merger, the Company shall withhold, in full or partial satisfaction of the tax obligations related to such vested restricted stock, a number of shares of common stock that would otherwise be acquired upon vesting having a fair market value equal to the lesser of (i) the tax withholding obligation and (ii) an aggregate of $200,000.

 

The foregoing description of the Restricted Stock Award Amendments does not purport to be complete and is qualified in its entirety by reference to the Restricted Stock Award Amendments, copies of which are filed as Exhibits 10.6 and 10.7 to this Current Report on Form 8-K and are incorporated by reference herein.

 

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Assumption of Paltalk Stock Options

 

The information set forth under the heading “The Merger” under Item 2.01 of this Current Report on Form 8-K related to the assumption of the outstanding Paltalk stock options by the Company is incorporated by reference herein.

 

Section 7 — Regulation FD

 

Item 7.01. Regulation FD Disclosure.

 

On October 10, 2016, the Company and Paltalk issued a joint press release announcing the consummation of the Merger. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

 

The information in this Item 7.01 (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, except as expressly set forth in such filing.

 

Section 9 — Financial Statements and Exhibits

 

Item 9.01. Financial Statements and Exhibits.

 

(a) Financial Statements of Business Acquired.

 

The Company will file the financial statements required to be filed by this Item 9.01(a) not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed.

 

(b) Pro Forma Financial Information.

 

The Company will file the financial statements required to be filed by this Item 9.01(b) not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed.

 

(d) Exhibits.

 

Exhibit No.   Description
2.1   Agreement and Plan of Merger, dated as of September 13, 2016, by and among Snap Interactive, Inc., SAVM Acquisition Corporation, A.V.M. Software, Inc., and Jason Katz, as the representative of A.V.M. Software, Inc. (filed as Exhibit 2.1 to Current Report on Form 8-K that was filed by the Company with the SEC on September 14, 2016, and incorporated herein by reference).
10.1   Escrow Agreement, dated October 7, 2016, by and among Snap Interactive, Inc., Jason Katz and Corporate Stock Transfer, Inc.
10.2   Registration Rights Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.3   Fourth Amendment to Executive Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Alexander Harrington.
10.4   Executive Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Jason Katz.
10.5   Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.6   First Amendment to Restricted Stock Award Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.7   First Amendment to Restricted Stock Award Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
99.1   Press Release, dated October 10, 2016, issued by Snap Interactive, Inc. and A.V.M. Software, Inc.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: October 11, 2016    
     
  SNAP INTERACTIVE, INC.
     
  By: /s/ Alexander Harrington
    Alexander Harrington
   

Chief Executive Officer and

interim Chief Financial Officer

 

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EXHIBIT INDEX

 

Exhibit No.   Description
2.1   Agreement and Plan of Merger, dated as of September 13, 2016, by and among Snap Interactive, Inc., SAVM Acquisition Corporation, A.V.M. Software, Inc., and Jason Katz, as the representative of A.V.M. Software, Inc. (filed as Exhibit 2.1 to Current Report on Form 8-K that was filed by the Company with the SEC on September 14, 2016, and incorporated herein by reference).
10.1   Escrow Agreement, dated October 7, 2016, by and among Snap Interactive, Inc., Jason Katz and Corporate Stock Transfer, Inc.
10.2   Registration Rights Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.3   Fourth Amendment to Executive Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Alexander Harrington.
10.4   Executive Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Jason Katz.
10.5   Employment Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.6   First Amendment to Restricted Stock Award Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
10.7   First Amendment to Restricted Stock Award Agreement, dated October 7, 2016, by and between Snap Interactive, Inc. and Clifford Lerner.
99.1   Press Release, dated October 10, 2016, issued by Snap Interactive, Inc. and A.V.M. Software, Inc.

 

 

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Exhibit 10.1

 

EXECUTION COPY

 

ESCROW AGREEMENT

 

This Escrow Agreement (this “ Agreement ”) dated October 7, 2016 by and among Snap Interactive, Inc., a Delaware corporation (“ Parent ”), Jason Katz, as representative (the “ Company Representative ”) for the former shareholders of A.V.M. Software, Inc., a New York corporation (“ Company ”), listed on Schedule A hereto and Corporate Stock Transfer, Inc., as escrow agent (in such capacity, the “ Escrow Agent ”).

 

RECITALS:

 

A. Parent, SAVM Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Parent (“ Merger Sub ”), Company and Company Representative are parties to an Agreement and Plan of Merger dated as of September 13, 2016 (the “ Merger Agreement ”) pursuant to which Merger Sub has merged with Company, with Company being the surviving entity of such merger. Pursuant to the Merger Agreement, Parent is to be indemnified in certain respects. The parties desire to establish an escrow fund as collateral security for the indemnification obligations of the Company Indemnitees under Article 9 of the Merger Agreement. The Company Representative has been designated pursuant to the Merger Agreement to represent all of the Company Indemnitees, and to act on their behalf for purposes of such indemnification obligations and this Agreement. Capitalized terms used herein that are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.

 

B. Pursuant to the Merger Agreement, the parties to the Merger Agreement have agreed that 18,000,000 shares of the common stock of Parent (the “ Parent Common Stock ”) to be issued to the Company Indemnitees pursuant to the Merger Agreement will be deposited in escrow in accordance with the terms of this Agreement to secure the Company Indemnitees’ indemnification obligations under Article IX of the Merger Agreement (such shares, which shall be subject to adjustment for stock splits, reverse stock splits and stock dividends, are referred to as the “ Escrow Shares ”).

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants contained herein and in the Merger Agreement, it is hereby agreed as follows:

 

1. Deposit in Escrow .

 

(a) Concurrently with the execution hereof, Parent has instructed its transfer agent (the “ Transfer Agent ”) to deliver to the Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, stock certificates representing the Escrow Shares issued in the name of “Corporate Stock Transfer, Inc. as Escrow Agent under agreement dated October 7, 2016”, to be held and administered as provided herein for the benefit of the Company Indemnitees as specified in Schedule A attached hereto. The Escrow Shares so delivered by the Transfer Agent to the Escrow Agent shall be held by the Escrow Agent in a segregated trust account (the “ Escrow Account ”) under the control of the Escrow Agent.

 

 

 

(b) The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the assets on deposit in the Escrow Account pursuant to the terms and conditions hereof. The Escrow Agent shall hold the Escrow Account as a trust account in accordance with the terms of this Agreement. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Account in accordance with this Agreement.

 

(c) Except as herein provided, the Company Indemnitees shall retain all of their rights as stockholders of Parent with respect to the Escrow Shares during the period the Escrow Shares are held by the Escrow Agent (the “ Escrow Period ”); provided, however, that with respect to the Escrow Shares held in the Escrow Account, the right to vote such Escrow Shares shall be exercised solely by the Company Representative in his discretion.

 

(d) During the Escrow Period, all dividends payable in cash with respect to the Escrow Shares (“ Cash Dividends ”) and all dividends payable in stock or other non-cash property, including shares issued upon a stock split (“ Non-Cash Dividends ”), shall each be delivered to the Escrow Agent to hold in the Escrow Account in accordance with the terms hereof. As used herein, the term “ Escrow Account ” shall be deemed to include the Cash Dividends and Non-Cash Dividends distributed thereon, if any.

 

(e) During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the Escrow Shares in the Escrow Account. During the Escrow Period, no Company Indemnitee shall pledge or grant a security interest in such Company Indemnitee’s shares of Parent Common Stock included in the Escrow Account or grant a security interest in such Company Indemnitee’s rights under this Agreement.

 

2. Distribution of the Escrow Shares .

 

(a) Parent, acting through at least two (2) members of the Committee, may make a claim for indemnification pursuant to the Merger Agreement (“ Indemnification Claim ”) against the Escrow Account by giving notice in the form attached hereto as Exhibit A (a “ Notice ”) to the Company Representative (with a copy to the Escrow Agent) specifying (i) the covenant, representation, warranty, agreement, undertaking or obligation contained in the Merger Agreement which it asserts has been breached or otherwise entitles Parent to indemnification, (ii) in reasonable detail, the nature and dollar amount of any Indemnification Claim, (iii) whether the Indemnification Claim results from a Third Party Claim against Parent or Company and (iv) the number of Escrow Shares to be delivered to Parent in respect of such Indemnification Claim.

 

(b) If the Company Representative gives a notice in the form attached hereto as Exhibit B to the Escrow Agent in accordance with Section 9.2 of the Merger Agreement (with a copy to the Committee) (a “ Counter Notice ”), within 30 days following the date of receipt (as specified in the Committee’s certification) by the Company Representative of a copy of the Notice, disputing that all or a portion of the Indemnification Claim is indemnifiable under the Merger Agreement, the Committee and the Company Representative shall attempt to resolve such dispute by voluntary settlement as provided in Section 2(c) below and in accordance with Section 9.2 of the Merger Agreement. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Company Representative within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.

 

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(c) If the Company Representative delivers a Counter Notice to the Escrow Agent (with a copy to the Committee) in accordance with Section 9.2 of the Merger Agreement, the Committee and the Company Representative shall, during the period of 30 days following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which the Counter Notice was given through good faith negotiations in accordance with Section 9.2(d)(i) of the Merger Agreement. If the Committee and the Company Representative reach a settlement with respect to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof.

 

(d) If the Committee and the Representative cannot resolve a dispute through good faith negotiations prior to expiration of the 30-day period referred to in Section 2(c) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be subject to resolution in accordance with Sections 9.2(d)(ii) and (iii) of the Merger Agreement.

 

(e) As used in this Agreement, “ Established Claim ” means any (i) Indemnification Claim deemed established pursuant to the last sentence of Section 2(b) above, (ii) Indemnification Claim resolved in favor of Parent by settlement pursuant to Section 2(c) above, resulting in an award to Parent, (iii) Indemnification Claim established pursuant to Section 2(d) above, resulting in an award to Parent, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Committee and the Company Representative have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement or otherwise.

 

(f) Promptly after an Indemnification Claim becomes an Established Claim, the Committee (acting by at least two (2) members thereof) and the Company Representative shall jointly deliver a notice to the Escrow Agent in the form attached hereto as Exhibit C (a “ Joint Notice ”) directing the Escrow Agent to transfer and deliver to Parent (or its designee as specified in the Notice), and the Escrow Agent promptly shall transfer and deliver to Parent (or its designee as specified in the Notice), the number of Escrow Shares (or other assets in the Escrow Account as the Joint Notice shall specify) (or, if at such time there remains in the Escrow Account less than the full number of Escrow Shares or other assets specified in the Joint Notice, the assets remaining in the Escrow Account).

 

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(g) Payment of an Established Claim shall be made only from the Escrow Account. However, in no event shall the Escrow Agent be required to calculate or make a determination of the number of Escrow Shares or other assets to be delivered to Parent in satisfaction of any Established Claim; rather, such calculation and determination shall be included in and made part of a Notice or Joint Notice delivered to the Escrow Agent. The Escrow Agent shall transfer to Parent (or its designee as specified in the Joint Notice) out of the Escrow Account that number of Escrow Shares or other assets necessary to satisfy each Established Claim, as set out in the applicable Notice or Joint Notice. Any dispute between the Committee and the Company Representative concerning the calculation of the number of Escrow Shares or other assets necessary to satisfy any Established Claim, or any other dispute regarding a Joint Notice, shall be resolved between the Committee and the Company Representative in accordance with Section 9.2(d) of the Merger Agreement, and shall not involve the Escrow Agent. Each transfer of Escrow Shares in satisfaction of an Established Claim shall be made by the Escrow Agent delivering, or causing the delivery, to Parent (or its designee as specified in the Joint Notice) certificates registered in the name of Parent (or such other name as shall be specified in the Joint Notice) evidencing the aggregate number of shares specified in the applicable Notice or Joint Notice. The parties hereto (other than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in shares of Parent Common Stock may be made notwithstanding any other agreements restricting or limiting the ability of any Company Indemnitee to sell any shares of Parent stock or otherwise. The Committee and the Company Representative shall be required to exercise utmost good faith in all matters relating to the preparation and delivery of each Notice or Joint Notice.

 

3. Escrow Termination Date .

 

(a) Not less than five Business Days prior to the occurrence of the Escrow Termination Date, Parent shall deliver written notice to the Escrow Agent of the date of the Escrow Termination Date.

 

(b) On the first Business Day after the Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver to the Transfer Agent (a) certificates representing the original number of Escrow Shares in the Escrow Account and other assets in the Escrow Account (b) less the sum of (i) the number of Escrow Shares and value of other assets applied in satisfaction of Indemnification Claims made prior to that date and (ii) the number of Escrow Shares and value of other assets in the Pending Claims Reserve (in each case, subject to adjustment for stock splits, reverse stock splits and stock dividends), and it shall be the responsibility of the Company Representative and the Transfer Agent to issue and distribute such shares to the Company Indemnitees. If, at such time, there are any Indemnification Claims with respect to which Notices have been received but which have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in either case, “ Pending Claims ”), and which, if resolved or finally determined in favor of Parent, would result in a payment to Parent, the Escrow Agent shall retain in the Pending Claims Reserve that number of Escrow Shares having a value (determined pursuant to Section 9.2(b) of the Merger Agreement) equal to the dollar amount for which indemnification is sought in such Indemnification Claim. The Joint Notice will include the value to be used in calculating the Pending Claims Reserve and the number of Escrow Shares to be retained therefor. Thereafter, if any Pending Claim becomes an Established Claim, the Committee and the Company Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to Parent (or its designee as specified in the Joint Notice) the number of Escrow Shares in the Pending Claims Reserve in respect thereof determined in accordance with Section 2 above and to deliver to Transfer Agent the remaining Escrow Shares in the Pending Claims Reserve allocated to such Pending Claim, all as specified in a Joint Notice, and it shall be the responsibility of the Company Representative and the Transfer Agent to issue and distribute such Escrow Shares to the Company Indemnitees. If any Pending Claim is resolved against Parent, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to the Transfer Agent the number of Escrow Shares allocated to such Pending Claim in the Pending Claims Reserve, and it shall be the responsibility of the Company Representative and the Transfer Agent to issue and distribute such shares to the Company Indemnitees.

 

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(c) As used herein, the “ Pending Claims Reserve ” shall mean, at the time any such determination is made, that number of Escrow Shares of Parent Common Stock in the Escrow Account having a value (determined pursuant to Section 9.2(b) of the Merger Agreement) equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims (as shown in the Notices of such Claims).

 

(d) As used herein, the “ Escrow Termination Date ” shall mean the date that is sixty (60) days after the date on which Parent files with the SEC its audited consolidated financial statements for the fiscal year ended December 31, 2016.

 

4. Cooperation and Good Faith; Voting .

 

(a) The Escrow Agent, the Committee and the Company Representative shall cooperate in all respects with one another in good faith in the calculation of any amounts determined to be payable to Parent and the Company Indemnitees in accordance with this Agreement and in implementing the procedures necessary to effect such payments.

 

(b) If the Escrow Agent receives from Parent or any other person any proxy materials or other information relating to a vote to be taken with respect to Parent common stock, the Escrow Agent shall promptly furnish copies of such materials to the Company Representative and the Company Representative shall vote all Escrow Shares, whether in person or by proxy, in such manner as the Company Representative shall instruct the Escrow Agent in writing.

 

5. Escrow Agent Responsibilities .

 

(a) The Escrow Agent undertakes to perform only such duties as are expressly set forth herein. It is understood that the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.

 

(b) The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto. Upon or before the execution of this Agreement, the Committee and the Company Representative shall deliver to the Escrow Agent authorized signers’ lists in the form of Exhibit D-1 and Exhibit D-2 to this Agreement.  

 

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(c) The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Parent pursuant to the terms of this Agreement or, if such notice is disputed by the Committee or the Company Representative, the settlement with respect to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to Parent the amount specified in such notice, and the Escrow Agent shall have no duty to determine the validity, authenticity or enforceability of any specification or certification made in such notice.

 

(d) The Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification under Section 5(f) , below, for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

(e) The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Account to a successor escrow agent appointed jointly by the Committee and the Company Representative.

 

(f) The Escrow Agent shall be indemnified and held harmless by Parent from and against any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Account held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Upon request by the Escrow Agent, Parent shall advance funds in an amount sufficient to pay such expenses of the Escrow Agent; provided, however, that the Escrow Agent shall repay any amount advanced by Parent (i) that exceeds the Escrow Agent’s actual expenses or (ii) in the event that it is ultimately determined that the Escrow Agent is not entitled to indemnification under this Agreement. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing.

 

(g) The Escrow Agent shall be entitled to reasonable compensation from Parent for all services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from Parent for all reasonable expenses incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

 

(h) From time to time on and after the date hereof, the Committee and the Company Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

(i) Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence or its own willful misconduct.

 

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6. This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.

 

7. This Agreement shall inure to the benefit of and be binding upon the parties (including the Committee) and their respective heirs, successors, assigns and legal representatives, shall be governed by and construed in accordance with the law of Delaware applicable to contracts made and to be performed therein. This Agreement cannot be changed or terminated except by a writing signed by Parent (by a member of the Committee), the Company Representative and the Escrow Agent.

 

8. This Agreement, and all claims or causes of action (whether at law, in contract or in tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of New York. Each of the parties hereto irrevocably (i) consents to submit itself to the personal jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court for the Southern District of New York in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, and, in connection with any such matter, to service of process by notice as otherwise provided herein, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the foregoing New York State court or, to the fullest extent permitted by applicable Law, the foregoing Federal court. Any party may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 9 hereof.

 

9. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given and duly delivered: (i) when delivered (or delivery was properly tendered) by hand; (ii) when delivered (or delivery was properly tendered) by the addressee if sent by a nationally recognized overnight courier; or (iii) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, if the original of such notice was duly transmitted in accordance with (i) or (ii) of this Section 9 or transmitted by certified mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9 :

 

A. If to the Committee, to:

Snap Interactive, Inc.
320 W. 37th Street, 13th Floor
New York, N.Y. 10018
Attention: Alex Harrington
Email: alex@snap-interactive.com
Telephone: 212-967-5120 ext. 113

 

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With a copy to (which will not constitute notice to the Committee):

Haynes and Boone, LLP
2323 Victory Avenue, Suite 700
Dallas, TX 75219-7672
Attention: Gregory R. Samuel
Email: Greg.Samuel@haynesboone.com

Telephone: 214-651-5645

 

B. If to the Company Representative, to:

 

A.V.M Software, Inc.
122 East 42nd Street
New York, NY
Attention: Jason Katz
Email: jkatz@paltalk.com
Telephone: 212-520-7000

 

With a copy to (which shall not constitute notice to the Company Representative):

 

Pryor Cashman LLP

7 Times Square, 39 th Floor

New York, New York 10036

Attention: Eric B. Woldenberg, Esq.

Email: ewoldenberg@pryorcashman.com

Telephone: 212-326-0865

 

C. If to the Escrow Agent, to:

 

Corporate Stock Transfer, Inc.
3200 Cherry Creek South Drive, Suite 430
Denver, Colorado 80209

Attention: Carylyn Bell
Email: cbell@corporatestock.com

Telephone: 303-282-4800

 

or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.

 

10. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.

 

[Signatures are on following page]

 

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.

 

 


PARENT:

 

SNAP INTERACTIVE, INC.

     
  By: /s/ Alexander Harrington
  Name: Alexander Harrington
  Title: Chief Executive Officer
     
 

ESCROW AGENT:

 


CORPORATE STOCK TRANSFER, INC.

     
  By:  /s/ Carylyn Bell
  Name: Carylyn Bell
  Title: President
 

 


COMPANY REPRESENTATIVE:

 

  By: /s/ Jason Katz
  Name: Jason Katz
 

 

 

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Exhibit 10.2

 

EXECUTION COPY

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, effective as of October 7, 2016 (this “ Agreement ”), is between Snap Interactive, Inc. (the “ Company ”) and Clifford Lerner (the “ Holder ”).

 

W I T N E S S E T H:

 

WHEREAS , the Holder is the holder of an aggregate of 30,250,000 shares of the common stock, par value $0.001 per share, of the Company (the “ Common Stock ”), including 9,250,000 shares of unvested restricted stock (the “ Restricted Stock ”) awarded pursuant to (i) that certain Restricted Stock Award Agreement, dated December 14, 2011, by and between the Company and the Holder and (ii) that certain Restricted Stock Award Agreement, dated March 3, 2016, by and between the Company and the Holder, in each case, as may be amended from time to time (all of such shares of Common Stock and Restricted Stock held by the Holder as of the date of this Agreement are referred to herein as the “ Holder Shares ”); and

 

WHEREAS , the Holder and the Company desire to enter into this Agreement to provide for certain rights relating to the registration of the resale of all or a portion of the Holder Shares.

 

AGREEMENT

 

NOW , THEREFORE , in consideration of the foregoing and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1. Certain Definitions . For purposes of this Agreement, the following terms have the meanings set forth below:

 

Affiliate ” means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether by contract, through the ownership of voting securities, or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

Commission ” means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act.

 

Exchange Act ” means the Securities Exchange Act of 1934, or any successor federal statute, and the rules and regulations of the Commission thereunder, as the same may be amended from time to time.

 

Person ” means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof.

 

Public Offering ” means a primary or secondary sale by the Company of Common Stock for cash to the public pursuant to an effective registration statement filed under the Securities Act.

 

Registrable Securities ” means (i) the Holder Shares owned or held as of the date of this Agreement by the Holder and (ii) any shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of any of the Registrable Securities described in (i) above; provided , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities upon the earliest of the date upon which: (a) a registration statement with respect to the resale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged pursuant to such registration statement; (b) such securities shall have been otherwise transferred and new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; or (d)  such securities are sold under Rule 144 (or any successor provision).

 

 

 

Securities Act ” means the Securities Act of 1933, or any successor federal statute, and the rules and regulations of the Commission thereunder, as the same may be amended from time to time.

 

Underwriter ” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

 

Section 2. Demand Registration .

 

(a) Request for Demand Registration . At any time following the end of the two hundred and seventy (270) day period after the effective date of the Merger (as defined in the Agreement and Plan of Merger, dated as of September 13, 2016, by and among the Company, SAVM Acquisition Corporation, A.V.M. Software, Inc. and Jason Katz as the A.V.M. Software, Inc. representative), the Holder may make a written demand for registration under the Securities Act of all or part of the Registrable Securities (a “ Demand Registration ”). Any demand for a Demand Registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) and plan of distribution thereof. Upon any such request, the Holder shall be entitled to have his Registrable Securities included in the Demand Registration, subject to Section 2(g) and the provisos set forth in the first sentence of Section 2(b) .

 

(b) Form of Registration Statement . The Company shall, as expeditiously as possible and in any event within sixty (60) days after receipt of a request for a Demand Registration pursuant to Section 2(a) , prepare and file with the Commission a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) and plan of distribution thereof; provided , that the Company shall have the right to defer any Demand Registration for up to forty-five (45) days, in each case if the Company shall furnish to the Holder a certificate signed by the Chief Executive Officer or Chairman of the Board of Directors of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its stockholders for such registration statement to be effected at such time; provided , further , that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than twice in any 365-day period in respect of a Demand Registration hereunder. In addition, the Company may elect to register for resale shares of Common Stock held by other security holders of the Company, so long as (i) the Registrable Securities of the Holder to be registered will not be reduced thereby; (ii) if such registration is an underwritten offering, such other security holders agree in writing to sell the Common Stock on the same terms and conditions as apply to the Registrable Securities being sold by the Holder, (iii) if such registration is an underwritten offering, any Common Stock held by other security holders of the Company to be registered for resale and/or resold will not, in the opinion of the managing Underwriter(s) adversely affect the proposed offering price, the timing, the distribution method, or the probability of success of such offering of the Registrable Securities being sold; and (iv) the Company will be responsible for any and all costs (including reasonable attorneys’ fees) incurred by the Holder arising out of the registration of such other security holder’s Common Stock.

 

(c) Effecting the Registration Statement . The Company shall use commercially reasonable efforts to cause the registration statement filed pursuant to this Section 2 to become effective as soon as reasonably practicable following the filing thereof, and shall use commercially reasonable efforts to keep such registration statement in effect and maintain compliance with all securities laws for the lesser of (x) three years and (y) until the securities registered thereunder no longer are Registrable Securities. A registration will not count as a Demand Registration for purposes of Section 2(d) until the registration statement filed with the Commission with respect to such Demand Registration registering all of the Registrable Securities specified in the notice received pursuant to Section 2(a) , determined on the basis described in Sections 2(a) and 2(b) , has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided , that if, after such registration statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the registration statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until: (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) the Holder thereafter elects to continue the offering.

 

2

 

 

(d) Number of Demands . Subject to Section 2(g) , the Company shall only be obligated under this Section 2 to effect one (1) Demand Registration for the Holder.

 

(e) Delay due to Underwritten Offering . If, following receipt of a demand for a Demand Registration pursuant to Section 2(a) , the Company has already begun registering securities (with respect to a primary or secondary offering) pursuant to an underwritten public offering (an “ Existing Offering ”) and in the good faith judgment of the managing Underwriter of the Existing Offering, the registration of the Registrable Securities pursuant to such demand or the resale of the Registrable Securities pursuant thereto would interfere with the Underwriter’s successful marketing of the Existing Offering, the Company may, by giving prompt written notice to the Holder, delay the registration of the Registrable Securities pursuant to such demand or any resale of such Registrable Securities for the minimum period necessary to not interfere with such Existing Offering, but in no event more than 180 days; provided , that the Company may not deliver any such notice more than once in any 365-day period. Notwithstanding the foregoing, the Holder shall have Piggyback Registration rights under Section 3 with respect to the Existing Offering.

 

(f) Underwritten Offering . If any registration under Section 2 of this Agreement is an underwritten offering, the Underwriter(s) that will administer the offering shall be selected by the Company.

 

(g) Withdrawal . If the Holder is not entitled to include all of its Registrable Securities in any offering, the Holder may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of its request to withdraw prior to the effectiveness of the registration statement filed with the Commission with respect to such Demand Registration. If the Holder withdraws from a proposed offering relating to a Demand Registration, then such registration shall not count as a Demand Registration provided for in Section 2(d) .

 

Section 3. Piggyback Registration .

 

(a) If at any time after the date hereof, the Company proposes to file a registration statement relating to an offering for its own account or the account of others (other than a registration statement on Form S-4 or Form S-8 or their equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall promptly provide the Holder with written notice (which notice shall be given not less than fifteen (15) business days prior to the effective date of such registration statement) of such registration (a “ Piggyback Registration ”), which notice shall offer the Holder the opportunity to register such amount of Registrable Securities as it shall request. The Holder shall have ten (10) business days from the date of receipt of the Company’s notice to deliver to the Company a written request for inclusion of the Holder’s Registrable Securities, specifying the number of such Registrable Securities to be included in the registration. The Holder shall have the right to withdraw the Holder’s request for inclusion at any time by sending a written withdrawal notice to the Company. The Company shall include in such registration all the Registrable Securities requested to be included by the Holder in accordance with this Section 3(a) .

 

(b) If the Company intends for the Common Stock being registered pursuant to any Piggyback Registration to be distributed pursuant to an underwriting (an “ Underwritten Piggyback Registration ”), the notice provided by the Company to the Holder pursuant to this Section 3 shall state that such registration will be underwritten. In connection with an Underwritten Piggyback Registration, the Board of Directors of the Company shall select the Underwriter.

 

(c) Notwithstanding anything to the contrary in this Section 3 , the right of the Holder to participate in an Underwritten Piggyback Registration shall be conditioned upon the Holder agreeing to (i) sell all of its Registrable Securities included in such registration on the basis provided in any underwriting arrangements approved by the Company and (ii) complete and execute all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

 

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(d) If in connection with any Underwritten Piggyback Registration the Underwriter imposes a limitation on the number of shares of Common Stock which may be included in the registration statement because, in such Underwriter(s)’ reasonable judgment, such limitation is necessary for marketing purposes or to effect an orderly public distribution, then the Company shall be obligated to include in such registration statement only such limited portion of the Registrable Securities, if any, with respect to which the Holder has requested inclusion hereunder and the Underwriter has approved. Any exclusion of Registrable Securities shall be made pro rata among the Holder and any other holders including securities in the registration statement, in proportion to the number of shares of Common Stock sought to be included by such persons; provided, however , that in the event such other securities to be included in the registration statement are securities beneficially owned (as defined in Rule 13d-3 of the Exchange Act) by Jason Katz, than the foregoing proportional exclusion shall not apply to such shares beneficially owned by Mr. Katz; provided , further , that the number of shares of Common Stock beneficially owned by Mr. Katz to be included in such registration statement shall not exceed a ratio of 2 shares of Common stock for every 1 share of Common Stock included by the Holder.

 

(e) If in connection with any Underwritten Piggyback Registration the Holder disapproves of the terms of the underwriting, the Holder may elect to withdraw from such underwriting by delivering written notice to the Company and the Underwriter at least three (3) business days prior to the effective date of the registration statement. Any Registrable Securities withdrawn from such underwriting shall also be withdrawn from such registration.

 

(f) Nothing in this Agreement shall create any liability on the part of the Company to the Holder if the Company in its sole discretion should decide not to file a registration statement proposed to be filed pursuant to Section 3 or to defer or withdraw such registration statement subsequent to its filing, regardless of any action whatsoever that the Holder may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise.

 

(g) The Company shall be entitled to suspend the rights of the Holder under Section 3 to make sales pursuant to a registration statement otherwise required to be kept effective hereunder if the Company determines in good faith that there exists a material proposed event (including any proposed acquisition or disposition) that would be required to be disclosed in such registration statement and the disclosure of which would either have a material adverse effect on such proposed transaction or the Company.

 

Section 4. Registration Procedures .

 

(a) In the case of each registration by the Company pursuant to this Agreement, the Company shall:

 

(i) Use commercially reasonable efforts to prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective, and keep such registration statement effective until the distribution contemplated in the registration statement has been completed;

 

(ii) Use commercially reasonable efforts to prepare and file with the Commission such amendments, supplements and post-effective amendments to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement;

 

(iii) Use commercially reasonable efforts to furnish to the Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as it may reasonably request in order to facilitate the disposition of Registrable Securities owned by it;

 

(iv) Use commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holder; provided , that the Company shall not be required in connection therewith or as a condition thereto (A) to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(a)(iv) ; (B) subject itself to taxation but for this Section 4(a)(iv) ; or (C) consent to general service of process in any jurisdiction in which it would not otherwise be subject to general service of process but for this Section 4(a)(iv) ;

 

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(v) Use commercially reasonable efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be required by virtue of the business and operations of the Company to enable the Holder to consummate the disposition of such Registrable Securities;

 

(vi) Enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the Holder.

 

(vii) Promptly, and in no event more than two (2) business days after such filing, notify the Holder of such filing, and shall further notify the Holder promptly and confirm such advice in writing in all events within two (2) business days of the occurrence of any of the following: (i) when such registration statement becomes effective; (ii) when any post-effective amendment to such registration statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such registration statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such registration statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the Holder any such supplement or amendment; except that before filing with the Commission a registration statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the Holder and to the legal counsel for the Holder, copies of all such documents proposed to be filed sufficiently in advance of filing to provide the Holder and legal counsel with a reasonable opportunity to review such documents and comment thereon;

 

(viii) Use its commercially reasonable efforts to cause all such Registrable Securities covered by the registration statement to be listed on each securities exchange or quotation system on which similar securities issued by the Company are then listed, and enter into such customary agreements, including a listing application; provided , that the applicable listing requirements are satisfied;

 

(ix) Make available for inspection during normal business hours by the Holder, any Underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by the Holder or any such Underwriter (collectively, the “ Inspectors ”), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, “ Records ”), if any, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors and employees to supply all information and respond to all inquiries reasonably requested by any such Inspector in connection with such registration statement. Notwithstanding the foregoing, the Company shall have no obligation to disclose any Records to the Inspectors in the event the Company determines that such disclosure is reasonably likely to have an adverse effect on the Company’s ability to assert the existence of an attorney-client privilege with respect thereto; and

 

(x) Otherwise use its commercially reasonable efforts to comply, and continue to comply during the period that such registration statement is effective under the Securities Act, with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all Registrable Securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

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(b) Upon receipt of written notice from the Company that a registration statement or prospectus for a registration under this Agreement includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances then existing, the Holder shall forthwith discontinue the disposition of Registrable Securities until the Holder has received copies of the supplemented or amended prospectus that corrects such untrue statement or discloses such material fact, or until the Holder is advised in writing by the Company that the use of the prospectus may be resumed, and, if directed by the Company, the Holder shall deliver to the Company (at the Company’s expense) all copies of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

(c) In connection with any registration statement in which the Holder is participating, the Holder shall furnish to the Company in writing such information and affidavits with respect to itself and its proposed distribution of Registrable Securities as shall be reasonably necessary in order to assure compliance with federal and applicable state securities laws.

 

Section 5. Registration Expenses .

 

(a) Subject to Section 5(b) , all expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with federal and applicable state securities laws, printing expenses, escrow fees, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, Underwriters (excluding discounts and commissions) and other Persons, retained by the Company (all such expenses being herein called “ Registration Expenses ”), will be borne by the Company.

 

(b) If the Holder chooses to be represented by separate counsel in connection with the registration of the Registrable Securities, then the Holder will bear the cost of such separate legal counsel. Any underwriting discounts or commissions incurred in connection with, and attributable to, the sale of Registrable Securities shall be borne by the Holder.

 

Section 6. Indemnification .

 

(a) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company agrees to indemnify and hold harmless (i) the Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “ controlling person ”) and (iii) the respective officers, directors, partners, employees, representatives and agents of the Holder or any controlling person, to the fullest extent permitted by law, from and against any and all losses, claims, damages, liabilities, judgments, actions and reasonable expenses (including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any such party) directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act (or any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided , that the Company shall not be liable in any such case insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to the Holder that is furnished in writing to the Company by the Holder or any controlling person of the Holder specifically for use in such registration statement or prospectus; provided , further , that the indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, judgment, action or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

 

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(b) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Holder thereunder agrees to indemnify and hold harmless the Company, and its respective directors, officers, and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, and the respective officers, directors, partners, employees, representatives and agents of each such Person, each Underwriter and each Person, if any, who controls any Underwriter (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and each other seller of Registrable Securities and each Person who controls any such other seller of Registrable Securities, to the fullest extent permitted by law, from and against any and all losses, claims, damages, liabilities, judgments, actions and reasonable expenses (including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any such party) directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act (or any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement or alleged untrue statement or omission or alleged omission is made solely in reliance upon and in express conformity with information pertaining to the Holder that is furnished in writing to the Company by the Holder or any controlling person of the Holder specifically for use in such registration statement or prospectus; provided , that (i) the indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, judgment, action or expense if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld) and (ii) the maximum aggregate liability of the Holder shall in no event exceed the net proceeds actually received by the Holder upon sale of Registrable Securities.

 

(c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission to promptly notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party under this Section 6 , except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action shall be brought against any indemnified party and it shall promptly notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 6 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided , that if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have reasonably concluded in writing that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. It is understood that the indemnifying party shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for the indemnified party. No indemnifying party, in the defense of any such claim or litigation, shall, except with the written consent of such indemnified party, which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity was sought hereunder by such indemnified party unless such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation and does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of the indemnified party. The indemnification procedures of Underwriters provided for in this Section 6 shall be on such other terms and conditions as are at the time customary and reasonably required by such Underwriter as provided in Section 6(c) .

 

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(d) If the indemnification provided for in Section 6(a) and Section 6(b) above is unavailable or insufficient to hold harmless an indemnified party under such sections in respect of any losses, claims, damages, liabilities, judgments, actions or expenses in respect thereof referred to therein, then each indemnifying party shall in lieu of indemnifying such indemnified party contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities, judgments, actions or expenses in such proportion as appropriate to reflect the relative fault of the Company, on the one hand, and the Underwriters or the Holder, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities, judgments, actions or expenses as well as any other relevant equitable considerations, including, without limitation, the failure to give any notice under Section 6(c) above, provided , that in no event shall any contribution by the Holder hereunder exceed the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) from the sale of Registrable Securities in the offering actually received by the Holder. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the Company, on the one hand, or the Underwriter or the Holder, on the other, and to the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holder that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above in this section. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities, judgments, actions or expenses in respect thereof, referred to in this Section 6(d) , shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act), shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

Section 7. Rule 144; Volume Limitations .

 

(a) The Company agrees with the Holder that, for so long as its Common Stock remains registered with the Commission, it shall use commercially reasonable efforts to timely file (including any extensions or grace periods as may be available under the Exchange Act) any and all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder.

 

(b) The Holder hereby agrees that, in the event that any registration statement filed by the Company pursuant to this Agreement is declared effective by the Commission, and such registration statement permits the resale by the Holder of Registrable Securities thereunder, the Holder shall not sell a number of Registrable Securities during any three (3) month period as is equal to the greater of: (i) two percent (2%) of all of the issued and outstanding shares of Common Stock as shown by the most recent report filed by the Company with the Commission; and (ii) two hundred percent (200%) of the average weekly reported volume of trading in the shares of Common Stock on the OTCQB Tier of the OTC Markets (or such other market or trading platform on which the Common Stock may then be traded or quoted, as applicable) during the four (4) calendar weeks preceding the date of receipt of the order to execute the applicable transaction by the broker or the date of execution of the applicable transaction directly with a market maker. For the avoidance of doubt, the foregoing volume limitations shall not apply to a private resale of the Holder Shares.

 

Section 8. Holdback Agreement . The Holder agrees that in the event (a) the Company proposes to offer for sale to the public any of its equity securities, (b) the Holder is requested by an Underwriter engaged by the Company in connection with a firmly committed underwritten Public Offering to sign an agreement restricting the sale or other transfer of any Registrable Securities and (c) all of the Company’s Affiliates and executive officers and all of the members of the Board of Directors (the " Restricted Sellers ") are restricted in the same manner and for the same duration, then the Holder will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Registrable Securities or any other securities of the Company held by him, her or it during such period as is determined by the Underwriter(s), not to exceed the seven (7) day period prior to and 180 days following the closing of the Public Offering (such period, the “ Lock-Up Period ”). Any such lock-up agreement shall be in writing and in form and substance reasonably satisfactory to such Underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Holder has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Registrable Securities or any other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.

 

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Section 9. Headings . The underlined headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

 

Section 10. Severability . Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

 

Section 11. Transfer or Assignment of Registration Rights; Agreement Not to Grant Demand Registration Rights .

 

(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns (if any). The Holder may not assign this Agreement or any rights, interests or obligations hereunder (in whole or in part, by operation of law or otherwise) to any Person without the prior written consent of the Company, and any attempt to make such assignment without such consent shall be null and void ab initia .

 

(b) The Company hereby agrees that it shall not, prior to the one year anniversary of the effective date of the Merger, enter into any agreement, arrangement or understanding with any Person that holds equity securities of the Company at the time that the Company enters into such agreement, arrangement or understanding with such Person, granting to such Person the right to demand that the Company register under the Securities Act any equity securities of the Company held by such Person, without the prior written consent of the Holder.

 

Section 12. Entire Agreement; Modification . This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. Any inconsistent provisions in the documents governing the Holder Shares relating to registration rights or lock up provisions shall be superseded by the provisions hereof to the extent required to make them not inconsistent. Except as expressly provided in this Agreement, none of the provisions of this Agreement may be amended, modified or supplemented, and waivers or consents to departures from the provisions thereof may not be given, unless the Company has obtained the written consent of the Holder.

 

Section 13. Notices . All notices, requests, demands, claims and other communications that are required or may be given pursuant to this Agreement must be in writing and delivered personally against written receipt, by facsimile, by email or by reputable domestic or international overnight courier to the parties at the following addresses (or to the attention of such other Person or at such other address as any party may provide to the other party by notice in accordance with this Section 13 ):

 

If to the Company, to it at:   Snap Interactive, Inc.
    320 W. 37th Street, 13th Floor
    New York, New York
    Attention:  Chief Executive Officer
    Telephone: (212) 594-5050
     

If to the Holder, to it at:

 

The address of the Holder as it is recorded in the books and records of the Company.

 

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Any such notice, request, demand, claim or other communication will be deemed to have been given (a) if personally delivered, when so delivered, (b) if sent by facsimile or email, upon transmission with electronic confirmation thereof, or (c) if sent by reputable domestic or international overnight courier, when received.

 

Section 14. Counterparts . This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by fax or email (in .pdf or .tif format) transmission shall be sufficient to bind the parties to the terms and conditions of this Agreement. No party to this Agreement will raise the use of a fax or email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a fax or email as a defense to the formation or enforceability of a contract, and each such party forever waives any such defense.

 

Section 15. Remedies Cumulative . In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Holder may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

 

Section 16. Governing Law .

 

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. Each of the parties hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

 

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

Section 17. Interpretation . As used herein, the words “hereof”, “herein”, “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and the word “Section” refers to a Section of this Agreement unless otherwise specified. Whenever the words “include”, “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation”. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

 

Section 18. Termination of Rights . The provisions of this Agreement, except the provisions in Sections 5 and 6 of this Agreement, shall terminate upon the earlier of: (i) the first day that there are no longer any Registrable Securities; (ii) the first day that the Holder no longer owns any Registrable Securities; and (iii) the tenth anniversary of the date of this Agreement; provided , that the indemnification and contribution rights and obligations hereunder shall not terminate and shall survive forever.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement as of the date and year first above written.

 

  SNAP INTERACTIVE, INC.  
     
  By: /s/ Alexander Harrington
  Name: Alexander Harrington
  Title: Chief Executive Officer

 

  HOLDER: 
     
  By: /s/ Clifford Lerner
  Name: Clifford Lerner

 

 

Signature Page to

Registration Rights Agreement

 

 

Exhibit 10.3

 

EXECUTION COPY

 

FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

This FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”), effective as of October 7, 2016 (the “Effective Date”), is made and entered into by and between Snap Interactive, Inc., a Delaware corporation (the “Company”), and Alexander Harrington (“Executive”) for purposes of amending that certain Executive Employment Agreement, dated as of February 28, 2014, as amended by the First Amendment to Executive Employment Agreement, effective as of March 19, 2015, as further amended by the Second Amendment to Executive Employment Agreement (the “Second Amendment”), effective as of October 13, 2015, and as further amended by the Third Amendment to Executive Employment Agreement (the “Third Amendment”), effective as of March 3, 2016, by and between the Company and Executive (collectively, the “Agreement”). Terms used in this Amendment with initial capital letters that are not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

WHEREAS , Section 12(j) of the Agreement provides that the Agreement can only be amended by a writing signed by the parties thereto; and

 

WHEREAS , the Company and Executive mutually desire to amend the Agreement to reflect a change to Executive’s Annual Incentive Bonus for the 2016 calendar year, to update Executive’s 2016 Annual Incentive Bonus amount, to provide for an additional grant of stock options following the Effective Date, to revise Executive’s severance entitlements, and to amend the definition of “Good Reason” in connection with various powers being reserved to the Chairman of the Board;

 

NOW, THEREFORE , pursuant to Section 12(j) of the Agreement, in consideration of the mutual promises, conditions, and covenants contained herein and in the Agreement, and other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree to amend the Agreement as follows, effective as of the Effective Date:

 

1. Section 4(a) of this Agreement is hereby amended by adding the following sentence to the end of the paragraph:

 

Executive agrees to devote substantially all his business time to the business of the Company.

 

2. Section 5(a) of the Agreement is hereby amended by changing “Base Salary” from Two Hundred Sixty-Five Thousand Dollars ($265,000) to Two Hundred Eighty-Five Thousand Dollars ($285,000).

 

3. Section 5(b)(i) of the Agreement is hereby amended by deleting said section in its entirety and substituting in lieu thereof the following new Section 5(b)(i):

 

(i) for the 2016 calendar year, Executive shall be eligible to receive an annual incentive bonus (the “Annual Incentive Bonus”) of up to One Hundred Fifty Thousand Dollars (US $150,000), payable as follows:

 

(A) the first Fifty Thousand Dollars (US $50,000) of such Annual Incentive Bonus is guaranteed and shall be paid to Executive during the annual review period (generally January or February) in 2017, provided Executive is employed by the Company on the date the Annual Incentive Bonus is paid; and

 

 

 

(B) the Board shall determine, in its sole discretion, what portion (if any) of the remaining Annual Incentive Bonus (the amount in excess of the amount described above in (A)), Executive shall receive, and the Company shall pay such portion (if earned) at the same time as the guaranteed portion described above in (A), provided that Executive is employed by the Company on the date the Annual Incentive Bonus is paid. As soon as practicable after the effective date of this Amendment, the Board will endeavor in good faith to formulate benchmarks and/or targets on the basis of which the non-guaranteed portion of the Annual Incentive Bonus will be determined, and the Board will promptly communicate those benchmarks and/or targets, in writing, to Executive.

 

4. A new Section 5(i) is added to the Agreement which provides as follows:

 

(i) 2016 Equity Award . As soon as administratively practicable after the effective date of this Agreement and subject to Board approval, Executive will receive, by separate agreement, a stock option with respect to One Million (1,000,000) shares of the Company's common stock (adjusted for any future stock splits occurring after the date hereof), with an exercise price equal to the fair market value (as determined by the Board) of the Company's common stock on the date of grant, vesting twenty-five percent (25%) per year over four (4) years, with the first tranche vesting on the first anniversary of the date of grant (subject to early termination or forfeiture in accordance with the terms of the award agreement) (the “2016 Stock Option”). The Company also intends to consider an additional grant of stock options to Executive prior to December 31, 2016.

 

5. Section 6(a) is amended by adding the following paragraph at the end of the Section:

 

The Company hereby notifies Executive in accordance with the Defend Trade Secrets Act of 2016 that Executive will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Executive that if Executive files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Executive may disclose the Company’s trade secrets to Executive’s attorney and use the trade secret information in the court proceeding if Executive: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

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6. Section 8 is deleted in its entirety and replaced with the following:

 

8. Trading Restrictions. Executive will be subject to trading and sales volume limitations in accordance with (a) applicable law, including Rule 144 under the Securities Act of 1933 as amended; and (b) such written insider trading policies as the Board may adopt and promulgate for Company employees generally.

 

7. Section 9(b) is amended by adding a new subsection (x) which provides as follows:

 

(x) The Executive undertaking any of the Restricted Actions (defined below) unless such Restricted Actions have first been approved by either (A) Jason Katz or (B) the Board (which approval must include the affirmative vote of Jason Katz, provided he is serving as a member of the Board when such approval is sought); provided, however, that (1) within thirty (30) days after becoming aware of Executive’s undertaking a Restricted Action without such approval, the Company shall provide written notice to Executive identifying the unapproved Restricted Action and notifying Executive of the Company’s intention to terminate Executive’s employment for Cause; and (2) Executive shall have thirty (30) days following his receipt of such written notice to cure the unapproved Restricted Action to the Company’s reasonable satisfaction, unless the Restricted Action is not reasonably susceptible to cure. Executive shall be deemed to have satisfactorily cured any unapproved Restricted Action if the resulting net cash loss to, or expenditure by, the Company is less than $50,000.

 

Section 9(b) is further amended by adding the following at the end of the section:

 

For purposes of this Agreement, the “Restricted Actions” are:

 

The incurrence (or guarantee) by the Company of indebtedness for borrowed money or indebtedness outside the ordinary course of business, in each case in excess of $50,000.

 

The settlement of any claim, debt, demand, suit, proceeding or judgment against or on behalf of the Company in excess of $50,000.

 

The appointment or removal of any executive officer of the Company (defined as an individual who has been, or is required to be, identified as an executive officer in the Company’s SEC filings), or the entry into any employment agreement with an annual salary greater than $100,000.

 

The entry into any new agreement, arrangement or understanding that would require payments by the Company in excess of $100,000 per annum, or that would materially limit the ability of the Company to operate its business. For the avoidance of doubt, a marketing agreement entered into in the ordinary course of business that is terminable in less than seven (7) days shall not be covered by the foregoing sentence.

 

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The engagement, on behalf of the Company, of attorneys, accountants, underwriters or placement agents, excluding an engagement of any of the foregoing requiring a net expenditure by the Company of less than $50,000 during any one (1)-year period, or the removal of any of the Company’s current such advisors or consultants.

 

The engagement, on behalf of the Company, of any other professional advisors or consultants to the Company outside the ordinary course of business, excluding an engagement requiring a net expenditure by the Company of less than $50,000 during any one (1)-year period, or the removal of any of the Company’s current such advisors or consultants.

 

8. Section 9(d) is amended is deleted in its entirety and replaced with the following:

 

(d) Termination by Executive for Good Reason .   Executive may terminate his employment at any time for Good Reason. For purposes of this Agreement, “ Good Reason   shall mean any of the following without Executive’s prior written consent: (i) Executive's being required to report to a regular place of employment outside New York, New York; (ii) the Company's material breach of any of the terms and conditions of this Agreement; or (iii) a detrimental and material change in Executive's title, compensation, duties, or responsibilities (other than the reassignment of Executive's CFO responsibilities upon the Company's hiring of a full-time CFO, as provided in Section 4(a) of this Agreement); provided, however, that within ninety (90) days following Executive's learning of such Good Reason, (1) the Company shall be given written notice of Executive's intent to terminate his employment under this paragraph, and (2) the Company shall have thirty (30) days from receipt of such written notice to cure any such breach or change to the reasonable satisfaction of Executive. Upon such termination for Good Reason, Executive shall be entitled to compensation as provided in Sections 10(a) and (b) below. Following the closing of the transaction contemplated in the Agreement and Plan of Merger between SNAP Interactive, Inc., SAVM Acquisition Corporation, and A.V. M. Software, Inc. and Jason Katz, as the Company Representative, dated as of September 13, 2016 (the “Merger”) the Company will require the approval of Jason Katz, in his position as Chairman of the Board, to take the Restricted Actions (as described above). Notwithstanding the foregoing, the requirement for such approval and the limitations imposed by such Restricted Actions shall not be deemed a detrimental and material change in Executive’s title, duties, or responsibilities and shall not give rise to Good Reason.

 

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9. The first paragraph of Section 10(b) is hereby deleted in its entirety and replaced with the following:

 

(b) Additional Compensation and Benefits Upon Non-Renewal by the Company or Upon Termination by the Company Without Cause or by Executive for Good Reason . If, at any time, (i) the Company elects not to renew this Agreement for any Renewal Term and Executive’s employment terminates as a result of such non-renewal, (ii) the Company terminates Executive’s employment without Cause (as defined in Section 9(b) above), or (iii) Executive terminates his employment for Good Reason (as defined in Section 9(d) above), then the Company shall, subject to Executive’s execution of a general release of claims in favor of the Company and subject to Executive’s compliance with Section 6 and Section 7, provide to Executive, in addition to the amounts set forth in Section 10(a) above, an amount equal to eight (8) months of Executive’s then-current annualized Base Salary, payable in eight (8) equal monthly installments commencing on the Company’s first regular payroll date after the release of claims provided by Executive has become effective and binding upon Executive, provided, that, if the maximum forty-five (45) day consideration period and revocation period described in Section 10(d) spans two tax years, then the payments shall commence in the second tax year. Additionally, if Executive is eligible and timely elects to continue his health insurance coverage pursuant to the COBRA statute, and subject to Executive’s execution of the release of claims referred to above, the Company will continue to pay its portion of Executive’s monthly health insurance premiums for the earlier of (A) the eight (8) months following the effective date of termination of Executive’s employment or, (B) the date Executive’s coverage under such group health plans terminates for any reason; provided that the Company’s payment of such premiums shall be limited to the same proportion of the cost of coverage under the Company’s group health plans as the Company pays on behalf of its employees generally (the “COBRA Entitlement”). Furthermore, in the event that Executive’s employment is terminated for any of the reasons described above in 10(b)(ii) or 10(b)(iii) on or prior to the first anniversary of the Effective Date, then the Base Salary and COBRA Entitlement discussed above shall be increased from eight (8) months to ten (10) months.

 

10. The last paragraph of Section 11(a) is amended by adding the following at the end:

 

Notwithstanding anything in this Agreement to the contrary, the Merger shall not be deemed a Change in Control for purposes of this Agreement.

 

11. Section 11(b)(i) of the Agreement is deleted in its entirety and replaced with the following:

 

(i) Severance Benefits. If, during the sixty (60) day period immediately prior to a Change in Control or during the one year period beginning on the date of a Change in Control (the “ Change Period ”) ,   (A) Executive's employment is terminated by the Company (or by the acquiring or successor business entity following a Change in Control) other than for Cause (as defined in. Section 9(b) above), or (B) Executive terminates his employment with the Company (or with the acquiring or successor business entity following a Change in Control) for Good Reason (as defined in Section 9(d) above), then Executive shall receive, in lieu of the severance benefits described in Section 10(b) above and subject to Executive's execution of a general release of claims as provided in Section 11(d) below, a severance benefit in an amount equal to fifteen (15) months of Executive’s annualized Base Salary (specified in Section 5(a)) as in effect on the date of the Change in Control plus fifteen (15) months of the COBRA Entitlement.

 

12. Exhibit A to the Agreement is deleted in its entirety and replaced with Exhibit A attached hereto.

 

13. Except as expressly amended by this Amendment, the Agreement shall continue in full force and effect in accordance with the provisions thereof.

 

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IN WITNESS WHEREOF , the Company and Executive have executed, or caused to be executed, this Amendment to be effective as of the Effective Date.

 

  SNAP INTERACTIVE, INC.
     
  By: /s/ Clifford Lerner
  Name: Clifford Lerner
  Title: Chairman
     
  EXECUTIVE  
       
  /s/ Alexander Harrington
  Alexander Harrington

 

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EXHIBIT A

 

WAIVER AND RELEASE OF CLAIMS

 

This Waiver and Release of Claims (“ Release ”), effective as of the ______________ (the “ Effective Date ”), is made and entered into by and between Alexander Harrington (“ Employee ”) and Snap Interactive, Inc., a Delaware corporation (the “ Company ”). Terms used in this Release with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the employment agreement by and between the Company and Employee, originally dated February 28, 2014 and subsequently amended four (4) times, the most recent amendment thereto being dated as of __________________, 2016 (the “ Agreement ”).

 

WHEREAS, Employee and the Company are parties to the Agreement; and

 

WHEREAS, Section 10 and Section 11 of the Agreement provide that Employee is entitled to certain payments and benefits upon separation from employment if he signs a release agreement;

 

NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and adequacy of which are acknowledged, Employee and the Company agree as follows:

 

1. Global Release . In consideration of the mutual promises contained in the Agreement, including the Company’s promises to pay Employee consideration under Section 10 or Section 11 of the Agreement, which are in addition to anything of value to which Employee is already entitled, Employee, on behalf of himself, his heirs, executors, successors and assigns, irrevocably and unconditionally releases, waives, and forever discharges the Company and all of its parents, divisions, subsidiaries, affiliates, joint venture partners, partners, and related companies, and their present and former agents, employees, officers, directors, attorneys, stockholders, plan fiduciaries, successors and assigns (collectively, the “ Released Parties ”), from any and all claims, demands, actions, causes of action, costs, fees, and all liability whatsoever, whether known or unknown, fixed or contingent, which Employee has, had, or may have against the Released Parties relating to or arising out of his employment, or any terms of the Agreement, from the Effective Date and up to and including the date of this Release. This Release includes, without limitation, claims at law or equity or sounding in contract (express or implied) or tort, claims arising under any federal, state, or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, creed, disability, religion, military status, family status, marital status, partnership status, domestic violence, stalking and sex offense victim status, arrest and conviction record, predisposing genetic characteristic, alienage or citizenship status, sexual orientation, or any other form of discrimination, harassment, or retaliation (including, without limitation, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the ADA Amendments Act of 2008, Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the Rehabilitation Act, the Family and Medical Leave Act, the Fair Labor Standards Act anti-retaliation provisions, the Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Lilly Ledbetter Fair Pay Act, the Genetic Information Nondiscrimination Act, the New York Civil Rights Law, the New York City Human Rights Law, any federal, state, local or municipal whistleblower protection or anti-retaliation statute or ordinance, or any other federal, state, local, or municipal laws of any jurisdiction), claims arising under the Employee Retirement Income Security Act (except any employee benefits or employee participation rights as contained in the Agreement), or any other statutory or common law claims related to or arising out of his employment or any terms of the Agreement, from the Effective Date and up to and including the date of this Release’s execution. Notwithstanding the foregoing, nothing in this Release shall affect or impair: (i) any rights Employee may have to indemnification, including without limitation indemnification for attorneys’ fees, costs and/or expenses, pursuant to applicable statute, certificates of incorporation and by-laws of the Company or any of its affiliates; (ii) any of Employee’s rights arising under the Agreement; or (iii) any rights that Employee has as a former employee under the Company’s employee benefit plans (other than any severance plan).

 

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2. No Admission of Liability . Employee understands and agrees that this Release shall not in any way be construed as an admission by the Released Parties of any unlawful or wrongful acts whatsoever against Employee or any other person. The Released Parties specifically disclaim any liability to or wrongful acts against Employee or any other person.

 

3. Time to Consider Release . Employee is hereby advised in writing by the Company that he should consult an attorney before executing this Release. Employee has a period of up to forty-five (45) calendar days after receiving the Release within which to review and consider the provisions of this Release. Employee understands that if he does not sign this Release before the forty-five (45) calendar day period expires, this Release offer will be withdrawn automatically.

 

4. Revocation Period . Employee understands and acknowledges that he has seven (7) calendar days following the execution of this Release to revoke his acceptance of this Release. This Release will not become effective or enforceable, and the payments and benefits described under Section 10 or Section 11 will not become payable, until after this revocation period has expired without his revocation. If Employee does not revoke the Release within the revocation period, the Company will commence the payments and benefits described under Section 10 or Section 11 of the Agreement within ten (10) days after the revocation period’s expiration date.

 

5. Confidentiality of Release and Company Information. Employee agrees to keep this Release, its terms, and the amount of payments and benefits related to this Release completely confidential. Employee agrees and understands that he is prohibited from disclosing any terms of this Release to anyone, except that he may disclose the terms of this Release and the amount of the payments and benefits related to this Release to his spouse, attorneys, accountants, and financial advisors or as otherwise required by law. Employee also agrees to continue to abide by the confidentiality provisions of the Agreement.

 

6. Non-Disparagement . Employee agrees to continue to abide by the non-disparagement provisions of the Agreement.

 

7. Agreement to Return Company Property/Documents. Employee understands and agrees that his last day of active work in any Company office or on any Company owned or leased property will be _______. Accordingly, Employee agrees that: (i) he will not take with him, copy, alter, destroy, or delete any files, documents, electronically stored information, or other materials, whether or not embodying or recording any Confidential Information, including copies, without obtaining in advance the written consent of an authorized Company representative; and (ii) he will promptly return to the Company all Confidential Information, documents, files, records and tapes, whether written in hardcopy form or electronically stored, that have been in his possession or control regarding the Company, and he will not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and all copies of these materials. Employee further agrees that on ________, he will return to the Company immediately all Company property, including, without limitation, keys, equipment, computer(s) and computer equipment, devices, Company cellular phones, Company credit cards, data, electronically stored information, lists, correspondence, notes, memos, reports, or other writings prepared by the Company or himself on behalf of the Company.

 

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8. Authorized Use of Trade Secrets/ Confidential Information. Notwithstanding the foregoing, Employee understands that Employee may disclose proprietary and/ or confidential information when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order that Employee divulge, disclose or make accessible such information. The Company hereby notifies Employee in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Employee that if Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

9. Knowing and Voluntary Release . Employee understands that it is his choice whether to enter into this Release and that his decision to do so is voluntary and is made knowingly.

 

10. No Prior Representations or Inducements . Employee represents and acknowledges that in executing this Release, he did not rely, has not relied, and expressly disavows reliance on any communications, statements, promises, inducements, or representation(s), oral or written, by any of the Released Parties, except as expressly contained in this Release.

 

11. Choice of Law . This Release shall, in all respects, be interpreted, enforced, and governed under the laws of the State of New York. The parties agree that the language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties.

 

12. Severability . The Company and Employee agree that should a court declare or determine that any provision of this Release is illegal or invalid, the validity of the remaining parts, terms or provisions of this Release will not be affected and any illegal or invalid part, term, or provision, will not be deemed to be a part of this Release.

 

13. Counterparts . The Company and Employee agree that this Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument.

 

Please read carefully as this document includes a release of claims.

 

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IN WITNESS WHEREOF, the Company and Employee hereto evidence their agreement by their signatures.

 

     
Employee Signature [Signature]   Company Representative [Signature]
     
     
Alexander Harrington   Company Representative [Printed Name]
     
     
Date   Date

 

 

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Exhibit 10.4

 

EXECUTION COPY

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“ Agreement ”)   is entered into on October 7, 2016 (the “ Execution Date ”) ,   by and between Snap Interactive, Inc., a Delaware corporation (the “ Company ”) ,   and Jason Katz (“ Executive ”) .   In consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows:

 

1. Agreement to Employ .   The Company desires to secure the services of Executive as its President and Chief Operating Officer as well as the Chairman of the Company’s Board of Directors (the “ Board ”) (“ President, COO & Chairman ”). The Company and Executive desire to enter into this Agreement to, among other things, set forth the terms of Executive's employment with the Company. The Company and Executive acknowledge that this Agreement supersedes any other offer, agreement or promises made by anyone, specifically concerning the offer of employment by the Company, and this Agreement comprises the complete agreement between Executive and the Company concerning Executive's employment by the Company.

 

2. Term of Agreement .   This Agreement shall be binding upon and enforceable against the Company and Executive immediately when both parties execute the Agreement. The Agreement's stated term and the employment relationship created hereunder will begin on the Execution Date and will remain in effect for one (1) year, unless earlier terminated in accordance with Section 9 (the “ Initial Employment Term ”) .   This Agreement shall be automatically renewed for successive one (1) year terms after the Initial Employment Term (each a “ Renewal Term ”) ,   unless terminated by either party upon written notice (“ Non-Renewal Notice ”)   given at least ninety (90) days before the end of the Initial Employment Term or any Renewal Term, as applicable, or unless earlier terminated in accordance with. Section 9. The period during which Executive is employed under this Agreement (including any Renewal Term(s)) will be referred to as the “ Employment Period .

 

3. Surviving Agreement Provisions .   Notwithstanding any provision of this Agreement to the contrary, the parties' respective rights and obligations under Sections 6 through 12 shall survive any termination or expiration of this Agreement or the termination of Executive's employment for any reason whatsoever.

 

4. Services to be Provided by Executive .

 

(a) Position and Responsibilities .   Executive’s services hereunder will commence as of the Execution Date. Subject to the Agreement’s terms, Executive agrees to serve the Company as its President, COO & Chairman. Executive shall have the duties and privileges customarily associated with executives occupying the role of President, COO & Chairman, and Executive shall perform all reasonable acts customarily associated with such roles, or necessary and/or desirable to protect and advance the best interests of the Company. Executive will report to the Board. Executive agrees to devote substantially all his business time to the business of the Company (except as provided below).

 

(b) Executive’s Employment Representations .   Executive agrees that he (i) shall not serve as a member of any board of directors, or as a trustee of, or in any manner be affiliated with, any present or future agency or organization (except for civic, religious, and not for profit organizations) without the consent of the Board (which consent will not be unreasonably withheld); (ii) will serve as an Executive of the Company; and (iii) shall not, directly or indirectly, have any interest in, or perform any services for, any business competing with or similar in nature to the Company's business as set forth in Section 7. Executive further represents to the Company that (i) he is not violating and will not violate any contractual, legal, or fiduciary obligations or burdens to which Executive is subject by entering into this Agreement or providing services under the Agreement's terms; (ii) Executive is under no contractual, legal, or fiduciary obligation or burden that he will allow to interfere with Executive's ability to perform services under the Agreement's terms; and (iii) he has no bankruptcies, convictions, disputes with regulatory agencies, or other disclosable or disqualifying events that would impact the Company or its ability to conduct securities offerings. Notwithstanding anything to the contrary herein, nothing shall prevent or restrict Executive’s ownership of, serving as a board member or a trustee for, or providing services (in any capacity) to, any entity (or derivative thereof) for which he currently has an equity interest and provides such services, provided that such activities: (A) do not reasonably interfere with his material services to the Company and (B) such entities are not competing businesses with the Company as set forth in Section 7.

 

 
 

 

5. Compensation for Services .   As compensation for the services Executive will perform under this Agreement during the Employment Period, the Company will pay Executive, and Executive shall accept as full compensation, the following:

 

(a) Base Salary . Executive shall receive an annualized base salary (“ Base Salary ”) of One Hundred Eighty Thousand Dollars (US $180,000), commencing as of the Effective Date and prorated for any partial years of employment. Additionally, the Company will review Executive’s Base Salary at least annually during the Employment Period, and, in the sole discretion of the Board, may increase (but not decrease) such Base Salary from time to time, but shall not be obligated to effectuate such an increase. Executive’s compensation shall be subject to all appropriate federal and state withholding taxes and shall be payable in accordance with the Company’s normal payroll procedures.

 

(b) Bonus Compensation .

 

(i) for the 2016 calendar year, Executive shall be eligible to receive an annual incentive bonus (the “ Annual Incentive Bonus ”) of at least Twenty-Five Thousand Dollars (US $25,000) as follows:

 

(A) Twenty-Five Thousand Dollars (US $25,000) of such Annual Incentive Bonus is guaranteed and shall be paid to Executive during the annual review period (generally January or February) in 2017, provided Executive is employed by the Company on the date the Annual Incentive Bonus is paid; and

 

(B) the Board shall determine, in its sole discretion, if any additional amount should be paid to Executive as part of his Annual Incentive Bonus, and the Company shall pay such additional amounts (if any) at the same time as the guaranteed portion described above in (A), provided that Executive is employed by the Company on the date the Annual Incentive Bonus is paid. As soon as practicable after the Execution Date, the Board will endeavor in good faith to formulate benchmarks and/or targets on the basis of which the non-guaranteed portion of the Annual Incentive Bonus will be determined, and the Board will promptly communicate those benchmarks and/or targets, in writing, to Executive.

 

(ii) Annual incentive bonuses awarded to Executive for subsequent calendar years shall be determined by the Board, based on criteria to be established jointly by the Board and Executive. Each such annual incentive bonus shall be payable during the annual review period (generally January or February) in the calendar year following the calendar year to which the annual incentive bonus relates, provided Executive is employed by the Company on such payment date.

 

(c) Reserved.

 

(d) Vacation .   During the Employment Period, Executive shall be entitled to five (5) weeks paid vacation annually. Vacation shall be taken at such times and intervals as shall be determined by Executive, subject to the reasonable business needs of the Company. Upon the termination of Executive's employment, for any reason, Executive will forfeit any accrued but unused vacation.

 

(e) Reserved.

 

(f) Reserved.

 

(g) Other Benefits and Perquisites .   Executive shall be entitled to participate in the-benefit plans provided by the Company for all employees generally, and for the Company's executive employees. The Company shall be entitled to change or terminate these plans in its sole discretion at any time. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses (including transportation and cellular service expenses as set forth above) incurred during the Employment Period, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit. Executive will comply with the Company's policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

(h) Withholdings and Deductions .   The compensation described in this Section 5 is subject to all legally required and authorized withholdings and deductions.

 

(i) 2016 Equity Award . The Company intends to consider a grant of stock options to Executive prior to December 31, 2016 (the “ Stock Option ”).

 

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6. Confidential Information .

 

(a) Confidential Information .   The Company shall provide Executive with confidential information and trade secrets of the Company (hereinafter referred to as “ Confidential Information ”)   and shall   place Executive in a position to develop and have ongoing access to Confidential Information of the Company, shall entrust Executive with business opportunities of the Company, and shall place Executive in a position to develop business goodwill on behalf of the Company. For purposes of this Agreement, Confidential Information includes, but is not limited to:

 

(i) Technologies developed by the Company and any research data or other documentation related to the development of such technologies, including all designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that are conceived, developed or acquired by Executive, individually or in conjunction with others during the period of Executive's employment by the Company;

 

(ii) All documents, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, E-mail, voice mail, electronic databases, maps, logs, drawings, models and all other writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of expression that are conceived, developed or acquired by Executive individually or in conjunction with others during the Employment Period (whether during business hours or otherwise and whether on any Company premises or otherwise) that relate to the Company's business, trade secrets, products or services;

 

(iii) Customer lists and prospect lists developed by the Company;

 

(iv) Information regarding the Company's customers which Executive acquired as a result of his employment with the Company, including but not limited to, customer contracts, work performed for customers, customer contacts, customer requirements and needs, data used by the Company to formulate customer bids, customer financial information, and other information regarding the customer's business;

 

(v) Information related to the Company's business, including but not limited to marketing strategies and plans, sales procedures, operating policies and procedures, pricing and pricing strategies, business plans, sales, profits, and other business and financial information of the Company;

 

(vi) Training materials developed by and utilized by the Company; and

 

(vii) Any other information that Executive acquired as a result of his employment with the Company and which Executive has a reasonable basis to believe the Company would not want disclosed to a business competitor or to the general public.

 

Executive understands and acknowledges that such Confidential Information gives the Company a competitive advantage over others who do not have the information, and that the Company would be harmed if the Confidential Information were disclosed.

 

The Company hereby notifies Executive in accordance with the Defend Trade Secrets Act of 2016 that Executive will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Executive that if Executive files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Executive may disclose the Company’s trade secrets to Executive’s attorney and use the trade secret information in the court proceeding if Executive: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

(b) Disclosure Of Confidential Information .   Executive agrees that he shall hold all Confidential Information of the Company in trust for the Company and shall not during or after his employment terminates for any reason: (a) use the information for any purpose other than the benefit of the Company; or (b) disclose to any person or entity any Confidential Information of the Company except as necessary during Executive's employment with the Company to perform services on behalf of the Company. Executive shall also take reasonable steps to safeguard such Confidential Information and to prevent its disclosure to unauthorized persons.

 

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(c) Return Of Information .   Upon termination of employment, or at any earlier time as directed by the Company, Executive shall immediately deliver to the Company any and all Confidential Information in Executive's possession, any other documents or information that Executive acquired as a result of his employment with the Company and any copies of any such documents/information. Executive shall not retain any originals or copies of any documents or materials related to the Company's business, which Executive came into possession of or created as a result of his employment with the Company. Executive acknowledges that such information, documents and materials are the exclusive property of the Company. In addition, upon termination of employment, or at any time earlier as directed by the Company, Executive shall immediately deliver to the Company any property of the Company in Executive's possession.

 

7. Restrictive Covenants .   In consideration for (i) the Company's promise to provide Confidential Information to Executive, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and the business opportunities disclosed or entrusted to Executive, (iii) the compensation and other benefits provided by the Company to Executive, and (iv) the Company's employment of Executive pursuant to this Agreement, and to protect the Company's Confidential Information, Executive agrees to enter into the following restrictive covenants.

 

(a) Non-Competition .   Executive agrees that, during the Employment Period and during the Non-Competition Period (defined below), other than in connection with his duties under this Agreement, he shall not, without the prior written consent of the Company, directly or indirectly, either individually or as a principal, partner, stockholder, manager, agent, consultant, contractor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, operate, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in the Company's Business (defined below) within the Restricted Area (defined below). Notwithstanding the foregoing, Executive shall be permitted during the Employment Period to own, directly or indirectly, solely as an investment, securities of any organization or entity, which are traded on any national securities exchange or NASDAQ if Executive is not the controlling shareholder, or a member of a group that controls such organization or entity, and directly or indirectly, does not own three percent (3%) or more of any class of securities of such organization or entity.

 

For purposes of this Agreement:

 

Non-Competition Period   means a period of twenty-four (24) months immediately following the date of Executive's termination from employment for any reason.

 

Non-Solicitation Period means a period of twenty-four (24) months immediately following the date of Executive's termination from employment for any reason.

 

Business   means the business of establishing and/or providing online dating services, and any other business in which the Company is actually engaged as of the date Executive's employment terminates and as to which Executive participated or had knowledge of Confidential Information.

 

Restricted Area   means, because the Company's business is nationwide, Executive's responsibilities are nationwide in scope, and Executive has access to the Company's Confidential Information on a nationwide basis, all States comprising the United States, and any other geographic area in which the Company conducts business and for which Executive has responsibilities during Executive's employment.

 

(b) Non-Solicitation .   Executive agrees that, during the Employment Period and during the Non-Solicitation Period, other than in connection with his duties under this Agreement, Executive shall not, directly or indirectly, either as a principal, manager, agent, employee, consultant, officer, director, stockholder, partner, investor or lender or in any other capacity, and whether personally or through other persons:

 

(i) Solicit business from, interfere with, attempt to solicit business with, or do business with any customer and/or business partner of the Company with whom the Company did business or who the Company solicited within the preceding two (2) years, and who or which: (1) Executive contacted, called on, serviced or did business with during Executive's employment at the Company; (2) Executive learned of solely as a result of Executive's employment with the Company; or (3) about whom Executive received Confidential Information. The parties acknowledge and agree that, for purposes of this Agreement, the term “customer” does not include actual or potential consumers or users of the Company's services, including its online dating services. This restriction in this Section 7(b)(i) applies only to the Business (as defined above) of the Company or any affiliate thereof; or

 

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(ii) Solicit, induce or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or consultant of the Company or who was employed by the Company within the preceding twelve (12) months.

 

Notwithstanding the foregoing, the restrictions contained in this Section shall not apply to any individual who is a family member.

 

(c) Non-Disparagement. Executive agrees that the Company's goodwill and reputation are assets of great value to the Company and its affiliates which were obtained through great costs, time and effort. Therefore, Executive agrees that during his employment and after the termination of his employment, Executive shall not in any way, directly or indirectly, publicly disparage, libel or defame the Company, its beneficial owners or its affiliates, their respective business or business practices, products or services, or employees.

 

(d) Tolling .   If Executive violates any of the restrictions contained in this Section 7 (other than subsection (c) of this Section 7), the Non-Competition Period and/or Non-Solicitation Period, as applicable, shall be suspended and will not run in favor of Executive from the time of the commencement of any violation until the time when Executive cures the violation to the reasonable satisfaction of the Company.

 

(e) Remedies .   Executive acknowledges that the restrictions contained in Sections 6 and 7 of this Agreement, in view of the nature of the Company's business and his position with the Company, are reasonable and necessary to protect the Company's legitimate business interests and that any violation of Sections 6 and 7 of this Agreement would result in irreparable injury to the Company. In the event of a breach by Executive of Sections 6 or 7 of this Agreement, then the Company shall be entitled to (i) a temporary restraining order and injunctive relief restraining Executive from the commission of any breach, and/or (ii) recover attorneys' fees, expenses and costs the Company incurs in such action. Further, if the Company prevails in any action brought by Executive (or anyone acting on his behalf) seeking to declare any term in this Section 7 void or unenforceable or subject to reduction or modification, then the Company shall be entitled to recover attorneys' fees, expenses and costs the Company incurs in such action.

 

(f) Reformation .   The courts shall be entitled to modify the duration and scope of any restriction contained herein to the extent such restriction would otherwise be unenforceable, and such restriction as modified shall be enforceable. Executive acknowledges that the restrictions imposed by this Agreement are legitimate, reasonable and necessary to protect the Company's investment in its businesses and the goodwill thereof Executive acknowledges that the scope and duration of the restrictions contained herein are necessary and reasonable in light of the time that Executive has been engaged in the business of the Company, Executive's reputation in the markets for the Company's business and Executive's relationship with the suppliers, customers and clients of the Company.

 

8. Trading Restrictions . Executive will be subject to trading and sales volume limitations in accordance with (a) applicable law, including Rule 144 under the Securities Act of 1933 as amended; and (b) such written insider trading policies as the Board may adopt and promulgate for Company employees generally.

 

9. Termination of Agreement .   The employment relationship between Executive and the Company created under this Agreement shall terminate before the expiration of the stated term of this Agreement upon the occurrence of any one of the following events:

 

(a) Death or Permanent Disability .   This Agreement, and Executive's employment, shall be terminated effective on the death or permanent disability of Executive. For this purpose, “permanent disability” shall mean that Executive is, by reason of any medically determinable physical or mental impairment that be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company or is determined to be totally disabled by the U.S. Social Security Administration.

 

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(b) Termination for Cause .   The Company shall have the option to terminate Executive's employment during the Employment Period, effective upon written notice of such termination to Executive, for Cause as the Company determines. Under the Agreement, termination for “ Cause   means the Company's termination of Executive's employment upon the occurrence of any of the following events:

 

(i) Any act of fraud, misappropriation or embezzlement by Executive regarding any aspect of the Company's business;

 

(ii) The material breach by Executive of any Agreement provision and the failure of Executive to cure the same in all material respects within thirty (30) days after written notice thereof from the Board;

 

(iii) The conviction of Executive by a court of competent jurisdiction of a felony or a crime involving moral turpitude;

 

(iv) The intentional and material breach by Executive of any non-disclosure or non-competition/non-solicitation provision of any agreement to which Executive and the Company or any of its subsidiaries are parties;

 

(v) The substantial failure by Executive to perform in all material respects his duties and responsibilities (other than as a result of death or disability) and the failure of Executive to cure the same in all material respects within thirty (30) days after written notice thereof from the Board;

 

(vi) The failure or refusal of Executive to follow the lawful directives of the Company, which, if curable, Executive failed or refused to cure within thirty (30) days after written demand is delivered;

 

(vii) Willful conduct by Executive that is materially injurious to the Company;

 

(viii) Acceptance of employment with any employer other than the Company except upon written permission of the Board; or

 

(ix) The breach by Executive of his fiduciary duties to the Company.

 

Prior to any termination for Cause, the Company shall give Executive an opportunity to appear before the Board (with personal counsel, if Executive so chooses) in order to be heard on the matter. The Company shall provide Executive with a written notice of termination, which can be provided on the date of termination. In the event Executive's employment is terminated for Cause under this Agreement, Executive shall be entitled to the compensation provided in Section 10(a) below.

 

(c) Termination by the Company without Cause .   The Company may terminate this Agreement without Cause at any time upon thirty (30) days' written notice to Executive, during which period Executive shall not be required to perform any services for Employer other than to assist the Company in training his successor and generally preparing for an orderly transition; PROVIDED, HOWEVER, that Executive shall be entitled to compensation upon such termination as provided in Sections 10(a) and (b) below.

 

(d) Termination by Executive for Good Reason .   Executive may terminate his employment at any time for Good Reason. For purposes of this Agreement, “ Good Reason   shall mean any of the following without Executive’s prior written consent: (i) Executive's being required to report to a regular place of employment outside New York, New York; (ii) the Company's material breach of any of the terms and conditions of this Agreement; or (iii) a detrimental and material change in Executive's title, compensation, duties, or responsibilities (other than the reassignment of Executive's CFO responsibilities upon the Company's hiring of a full-time CFO, as provided in Section 4(a) of this Agreement); provided, however, that within ninety (90) days following Executive's learning of such Good Reason, (1) the Company shall be given written notice of Executive's intent to terminate his employment under this paragraph, and (2) the Company shall have thirty (30) days from receipt of such written notice to cure any such breach or change to the reasonable satisfaction of Executive. Upon such termination for Good Reason, Executive shall be entitled to compensation as provided in Sections 10(a) and (b) below.

 

(e) Termination by Executive Other Than for Good Reason .   Executive may terminate this Agreement other than for Good Reason at any time upon forty-five (45) days' written notice to the Company. Upon termination of this Agreement, the Company shall have no obligation to Executive other than as set forth in Section 10(a).

 

(f) Separation from Service .   For purposes of this Agreement, including, without limitation, Sections 10 and 11, any references to a termination of Executive's employment shall mean a “separation from service” as defined by Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”)   and the Treasury Regulations and other guidance issued thereunder.

 

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10. Compensation Upon Termination .   Upon the termination of Executive's employment under this Agreement before the expiration of the stated term in this Agreement, Executive shall be entitled to the following:

 

(a) Compensation Upon Termination for Any Reason .   Upon termination of Executive's employment during the Employment Period before the expiration of the stated term hereof for any reason, Executive shall be entitled to the following within thirty (30) days of such termination:

 

(i) Salary. The Base Salary earned by him before the effective date of termination as provided in Section 5(a) (including salary payable during any applicable notice period), prorated on the basis of the number of full days of service rendered by Executive during the salary payment period to the effective date of termination; and

 

(ii) Unreimbursed Business Expenses; Company Benefit Plans. Any unreimbursed reasonable business expenses and any amounts to which Executive is entitled to under the Company's benefit plans in accordance with their terms.

 

(b) Additional Compensation and Benefits Upon Non-Renewal by the Company or Upon Termination by the Company Without Cause or by Executive for Good Reason . If, at any time, (i) the Company elects not to renew this Agreement for any Renewal Term and Executive’s employment terminates as a result of such non-renewal, , (ii) the Company terminates Executive’s employment without Cause (as defined in Section 9(b) above), or (iii) Executive terminates his employment for Good Reason (as defined in Section 9(d) above), then the Company shall, subject to Executive’s execution of a general release of claims in favor of the Company and subject to Executive’s compliance with Section 6 and Section 7, provide to Executive, in addition to the amounts set forth in Section 10(a) above, an amount equal to three (3) months of Executive’s then-current annualized Base Salary, payable in three (3) equal monthly installments commencing on the Company’s first regular payroll date after the release of claims provided by Executive has become effective and binding upon Executive, provided, that, if the maximum forty-five (45) day consideration period and revocation period described in Section 10(d) spans two tax years, then the payments shall commence in the second tax year. Additionally, if Executive is eligible and timely elects to continue his health insurance coverage pursuant to the COBRA statute, and subject to Executive’s execution of the release of claims referred to above, the Company will continue to pay its portion of Executive’s monthly health insurance premiums for the earlier of (A) the three (3) months following the effective date of termination of Executive’s employment or, (B) the date Executive’s coverage under such group health plans terminates for any reason; provided that the Company’s payment of such premiums shall be limited to the same proportion of the cost of coverage under the Company’s group health plans as the Company pays on behalf of its employees generally (the “COBRA Entitlement”).

 

Executive shall have no obligation to mitigate any severance obligation of the Company under this Agreement by seeking new employment. The Company shall not be entitled to set off or reduce any severance payments owed to Executive under this Agreement by the amount of earnings or benefits received by Executive in future employment.

 

Notwithstanding the foregoing, with respect to any stock options, restricted stock, or other plans or programs in which Executive is participating at the time of termination of his employment, Executive's rights and benefits under each of these plans shall be determined in accordance with the terms, conditions, and limitations of the plans and any separate agreement executed by Executive which may then be in effect.

 

(c) Penalty for Breach of Covenants .   For any period of time that Executive is in breach of Section 6 or Section 7, the Company shall not be obligated to pay any severance payments referenced in this Agreement, the Company's severance obligations shall terminate and expire, and the Company shall have no further obligations to Executive from and after the date of such breach. Additionally, the Company may recover any severance pay previously paid to Executive for the period of time that Executive was in breach of Section 6 or Section 7. The Company shall have all other rights and remedies available under this Agreement or any other agreement at law or in equity.

 

(d) Release . Payment of any of the amounts described in this Section 10 is conditioned upon Executive's execution of a Waiver and Release of Claims in the form attached hereto as Exhibit A relating to the period of Executive's employment with the Company, within the forty-five (45) day period following the end of Executive's employment and not revoking such Waiver and Release of Claims during any applicable revocation period.

 

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11. Compensation Upon Change in Control .

 

(a) Change in Control .   For purposes of this Agreement, a “ Change in Control   of the Company occurs upon a change in the Company's ownership or the ownership of a substantial portion of its assets, as follows:

 

(i) Change in Ownership. A change in ownership of the Company occurs on the date that any Person, other than (1) the Company or any of its subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the Company's stock, acquires ownership of the Company's stock that, together with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the Company's stock However, if any Person is considered to own already more than 50% of the total fair market value or total voting power of the Company's stock, the acquisition of additional stock by the same Person is not considered to be a Change of Control;

 

(ii) Change in Ownership of Substantial Portion of Assets . A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such Person) all or a substantial portion of the assets of the Company, by reason of any sale, lease, exchange or other transfer of the assets of the Company. For purposes hereof, a “substantial portion of the assets of the Company” shall mean any portion of the Company’s overall assets representing more than fifty percent (50%) of the fair market value of the Company’s overall assets. However, there is no Change in Control when there is such a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer, through a transfer to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock; (2) an entity, at least 50% of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock; or (4) an entity, at least 50% of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock.

 

For purposes of paragraphs (i) and (ii):

 

Person   shall have the meaning given in Section 7701(a)(1) of the Code. Person shall include more than one Person acting as a group as defined by the Treasury Regulations issued under Section 409A of the Code.

 

Affiliate   shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.

 

The provisions of this Section 11(a) shall be interpreted in accordance with the requirements of the Treasury Regulations under Section 409A of the Code, it being the intent of the parties that this Section 11(a) shall be in compliance with the requirements of said Code Section and said Treasury Regulations. Notwithstanding, anything in this Agreement to the contrary, the transaction contemplated in the Agreement and Plan of Merger between SNAP Interactive, Inc., SAVM Acquisition Corporation, and A.V. M. Software, Inc. and Jason Katz, as the Company Representative, dated as of September 13, 2016 (the “ Merger ”) shall not be deemed a Change in Control for purposes of this Agreement.

  

(b) Benefits Upon Termination Following Change in Control .

 

(i) Severance Benefits. If, during the sixty (60) day period immediately prior to a Change in Control or during the one year period beginning on the date of a Change in Control (the “ Change Period ”) ,   (A) Executive's employment is terminated by the Company (or by the acquiring or successor business entity following a Change in Control) other than for Cause (as defined in. Section 9(b) above), or (B) Executive terminates his employment with the Company (or with the acquiring or successor business entity following a Change in Control) for Good Reason (as defined in Section 9(d) above), then Executive shall receive, in lieu of the severance benefits described in Section 10(b) above and subject to Executive's execution of a general release of claims as provided in Section 11(d) below, a severance benefit in an amount equal to three (3) months of Executive’s annualized Base Salary (specified in Section 5(a)) as in effect on the date of the Change in Control plus three (3) month of the COBRA Entitlement.

 

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(ii) No Payments Upon Breach. The Company shall have no obligation to provide Executive with any severance compensation under this Section 11 if Executive is in breach or violation of any of the covenants contained in Sections 6 or 7, which are applicable to Executive at the time of the severance payment.

 

(iii) No Duplication of Payment. The payment of severance benefits under this Section 11 shall be in lieu of, and not in addition to, any payments under Section 10(b).

 

(iv) Time and Form of Payment. Except as otherwise provided by Section 12, the Company shall pay the severance amount referenced in Section 11(b)(i) in a lump sum on the date that is sixty (60) days after the date of Executive's termination.

 

(v) Notwithstanding the foregoing, with respect to any stock options, restricted stock, or other plans or programs in which Executive is participating at the time of termination of his employment, Executive's rights and benefits under each such plan shall be determined in accordance with the terms, conditions, and limitations of the plan and any separate agreement executed by Executive which may then be in effect

 

(c) No Mitigation or Offset .   Executive shall not be required to mitigate the amount of any payment provided for in this Section 11 by seeking other employment or otherwise. The Company shall not be entitled to set off or reduce any severance payments owed to Executive under this Section 11 by the amount of earnings or benefits received by Executive in future employment.

 

(d) Release. Payment of any of the amounts described in this Section 11 is conditioned upon Executive's execution of a Waiver and Release of Claims in the form attached hereto as Exhibit A relating to the period of Executive's employment with the Company, within the forty-five (45) day period following the end of Executive's employment and not revoking such Waiver and Release of Claims during any applicable revocation period.

 

12. Other Provisions .

 

(a) Remedies; Legal Fees .   Each of the parties to this Agreement shall be entitled to enforce his or its rights under this Agreement, specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in his or its favor. In any action resulting from a breach of this Agreement, the prevailing party shall be entitled to recover his or its attorneys' fees.

 

(b) Limitations on Assignment .   In entering into this Agreement, the Company is relying on the unique personal services of Executive; services from another person will not be an acceptable substitute. Except as provided in this Agreement, Executive may not assign this Agreement or any of the rights or obligations set forth in this Agreement without the explicit written consent of the Company. Any attempted assignment by Executive in violation of this Section 12(b) shall be void. Except as provided in this Agreement, nothing in this Agreement entitles any person other than the parties to the Agreement to any claim, cause of action, remedy, or right of any kind, including, without limitation, the right of continued employment.

 

(c) Severability and Reformation .   The parties intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible, and the Company and Executive hereby request the court to whom disputes relating to this Agreement are submitted to reform the otherwise unenforceable covenant in accordance with this Section 12(c).

 

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(d) Notices .   Any notice or other communication required, permitted or desired to be given under this Agreement shall be deemed delivered when personally delivered; the business day, if delivered by overnight courier; the same day, if transmitted by facsimile on a business day before noon, Eastern Standard Time; the next business day, if otherwise transmitted by facsimile; and the third business day after mailing, if mailed by prepaid certified mail, return receipt requested, as addressed or transmitted as follows (or to such subsequent addresses as the parties may give one another notice of):

 

If to Executive, at the address last for him on record with the Company.

 

If to the Company:

 

Snap Interactive, Inc.

462 7th Avenue, 4th Floor

New York, NY 10018

 

(e) Further Acts .   Whether or not specifically required under the terms of this Agreement, each party shall execute and deliver such documents and take such further actions as shall be necessary in order for such party to perform all of his or its obligations specified in the Agreement or reasonably implied from the Agreement's terms.

 

(f) Publicity and Advertising .   Executive agrees that the Company may use his name, picture, or likeness for any advertising, publicity or other business purpose at any time, during the term of this Agreement and may continue to use materials generated during the term of this Agreement for a period of six (6) months thereafter. The use of Executive's name, picture, or likeness shall not be deemed to result in any invasion of Executive's privacy or in violation of any property right Executive may have; and Executive shall receive no additional consideration if his name, picture or likeness is so used. Executive further agrees that any negatives, prints or other material for printing or reproduction purposes prepared in connection with the use of his name, picture or likeness by the Company shall be and are the sole property of the Company.

 

(g) GOVERNING LAW .   THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.

 

(h) Venue .   The exclusive venue for all suits or proceedings arising from or related to this Agreement shall be in a court of competent jurisdiction in New York, New York.

 

(i) Waiver .   A party's waiver of any breach or violation of any Agreement provisions shall not operate as, or be construed to be, a waiver of any later breach of the same or other Agreement provision.

 

(j) Entire Agreement, Amendment, Binding Effect. This Agreement constitutes the entire agreement between the parties concerning the subject matter in this Agreement. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Executive acknowledges and represents that in executing this Agreement, he did not rely, and has not relied, on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. Any amendment to this Agreement must be signed by all parties to this Agreement. This Agreement will be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, legal representatives, and permitted assigns (if any). This Agreement supersedes any prior agreements between Executive and the Company concerning the subject matter of this Agreement.

 

(k) Counterparts. This Agreement may be executed in counterparts, with the same effect as if both parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

 

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(l) Directors and Officers Insurance/Indemnification .   During the Employment Period, the Company shall maintain Executive as an insured party on directors' and officers' insurance maintained by the Company for the benefit of its directors and officers. Either through its directors and officers insurance policy and pursuant to the terms thereof or, if such insurance is not available, otherwise, the Company will indemnify and hold Executive harmless against any liability, damage, cost or expense incurred in connection with the defense of any action, suit or proceeding to which Executive is a party, or threat thereof, by reason of his being or having been an officer or director of the Company or any affiliate of the Company, to the extent permitted by applicable law; provided, however, that this indemnity shall not apply if Executive is determined by a court of competent jurisdiction to have acted against the interests of the Company with gross negligence, gross misconduct, or gross malfeasance. Promptly after receipt by Executive of notice of the commencement of any action (including any governmental action) or threat thereof, Executive shall, if a claim covered by this Section 12(1) is to be made or is threatened against Executive, deliver to the Company a written notice of the commencement or threat thereof and the Company shall have the right to participate in, and, to the extent ,the Company so desires to assume the defense thereof with counsel selected by the Company and approved by Executive (whose approval shall not be unreasonably withheld); provided, however, that Executive (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Company, if, and only if, representation of Executive by the counsel retained by the Company would be inappropriate due to actual or potential differing interests between Executive and any other party represented by such counsel in such proceeding. Executive's failure to deliver written notice to the Company within a reasonable time of the commencement or threat of any action for which Executive seeks indemnification under this Section 12(1), if prejudicial to the Company's ability to defend such action, shall relieve the Company of any liability to Executive under this Agreement.

 

13. Section 409A of the Code

 

(a) To the extent (i) any payments to which Executive becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with Executive's termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code; (ii) Executive is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (iii) at the time of Executive's separation from service the Company is publicly traded (as defined in Section 409A of Code), then such payments (other than any payments permitted by Section 409A of the Code to be paid within six (6) months of Executive's separation from service) shall not be made until the earlier of (x) the first day of the seventh month following Executive's separation from service or (y) the date of Executive's death following such separation from service. During any period that payment or payments to Executive are deferred pursuant to the foregoing, Executive shall be entitled to interest on the deferred payment or payments at a per annum rate equal to the highest rate of interest applicable to six (6) month money market accounts offered by the following institutions: Citibank N.A., Wells Fargo Bank, NA., or Bank of America, on the date of such “separation from service.” Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Section 13 (together with accrued interest thereon) shall be paid to Executive or Executive's beneficiary hi one lump sum.

 

(b) It is intended that this Agreement comply with or be exempt from the provisions of Section 409A of the Code and the Treasury Regulations and guidance of general applicability issued thereunder so as to not subject Executive to the payment of additional interest and taxes under Section 409A of the Code, and in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first indicate above.

 

  THE COMPANY:
     
  SNAP INTERACTIVE, INC.
     
  By: /s/ Alexander Harrington
 

Name: Alexander Harrington

Title: Chief Executive Officer

   
  EXECUTIVE:
     
  By: /s/ Jason Katz
    Jason Katz

 

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EXHIBIT A

 

WAIVER AND RELEASE OF CLAIMS

 

This Waiver and Release of Claims (“ Release ”), effective as of the ______________ (the “ Effective Date ”), is made and entered into by and between Jason Katz (“ Employee ”) and Snap Interactive, Inc., a Delaware corporation (the “ Company ”). Terms used in this Release with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement made and entered into as of __________ , 2016 by and between the Company and Employee (the “ Agreement ”).

 

WHEREAS, Employee and the Company are parties to the Agreement; and

 

WHEREAS, Section 10 and Section 11 of the Agreement provide that Employee is entitled to certain payments and benefits upon separation from employment if he signs a release agreement;

 

NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and adequacy of which are acknowledged, Employee and the Company agree as follows:

 

1. Global Release . In consideration of the mutual promises contained in the Agreement, including the Company’s promises to pay Employee consideration under Section 10 or Section 11 of the Agreement, which are in addition to anything of value to which Employee is already entitled, Employee, on behalf of himself, his heirs, executors, successors and assigns, irrevocably and unconditionally releases, waives, and forever discharges the Company and all of its parents, divisions, subsidiaries, affiliates, joint venture partners, partners, and related companies, and their present and former agents, employees, officers, directors, attorneys, stockholders, plan fiduciaries, successors and assigns (collectively, the “ Released Parties ”), from any and all claims, demands, actions, causes of action, costs, fees, and all liability whatsoever, whether known or unknown, fixed or contingent, which Employee has, had, or may have against the Released Parties relating to or arising out of his employment, or any terms of the Agreement, from the Effective Date and up to and including the date of this Release. This Release includes, without limitation, claims at law or equity or sounding in contract (express or implied) or tort, claims arising under any federal, state, or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, creed, disability, religion, military status, family status, marital status, partnership status, domestic violence, stalking and sex offense victim status, arrest and conviction record, predisposing genetic characteristic, alienage or citizenship status, sexual orientation, or any other form of discrimination, harassment, or retaliation (including, without limitation, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the ADA Amendments Act of 2008, Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the Rehabilitation Act, the Family and Medical Leave Act, the Fair Labor Standards Act anti-retaliation provisions, the Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Lilly Ledbetter Fair Pay Act, the Genetic Information Nondiscrimination Act, the New York Civil Rights Law, the New York City Human Rights Law, any federal, state, local or municipal whistleblower protection or anti-retaliation statute or ordinance, or any other federal, state, local, or municipal laws of any jurisdiction), claims arising under the Employee Retirement Income Security Act (except any employee benefits or employee participation rights as contained in the Agreement), or any other statutory or common law claims related to or arising out of his employment or any terms of the Agreement, from the Effective Date and up to and including the date of this Release’s execution. Notwithstanding the foregoing, nothing in this Release shall affect or impair: (i) any rights Employee may have to indemnification, including without limitation indemnification for attorneys’ fees, costs and/or expenses, pursuant to applicable statute, certificates of incorporation and by-laws of the Company or any of its affiliates; (ii) any of Employee’s rights arising under the Agreement; or (iii) any rights that Employee has as a former employee under the Company’s employee benefit plans (other than any severance plan).

 

2. No Admission of Liability . Employee understands and agrees that this Release shall not in any way be construed as an admission by the Released Parties of any unlawful or wrongful acts whatsoever against Employee or any other person. The Released Parties specifically disclaim any liability to or wrongful acts against Employee or any other person.

 

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3. Time to Consider Release . Employee is hereby advised in writing by the Company that he should consult an attorney before executing this Release. Employee has a period of up to forty-five (45) calendar days after receiving the Release within which to review and consider the provisions of this Release. Employee understands that if he does not sign this Release before the forty-five (45) calendar day period expires, this Release offer will be withdrawn automatically.

 

4. Revocation Period . Employee understands and acknowledges that he has seven (7) calendar days following the execution of this Release to revoke his acceptance of this Release. This Release will not become effective or enforceable, and the payments and benefits described under Section 10 or Section 11 will not become payable, until after this revocation period has expired without his revocation. If Employee does not revoke the Release within the revocation period, the Company will commence the payments and benefits described under Section 10 or Section 11 of the Agreement within ten (10) days after the revocation period’s expiration date.

 

5. Confidentiality of Release and Company Information. Employee agrees to keep this Release, its terms, and the amount of payments and benefits related to this Release completely confidential. Employee agrees and understands that he is prohibited from disclosing any terms of this Release to anyone, except that he may disclose the terms of this Release and the amount of the payments and benefits related to this Release to his spouse, attorneys, accountants, and financial advisors or as otherwise required by law. Employee also agrees to continue to abide by the confidentiality provisions of the Agreement.

 

6. Non-Disparagement . Employee agrees to continue to abide by the non-disparagement provisions of the Agreement.

 

7. Agreement to Return Company Property/Documents. Employee understands and agrees that his last day of active work in any Company office or on any Company owned or leased property will be _______. Accordingly, Employee agrees that: (i) he will not take with him, copy, alter, destroy, or delete any files, documents, electronically stored information, or other materials, whether or not embodying or recording any Confidential Information, including copies, without obtaining in advance the written consent of an authorized Company representative; and (ii) he will promptly return to the Company all Confidential Information, documents, files, records and tapes, whether written in hardcopy form or electronically stored, that have been in his possession or control regarding the Company, and he will not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and all copies of these materials. Employee further agrees that on ________, he will return to the Company immediately all Company property, including, without limitation, keys, equipment, computer(s) and computer equipment, devices, Company cellular phones, Company credit cards, data, electronically stored information, lists, correspondence, notes, memos, reports, or other writings prepared by the Company or himself on behalf of the Company.

 

8. Authorized Use of Trade Secrets/ Confidential Information. Notwithstanding the foregoing, Employee understands that Employee may disclose proprietary and/ or confidential information when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order that Employee divulge, disclose or make accessible such information. The Company hereby notifies Employee in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Employee that if Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

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9. Knowing and Voluntary Release . Employee understands that it is his choice whether to enter into this Release and that his decision to do so is voluntary and is made knowingly.

 

10. No Prior Representations or Inducements . Employee represents and acknowledges that in executing this Release, he did not rely, has not relied, and expressly disavows reliance on any communications, statements, promises, inducements, or representation(s), oral or written, by any of the Released Parties, except as expressly contained in this Release.

 

11. Choice of Law . This Release shall, in all respects, be interpreted, enforced, and governed under the laws of the State of New York. The parties agree that the language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties.

 

12. Severability . The Company and Employee agree that should a court declare or determine that any provision of this Release is illegal or invalid, the validity of the remaining parts, terms or provisions of this Release will not be affected and any illegal or invalid part, term, or provision, will not be deemed to be a part of this Release.

 

13. Counterparts . The Company and Employee agree that this Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument.

 

Please read carefully as this document includes a release of claims .

 

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IN WITNESS WHEREOF, the Company and Executive hereto evidence their agreement by their signatures.

 

     
Executive Signature [Signature]   Company Representative [Signature]
     
     
Jason Katz   Company Representative [Printed Name]
     
     
Date   Date

 

 

16

 

 

Exhibit 10.5

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“ Agreement ”) is entered into on October 7, 2016 by and between Snap Interactive, Inc., a Delaware corporation (the “ Company ”), and Clifford Lerner (“ Employee ”) and is effective on the Closing Date as defined in the Agreement and Plan of Merger, by and among the Company, SAVM Acquisition Corporation, a Delaware corporation, and A.V.M. Software, Inc., a New York corporation (the “ Merger Agreement ”). In consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows:

 

1. Agreement to Employ . The Company desires to secure the services of Employee as its Chief Product Innovation Officer. In addition, Employee shall serve as a member of the Board of Directors of the Company (the “ Board ”). The Company and Employee desire to enter into this Agreement to, among other things, set forth the terms of Employee’s employment with the Company. The Company and Employee acknowledge that this Agreement supersedes any other offer, agreement or promises made by anyone, specifically concerning the offer of employment by the Company, and this Agreement comprises the complete agreement between Employee and the Company concerning Employee’s employment by the Company.

 

2. Term of Agreement . This Agreement shall be binding upon and enforceable against the Company and Employee as of the Closing Date. The Agreement’s stated term and the employment relationship created hereunder will begin on the Closing Date, and will remain in effect until terminated in accordance with Section 8 (the “ Employment Period ”). Employee’s employment will be that of an at-will employee which means that either the Company or Employee can end the employment relationship at any time for any reason or for no reason, with or without notice, or with or without Cause (defined below).

 

3. Surviving Agreement Provisions . Notwithstanding any provision of this Agreement to the contrary, the parties’ respective rights and obligations under Sections 6 through 11 shall survive any termination or expiration of this Agreement or the termination of Employee’s employment for any reason whatsoever.

 

4. Services to be Provided by Employee .

 

(a) Position and Responsibilities . Subject to the Agreement’s terms, Employee agrees to serve the Company as its Chief Product Innovation Officer, and as a member of the Board of Directors of the Company. In such capacity, Employee shall serve as an advisor to the Company on strategic decisions. Employee will report to the Chief Executive Officer.

 

(b) Employee’s Employment Representations . Employee agrees that he shall not, directly or indirectly, have any interest in, or perform any services for, any business competing with or similar in nature to the Company’s business as set forth in Section 7. Employee further represents to the Company that he is not violating and will not violate any contractual, legal, or fiduciary obligations or burdens to which Employee is subject by entering into this Agreement or providing services under the Agreement’s terms. Notwithstanding the above, Employee is authorized to have an interest in (including a one hundred percent (100%) interest in), to perform services for, and to serve on advisory boards, board of directors or serve as a trustee for any business that does not compete with the Company as set forth in Section 7 of the Agreement, without obtaining the written consent of the Company.

 

(c) Appointment of Committee Member . Employee shall have the right to appoint one (1) member of the Committee (as defined in the Merger Agreement). Notwithstanding anything to the contrary in this Agreement, this Section 4(c) shall survive the termination of this Agreement and the expiration of the Employment Period.

 

 
 

 

5. Compensation for Services . As compensation for the services Employee will perform under this Agreement during the Employment Period, the Company will pay Employee, and Employee shall accept as full compensation, the following:

 

(a) Base Salary . Employee shall receive a monthly salary (“ Base Salary ”) of twelve thousand five hundred dollars ($12,500) or one hundred fifty thousand dollars ($150,000) annualized, prorated for partial months of employment, through the first anniversary of the Closing date. After the first anniversary of the Closing Date, Employee’s Base Salary shall be reduced to seventy-five thousand dollars ($75,000) per annum, prorated for partial months. Employee’s compensation shall be subject to all appropriate federal and state withholding taxes and shall be payable in accordance with the Company’s normal payroll procedures.

 

(b) Annual Bonus . Employee shall be eligible to receive an annual discretionary incentive bonus (“ Annual Bonus ”) each year during the Employment Period. The amount of each Annual Bonus shall be determined by the Company in its sole discretion and Employee must be an employee in good standing with the Company on the date an Annual Bonus is otherwise due to be paid in order to receive it.

 

(c) Future Equity Awards . The Company shall determine, in its sole discretion, Employee’s eligibility to participate in future equity award programs of the Company and the terms of any such awards and programs.

 

(d) Restricted Stock. On March 3, 2016 and December 14, 2011, the Company and Employee entered into certain Restricted Stock Award Agreements, pursuant to which Employee was granted 5,000,000 and 4,250,000 shares of restricted stock in the Company, respectively (collectively, the “ Restricted Stock Awards ”). In connection with the Merger Agreement, the Company and Employee amended the Restricted Stock Awards by entering into certain First Amendments to Restricted Stock Award Agreement (the “ First Amendments ”), to be effective on the Closing Date. Employee acknowledges and agrees that at all times after the Closing Date the vesting and other terms of the Restricted Stock Awards will be governed by the First Amendments, including, but not limited to, the requirement that Employee must satisfy any withholding obligations in order to vest in such Restricted Stock Awards.

 

(e) 10b5-1 Trading Plan. The Company agrees that during the one hundred eighty (180) day period following the Closing Date, Employee shall be entitled to enter into (but not effect any transaction under) a customary Rule 10b5-1 Trading Plan with a broker-dealer reasonably acceptable to the Company.

 

(f) Cellular Service . During the Employment Period, Employee shall be entitled to reimbursement by the Company for the cost of his cellular and data service for business purposes, subject to a monthly cap of $100.

 

(g) Other Benefits and Perquisites . Employee shall be entitled to participate in the benefit plans provided by the Company for all employees generally, subject to the terms and conditions of such plans. The Company shall be entitled to change or terminate these plans in its sole discretion at any time. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses incurred during the Initial Employment Term or Renewal Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit. Employee will comply with the Company’s policies regarding these benefits, including all Internal Revenue Service rules and requirements.

 

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6. Confidential Information.

 

(a)  Confidential Information. The Company shall provide Employee with confidential information and trade secrets of the Company (hereinafter referred to as “ Confidential Information ”) and shall place Employee in a position to develop and have ongoing access to Confidential Information of the Company, shall entrust Employee with business opportunities of the Company, and shall place Employee in a position to develop business goodwill on behalf of the Company. For purposes of this Agreement, Confidential Information includes, but is not limited to:

 

(i) Technologies developed by the Company and any research data or other documentation related to the development of such technologies, including all designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that are conceived, developed or acquired by Employee, individually or in conjunction with others during the period of Employee’s employment by the Company;

 

(ii) All documents, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, E-mail, voice mail, electronic databases, maps, logs, drawings, models and all other writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of expression that are conceived, developed or acquired by Employee individually or in conjunction with others during the Employment Period (whether during business hours or otherwise and whether on any Company premises or otherwise) that relate to the Company’s business, trade secrets, products or services;

 

(iii) Customer lists and prospect lists developed by the Company;

 

(iv) Information regarding the Company’s customers which Employee acquired as a result of his employment with the Company, including but not limited to, customer contracts, work performed for customers, customer contacts, customer requirements and needs, data used by the Company to formulate customer bids, customer financial information, and other information regarding the customer’s business;

 

(v) Information related to the Company’s business, including but not limited to marketing strategies and plans, sales procedures, operating policies and procedures, pricing and pricing strategies, business plans, sales, profits, and other business and financial information of the Company;

 

(vi) Training materials developed by and utilized by the Company; and

 

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(vii) Any other information that Employee acquired as a result of his employment with the Company and which Employee has a reasonable basis to believe the Company would not want disclosed to a business competitor or to the general public.

 

Employee understands and acknowledges that such Confidential Information gives the Company a competitive advantage over others who do not have the information, and that the Company would be harmed if the Confidential Information were disclosed.

 

(b)  Disclosure Of Confidential Information. Employee agrees that he shall hold all Confidential Information of the Company in trust for the Company and shall not during or after his employment terminates for any reason: (a) use the information for any purpose other than the benefit of the Company; or (b) disclose to any person or entity any Confidential Information of the Company except as necessary during Employee’s employment with the Company to perform services on behalf of the Company. Employee shall also take reasonable steps to safeguard such Confidential Information and to prevent its disclosure to unauthorized persons.

 

(c)  Return Of Information. Upon termination of employment, or at any earlier time as directed by the Company, Employee shall immediately deliver to the Company any and all Confidential Information in Employee’s possession, any other documents or information that Employee acquired as a result of his employment with the Company and any copies of any such documents/information. Employee shall not retain any originals or copies of any documents or materials related to the Company’s business, which Employee came into possession of or created as a result of his employment with the Company. Employee acknowledges that such information, documents and materials are the exclusive property of the Company. In addition, upon termination of employment, or at any time earlier as directed by the Company, Employee shall immediately deliver to the Company any property of the Company in Employee’s possession.

 

(d)  Authorized Use of Trade Secrets/ Confidential Information. Notwithstanding the foregoing, Employee understands that Employee may disclose proprietary and/ or confidential information when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order that Employee divulge, disclose or make accessible such information. The Company hereby notifies Employee in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Employee that if Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

7. Restrictive Covenants . In consideration for (i) the Company’s promise to provide Confidential Information to Employee, (ii) the substantial economic investment made by the Company in the Confidential Information and goodwill of the Company, and the business opportunities disclosed or entrusted to Employee, (iii) the compensation and other benefits provided by the Company to Employee, and (iv) the Company’s employment of Employee pursuant to this Agreement, and to protect the Company’s Confidential Information, Employee agrees to enter into the following restrictive covenants.

 

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(a) Non-Competition. Employee agrees that, during the Employment Period and during the Restricted Period (defined below), other than in connection with his duties under this Agreement, he shall not, without the prior written consent of the Company, directly or indirectly, either individually or as a principal, partner, stockholder, manager, agent, consultant, contractor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, become employed by, control, carry on, join, lend money for, operate, engage in, establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in the Company’s Business (defined below) within the Restricted Area (defined below). Notwithstanding the foregoing, Employee shall be permitted during the Employment Period to own, directly or indirectly, solely as an investment, securities of any organization or entity, which are traded on any national securities exchange or NASDAQ if Employee is not the controlling shareholder, or a member of a group that controls such organization or entity, and directly or indirectly, does not own three percent (3%) or more of any class of securities of such organization or entity. The Company confirms further that this Section 7(a) does not prohibit Employee from issuing, printing, distributing, publishing, announcing or advertising original works and does not prohibit Employee from owning (including as a one hundred percent (100%) owner) or being involved with business interests that do not compete with the Company’s Business.

 

For purposes of this Agreement:

 

Restricted Period ” means a period of one (1) year immediately following the date of the termination of Employee’s employment with the Company for any reason.

 

Business ” means the business of establishing and/or providing online dating services or other service that directly compete with the services offered by the Company and with which Employee was directly involved as an employee of the Company.

 

Restricted Area ” means, because the Company’s business is nationwide, Employee’s responsibilities are nationwide in scope, and Employee has access to the Company’s Confidential Information on a nationwide basis, all States comprising the United States, and any other geographic area in which the Company conducts business and for which Employee has responsibilities during Employee’s employment.

 

(b) Non-Solicitation. Employee agrees that, during the Employment Period and for two (2) years immediately following the termination of Employee’s employment with the Company for any reason, other than in connection with his duties under this Agreement, Employee shall not, directly or indirectly, either as a principal, manager, agent, employee, consultant, officer, director, stockholder, partner, investor or lender or in any other capacity, and whether personally or through other persons:

 

(i) Solicit business from, interfere with, attempt to solicit business with, or do business with any customer, referral source and/or sponsor of the Company with whom the Company did business or who the Company solicited within the preceding one (1) year, and who or which: (1) Employee contacted, called on, serviced or did business with during Employee’s employment at the Company; (2) Employee learned of as a result of Employee’s employment with the Company; or (3) about whom Employee received Confidential Information. This restriction in this Section 7(b)(i) applies only to the Business (as defined above) of the Company or any affiliate thereof and does not apply to general service providers (such as payment processors); or

 

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(ii) Solicit, induce or attempt to solicit or induce, engage or hire, on behalf of himself or any other person or entity, any person who is an employee or consultant of the Company or who was employed by the Company within the preceding twelve (12) months.

 

Notwithstanding the foregoing, the restrictions contained in this Section 7 shall not apply to Darrell Lerner.

 

(c) Non-Disparagement. Employee agrees that the Company’s goodwill and reputation are assets of great value to the Company and its affiliates which were obtained through great costs, time and effort. Therefore, Employee agrees that during the Employment Period and following the termination of his employment, Employee shall not in any way, directly or indirectly, individually or in concert with others, engage in any conduct or make any statement that is likely to have the effect of undermining, disparaging, libeling or defaming the Company, its beneficial owners or its affiliates, their respective business or business practices, products or services, officers, directors, agents, representatives or employees, past or present.

 

(d)  Tolling . If Employee violates any of the restrictions contained in this Section 7 (other than subsection (c) of this Section 7), the Restricted Period shall be extended by any and all periods during which Employee is in breach of such restrictions.

 

(e)  Remedies . Employee acknowledges that the restrictions contained in Sections 6 and 7 of this Agreement, in view of the nature of the Company’s business and his position with the Company, are reasonable and necessary to protect the Company’s legitimate business interests and that any violation of Sections 6 and 7 of this Agreement would result in irreparable injury to the Company. In the event of a breach by Employee of Sections 6 or 7 of this Agreement, then the Company shall be entitled to (i) a temporary restraining order and injunctive relief restraining Employee from the commission of any breach, and/or (ii) recover attorneys’ fees, expenses and costs the Company incurs in such action. Further, if the Company prevails in any action brought by Employee (or anyone acting on his behalf) seeking to declare any term in this Section 7 void or unenforceable or subject to reduction or modification, then the Company shall be entitled to recover attorneys’ fees, expenses and costs the Company incurs in such action.

 

(f)  Reformation . The courts shall be entitled to modify the duration and scope of any restriction contained herein to the extent such restriction would otherwise be unenforceable, and such restriction as modified shall be enforceable. Employee acknowledges that the restrictions imposed by this Agreement are legitimate, reasonable and necessary to protect the Company’s investment in its businesses and the goodwill thereof. Employee acknowledges that the scope and duration of the restrictions contained herein are necessary and reasonable in light of the time that Employee has been engaged in the business of the Company, Employee’s reputation in the markets for the Company’s business and Employee’s relationship with the suppliers, customers and clients of the Company.

 

8. Termination of Agreement. The employment relationship between Employee and the Company created under this Agreement shall terminate upon the occurrence of any one of the following events:

 

(a) Death or Permanent Disability . This Agreement, and Employee’s employment, shall be terminated effective on the death or permanent disability of Employee. For this purpose, “permanent disability” shall mean that Employee is, by reason of any medically determinable physical or mental impairment that is expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, as determined by a physician mutually selected by the Company and Employee.

 

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(b) Termination for Cause or Resignation without Good Reason . The Company shall have the option to terminate Employee’s employment during the Employment Period, effective upon written notice of such termination to Employee, for Cause as the Company determines. The Employee also shall have the option to terminate his employment during the Employment Period without Good Reason. Under the Agreement, termination for “ Cause ” means the Company’s termination of Employee’s employment upon the occurrence of any of the following events:

 

(i) Any act of fraud, misappropriation or embezzlement by Employee regarding any aspect of the Company’s business;

 

(ii) The conviction of Employee by a court of competent jurisdiction of a felony;

 

(iii) The intentional and material breach by Employee of any non-disclosure or non-competition/non-solicitation provision of any agreement to which Employee and the Company or any of its subsidiaries are parties, including, but not limited to, Section 7 hereof, as determined by a court of competent jurisdiction; or

 

(iv) Employee’s breach of his fiduciary duties to the Company, as determined by a court of competent jurisdiction.

 

In the event Employee’s employment under this Agreement is terminated for Cause or Employee resigns without Good Reason, Employee shall only be entitled to the compensation provided in Section 9(a) below.

 

(c) Termination by the Company without Cause . The Company may terminate this Agreement without Cause at any time; provided, however, that if the Company terminates Employee’s employment within one (1) year of the Closing Date, Employee shall be entitled to compensation and benefits upon such termination as provided in Sections 9(a) and 9(b) below. If Company terminates Employee’s employment without Cause after the first (1 st ) anniversary of the Closing Date, he shall only be entitled to the benefits provided in Section 9(a) below.

 

(d) Termination by Employee For Good Reason . Employee shall be entitled to terminate this Agreement at any time for Good Reason. Under the Agreement, “ Good Reason ” means the occurrence of any of the following events:

 

(i) Without his express written consent, the assignment of Employee to a position constituting a material demotion with loss of compensation and job duties by comparison to his position with the Company on the date of this Agreement; provided, however, that changes in Employee’s job duties and reporting relationships, at the Company’s or Board’s discretion, and without a material loss in Employee’s compensation, will not constitute Good Reason under this Agreement;

 

(ii) The change of the location where Employee performs the majority of Employee’s job duties at the time Employee executes this Agreement (“ Base Location ”) to a location that is more than fifty (50) miles from the Base Location, without Employee’s written consent; or

 

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(iii) A material reduction by the Company in Employee’s Base Salary as in effect on the date of this Agreement, unless the reduction is a proportionate reduction of the compensation of Employee and all other senior officers of the Company as a part of a company-wide effort to enhance the Company’s financial condition.

 

Employee shall give the Company thirty (30) days’ notice of his intent to terminate this Agreement for Good Reason within thirty (30) days following the date of such alleged Good Reason’s initial existence and the Company shall have thirty (30) days following receipt of such notice from Employee to remedy the alleged violation of Sections 8(d). In the event the Company does not cure the violation, if Employee does not terminate this Agreement within sixty (60) days following the last day of the Board’s cure period, the occurrence of the violation shall not subsequently serve as Good Reason for Employee to terminate this Agreement. In the event Employee terminates his employment for Good Reason within one (1) year of the Closing Date, Employee shall be entitled to the compensation and benefits provided in Sections 9(a) and 9(b) below. If Employee terminates his employment for Good Reason after the first (1 st ) anniversary of the Closing Date, he shall only be entitled to the benefits provided in Section 9(a) below.

 

(e) Separation from Service. For purposes of this Agreement, including, without limitation, Sections 9 and 10, any references to a termination of Employee’s employment shall mean a “separation from service” as defined by Section 409A of the Internal Revenue Code of 1986, as amended (and the Treasury Regulations and other guidance issued thereunder) (the “ Code ”).

 

9. Compensation Upon Termination . Upon the termination of Employee’s employment under this Agreement before the expiration of the stated term in this Agreement, Employee shall be entitled to the following:

 

(a) Compensation Upon Termination for Any Reason . Upon termination of Employee’s employment for any reason, Employee shall be entitled to the following within thirty (30) days of such termination:

 

(i) Salary . The Base Salary earned by him before the effective date of termination as provided in Section 5(a) (including salary payable during any applicable notice period), prorated on the basis of the number of full days of service rendered by Employee during the salary payment period to the effective date of termination;

 

(ii) Vacation Benefits . Any accrued, but unpaid, vacation benefits; and

 

(iii) Unreimbursed Business Expenses . Any previously authorized but unreimbursed business expenses.

 

(b) Additional Benefits Upon Termination by the Company Without Cause or by Employee for Good Reason During the First Year. If Employee’s employment under this Agreement terminates without Cause or for Good Reason within one (1) year of the Closing Date, subject to Employee’s satisfaction of the Release Condition (defined below) and subject to Employee’s compliance with Section 6 and Section 7, the Company shall, in addition to the amounts set forth in Sections 9(a) above: (i) continue to pay Employee his monthly Base Salary during the Severance Period (defined below) (the “ Salary Continuation ”) and (ii) and assuming Employee is eligible for and timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), pay to Employee an amount sufficient to reimburse Employee for a portion of the cost of the premiums under the Company’s group health plans for Employee and Employee’s dependents to continue receiving medical, dental, prescription drugs, and vision insurance provided to current employees at the same level Employee and his dependents (if applicable) had immediately prior to such termination for the earlier of (A) the Severance Period or, (B) the date Employee’s coverage under such group health plans terminates for any reason, provided that Company’s reimbursement of such premiums shall be limited to the same proportion of the cost of coverage under the Company’s group health plans as the Company pays on behalf of its employees generally ( e.g. if the Company pays 30% of the cost of health care coverage for its employees, it shall reimburse Employee 30% of the cost of the COBRA premiums) (such amount being the “ COBRA Amount ”).

 

  8  
 

 

The “ Severance Period ” shall be the period beginning on the date of the termination of Employee’s employment and ending on the earlier of (i) the 12 month anniversary of the termination of Employee’s employment with the Company or (ii) the first (1 st ) anniversary of the Closing Date.

 

The Company shall pay the Salary Continuation and COBRA Amount in accordance with its normal payroll practices; provided that the Company shall commence paying Employee the Salary Continuation and COBRA Amount on the 60 th day following the termination provided that the Release Condition is satisfied, with the first payment being a catch-up for missed payments of Salary Continuation and COBRA Amount otherwise payable during the period the Release Condition was not yet satisfied.

 

The “ Release Condition ” shall mean that Employee has executed and delivered to the Company a waiver and release of claims in the form attached as Exhibit A hereto (to include any legally required updates) (the “ Release ”) and that such Release has become final and binding upon Employee by the date specified in the Release.

 

Notwithstanding the foregoing, with respect to any stock options, restricted stock, or other plans or programs in which Employee is participating at the time of termination of his employment, Employee’s rights and benefits under each of these plans shall be determined in accordance with the terms, conditions, and limitations of the plans and any separate agreement executed by Employee which may then be in effect.

 

(c) Penalty for Breach of Covenants . For any period of time that Employee is in breach of Section 6 or Section 7, the Company shall not be obligated to pay any Salary Continuation referenced in this Agreement, the Company’s severance obligations shall terminate and expire, and the Company shall have no further obligations to Employee from and after the date of such breach. Additionally, the Employee shall immediately repay to the Company the gross amounts of all Salary Continuation payments and COBRA Amounts he has received from the Company (if any). In addition, the Company shall have all other rights and remedies available under this Agreement or any other agreement at law or in equity.

 

(d) No Mitigation or Offset . Employee shall have no obligation to mitigate any severance obligation of the Company under this Agreement by seeking new employment. The Company shall not be entitled to set off or reduce any severance payments owed to Employee under this Agreement by the amount of earnings or benefits received by Employee in future employment.

 

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10. Section 280G. Notwithstanding the other provisions of this Section 10, in the event that any severance and other benefits provided to or for the benefit of Employee or his legal representatives and dependents pursuant to this Agreement and any other agreement, benefit, plan, or policy of the Company (including, but not limited to, any equity awards granted by the Company to Employee) (this Agreement and such other agreements, benefits, plans, and policies collectively being referred to herein as the “ Change in Control Arrangements ”) constitute “parachute payments” within the meaning of Code Section 280G(b)(2)(A)(i) (such severance and other benefits being referred to herein as the “ Payments ”), the Company will provide Employee with a computation of (1) the maximum amount of Payments that could be made, without the imposition of the excise tax imposed by Code Section 4999, under the Change in Control Arrangements (said maximum amount being referred to as the “ Capped Amount ”); (2) the value of all Payments that could be made pursuant to the terms of the Change in Control Arrangements (all said payments, distributions and benefits being referred to as the “ Uncapped Payments ”); (3) the dollar amount of excise tax (if any) which Employee would become obligated to pay pursuant to Code Section 4999 as a result of receipt of the Uncapped Payments (the “ Excise Tax Amount ”); and (4) the net value of the Uncapped Payments after reduction by (A) the Excise Tax Amount, (B) the estimated income taxes payable by Employee on the difference between the Uncapped Payments and the Capped Amount, assuming that Employee is paying the highest marginal tax rate for state, local and federal income taxes, and (C) the estimated hospital insurance taxes payable by Employee on the difference between the Uncapped Payments and the Capped Amount based on the hospital insurance tax rate under Code Section 3101(b) (the “ Net Uncapped Amount ”).

 

If the Capped Amount is greater than the Net Uncapped Amount, Employee shall be entitled to receive or commence to receive Payments equal to the Capped Amount; or if the Net Uncapped Amount is greater than the Capped Amount, Employee shall be entitled to receive or commence to receive Payments equal to the Uncapped Payments. If Employee receives the Uncapped Payments, then Employee shall be solely responsible for the payment of all income and excise taxes due from Employee and attributable to such Uncapped Payments, with no right of additional payment from the Company as reimbursement for any taxes.

 

Unless the Company and Employee otherwise agree in writing, any determination required under this Section 10 shall be made in writing by independent public accountants agreed to by the Company and Employee (the “ Accountants ”), whose determination shall be conclusive and binding upon Employee and the Company for all purposes. For purposes of making the calculations required by this Section 10, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 10. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 10(b)(vi).

 

If the computations and valuations required to be provided by the Company to Employee pursuant to this Section 10(b)(vi) are on audit challenged by the Internal Revenue Service as having been performed in a manner inconsistent with the requirements of Code Sections 280G and 4999 or if Code Section 409A is determined to apply to all or any part of the payments to which Employee or his survivors may be entitled under this Agreement and as a result of such audit or determination, (x) the amount of cash and the benefits provided for in this Section 10 remaining to Employee after completion of such audit or determination is less than (y) the amount of cash and the benefits which were paid or provided to Employee on the basis of the calculations provided for in this Section 10 (the difference between (x) and (y) being referred to as the “ Short Fall Amount ”), then Employee shall be entitled to receive an additional payment (an “ Indemnification Payment ”) in an amount such that, after payment by Employee of all taxes (including additional excise taxes under said Code Section 4999 and any interest, and penalties imposed with respect to any taxes) imposed upon the Indemnification Payment and all reasonable attorneys’ and accountants’ fees incurred by Employee in connection with such audit or determination, Employee retains an amount of the Indemnification Payment equal to the Short Fall Amount. The Company shall pay the Indemnification Payment to Employee in a lump sum cash payment within ten (10) days of the completion of such audit or determination.

 

  10  
 

 

If the computations and valuations required to be provided by the Company to Employee pursuant to this Section 10 are on audit challenged by the Internal Revenue Service as having been performed in a manner inconsistent with the requirements of Code Sections 280G and 4999 and as a result of such audit or determination, (z) the amount of cash and the benefits which were paid or provided to Employee on the basis of the calculations provided for in this Section 10 is greater than (aa) the amount of cash and the benefits provided for in Section 10 payable to Employee after completion of such audit or determination (the difference between (z) and (aa) being referred to as the “ Excess Amount ”), then Employee shall repay to the Company the Excess Amount in a lump sum cash payment within ten (10) days of the completion of such audit or determination.

 

11. Other Provisions .

 

(a) Remedies . Each of the parties to this Agreement shall be entitled to enforce its rights under this Agreement, specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor.

 

(b) Limitations on Assignment. In entering into this Agreement, the Company is relying on the unique personal services of Employee; services from another person will not be an acceptable substitute. Except as provided in this Agreement, Employee may not assign this Agreement or any of the rights or obligations set forth in this Agreement without the explicit written consent of the Company. Any attempted assignment by Employee in violation of this Section 11(b) shall be void. Except as provided in this Agreement, nothing in this Agreement entitles any person other than the parties to the Agreement to any claim, cause of action, remedy, or right of any kind, including, without limitation, the right of continued employment.

 

(c) Severability and Reformation . The parties intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible, and the Company and Employee hereby request the court to whom disputes relating to this Agreement are submitted to reform the otherwise unenforceable covenant in accordance with this Section 11(c).

 

  11  
 

 

(d) Notices . Any notice or other communication required, permitted or desired to be given under this Agreement shall be deemed delivered when personally delivered; the business day, if delivered by overnight courier; the same day, if transmitted by facsimile on a business day before noon, Eastern Standard Time; the next business day, if otherwise transmitted by facsimile; and the third business day after mailing, if mailed by prepaid certified mail, return receipt requested, as addressed or transmitted as follows (as applicable):

 

If to Employee:

 

Clifford Lerner

320 W 37 th Street, 13 th Floor

New York, NY 10018

 

If to the Company:

 

Snap Interactive, Inc.

320 W 37 th Street, 13 th Floor

New York, NY 10018

 

(e) Further Acts. Whether or not specifically required under the terms of this Agreement, each party shall execute and deliver such documents and take such further actions as shall be necessary in order for such party to perform all of his or its obligations specified in the Agreement or reasonably implied from the Agreement’s terms.

 

(f) Publicity and Advertising . Employee agrees that the Company may use his name, picture, or likeness for any advertising, publicity or other business purpose at any time during the Employment Period and may continue to use materials generated during the Employment Period for a period of six (6) months thereafter. The use of Employee’s name, picture, or likeness shall not be deemed to result in any invasion of Employee’s privacy or in violation of any property right Employee may have; and Employee shall receive no additional consideration if his name, picture or likeness is so used. Employee further agrees that any negatives, prints or other material for printing or reproduction purposes prepared in connection with the use of his name, picture or likeness by the Company shall be and are the sole property of the Company.

 

(g) GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.

 

(h) Venue . The exclusive venue for all suits or proceedings arising from or related to this Agreement shall be in a court of competent jurisdiction in New York, New York.

 

(i) Waiver . A party’s waiver of any breach or violation of any Agreement provisions shall not operate as, or be construed to be, a waiver of any later breach of the same or other Agreement provision.

 

(j) Entire Agreement , Amendment, Binding Effect . This Agreement constitutes the entire agreement between the parties concerning the subject matter in this Agreement, and supersedes all prior employment-related agreements by and between the Company and the Employee. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Employee acknowledges and represents that in executing this Agreement, he did not rely, and has not relied, on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. Any amendment to this Agreement must be signed by all parties to this Agreement. This Agreement will be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, legal representatives, and permitted assigns (if any). This Agreement supersedes any prior agreements between Employee and the Company concerning the subject matter of this Agreement.

 

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(k) Counterparts . This Agreement may be executed in counterparts, with the same effect as if both parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

 

(l) Withholding. The Company shall be entitled to withhold from payment any amount of withholding required by law.

 

(m) Indemnification. To the extent permitted by law, the Company will indemnify and hold Employee harmless against any liability, damage, cost or expense incurred in connection with the defense of any action, suit or proceeding to which he is a party, or threat thereof, by reason of his being or having been an officer or director of the Company or any affiliate of the Company, to the extent permitted by applicable law; provided, however, that this indemnity shall not apply if Employee is determined by a court of competent jurisdiction to have acted against the interests of the Company with gross negligence, gross misconduct, or gross malfeasance. Promptly after receipt by Employee under this section of notice of the commencement of any action (including any governmental action), Employee shall, if a claim in respect thereof is to be made against Employee under this section, deliver to the Company a written notice of the commencement thereof and Employee shall have the right to participate in, and, to the extent Employee so desires to assume the defense thereof with counsel selected by the Company and approved by Employee (whose approval shall not be unreasonably withheld); provided, however, that the indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by Employee, if representation of such indemnified party by the counsel retained by Employee would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to Employee within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Employee of any liability to the indemnified party under this section, but the omission so to deliver written notice to Employee will not relieve it of any liability that it may have to any indemnified party otherwise than under this section. If the indemnification provided for in this section is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then Employee, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of Employee on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of Employee and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the alleged omission to state a material fact relates to information supplied by Employee or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

12. Section 409A of the Code.

 

a. To the extent (i) any payments to which Employee becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with Employee’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code; (ii) Employee is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (iii) at the time of Employee’s separation from service the Company is publicly traded (as defined in Section 409A of Code), then such payments (other than any payments permitted by Section 409A of the Code to be paid within six (6) months of Employee’s separation from service) shall not be made until the earlier of (x) the first day of the seventh month following Employee’s separation from service or (y) the date of Employee’s death following such separation from service. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Section 12 shall be paid to Employee or Employee’s beneficiary in one lump sum. Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.

 

b. It is intended that this Agreement comply with or be exempt from the provisions of Section 409A of the Code and the Treasury Regulations and guidance of general applicability issued thereunder so as to not subject Employee to the payment of additional interest and taxes under Section 409A of the Code, and in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions. Notwithstanding the above, in no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed upon Employee by Section 409A of the Code or damages for failing to comply with Section 409A of the Code.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first indicated above.

 

 

THE COMPANY:

   
  SNAP INTERACTIVE, INC.
     
  By: /s/ Alexander Harrington
  Name: Alexander Harrington
  Title: Chief Executive Officer
     
  Employee:
   
  /s/ Clifford Lerner
 

Clifford Lerner

 

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EXHIBIT A

 

WAIVER AND RELEASE OF CLAIMS

 

This Waiver and Release of Claims (“ Release ”), effective as of the _____________ (the “ Effective Date ”), is made and entered into by and between Clifford Lerner (“ Employee ”) and Snap Interactive, Inc., a Delaware corporation (the “ Company ”). Terms used in this Release with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement made and entered into as of _____________, 2016 by and between the Company and Employee (the “ Agreement ”).

 

WHEREAS, Employee and the Company are parties to the Agreement; and

 

WHEREAS, Section 8 and Section 9 of the Agreement provide that Employee is entitled to certain payments and benefits upon separation from employment if he signs a release agreement;

 

NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and adequacy of which are acknowledged, Employee and the Company agree as follows:

 

1. Global Release . In consideration of the mutual promises contained in the Agreement, including the Company’s promises to pay Employee consideration under Section 8 or Section 9 of the Agreement, which are in addition to anything of value to which Employee is already entitled, Employee, on behalf of himself, his heirs, executors, successors and assigns, irrevocably and unconditionally releases, waives, and forever discharges the Company and all of its parents, divisions, subsidiaries, affiliates, joint venture partners, partners, and related companies, and their present and former agents, employees, officers, directors, attorneys, stockholders, plan fiduciaries, successors and assigns (collectively, the “ Released Parties ”), from any and all claims, demands, actions, causes of action, costs, fees, and all liability whatsoever, whether known or unknown, fixed or contingent, which Employee has, had, or may have against the Released Parties relating to or arising out of his employment, or any terms of the Agreement, from the Effective Date and up to and including the date of this Release. This Release includes, without limitation, claims at law or equity or sounding in contract (express or implied) or tort, claims arising under any federal, state, or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, creed, disability, religion, military status, family status, marital status, partnership status, domestic violence, stalking and sex offense victim status, arrest and conviction record, predisposing genetic characteristic, alienage or citizenship status, sexual orientation, or any other form of discrimination, harassment, or retaliation (including, without limitation, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the ADA Amendments Act of 2008, Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the Rehabilitation Act, the Family and Medical Leave Act, the Fair Labor Standards Act anti-retaliation provisions, the Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Lilly Ledbetter Fair Pay Act, the Genetic Information Nondiscrimination Act, the New York Civil Rights Law, the New York City Human Rights Law, any federal, state, local or municipal whistleblower protection or anti-retaliation statute or ordinance, or any other federal, state, local, or municipal laws of any jurisdiction), claims arising under the Employee Retirement Income Security Act (except any employee benefits or employee participation rights as contained in the Agreement), or any other statutory or common law claims related to or arising out of his employment or any terms of the Agreement, from the Effective Date and up to and including the date of this Release’s execution. Notwithstanding the foregoing, nothing in this Release shall affect or impair: (i) any rights Employee may have to indemnification, including without limitation indemnification for attorneys’ fees, costs and/or expenses, pursuant to applicable statute, certificates of incorporation and by-laws of the Company or any of its affiliates; (ii) any of Employee’s rights arising under the Agreement; or (iii) any rights that Employee has as a former employee under the Company’s employee benefit plans (other than any severance plan).

 

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2. No Admission of Liability . Employee understands and agrees that this Release shall not in any way be construed as an admission by the Released Parties of any unlawful or wrongful acts whatsoever against Employee or any other person. The Released Parties specifically disclaim any liability to or wrongful acts against Employee or any other person.

 

3. Time to Consider Release . Employee is hereby advised in writing by the Company that he should consult an attorney before executing this Release. Employee has a period of up to forty-five (45) calendar days after receiving the Release within which to review and consider the provisions of this Release. Employee understands that if he does not sign this Release before the forty-five (45) calendar day period expires, this Release offer will be withdrawn automatically.

 

4. Revocation Period . Employee understands and acknowledges that he has seven (7) calendar days following the execution of this Release to revoke his acceptance of this Release. This Release will not become effective or enforceable, and the payments and benefits described under Section 9 will not become payable, until after this revocation period has expired without his revocation. If Employee does not revoke the Release within the revocation period, the Company will commence the payments and benefits described under Section 8 or Section 9 of the Agreement within ten (10) days after the revocation period’s expiration date.

 

5. Confidentiality of Release and Company Information. Employee agrees to keep this Release, its terms, and the amount of payments and benefits related to this Release completely confidential. Employee agrees and understands that he is prohibited from disclosing any terms of this Release to anyone, except that he may disclose the terms of this Release and the amount of the payments and benefits related to this Release to his spouse, attorneys, accountants, and financial advisors or as otherwise required by law. Employee also agrees to continue to abide by the confidentiality provisions of the Agreement.

 

6. Non-Disparagement . Employee agrees to continue to abide by the non-disparagement provisions of the Agreement.

 

7. Agreement to Return Company Property/Documents. Employee understands and agrees that his last day of active work in any Company office or on any Company owned or leased property will be _______. Accordingly, Employee agrees that: (i) he will not take with him, copy, alter, destroy, or delete any files, documents, electronically stored information, or other materials, whether or not embodying or recording any Confidential Information, including copies, without obtaining in advance the written consent of an authorized Company representative; and (ii) he will promptly return to the Company all Confidential Information, documents, files, records and tapes, whether written in hardcopy form or electronically stored, that have been in his possession or control regarding the Company, and he will not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and all copies of these materials. Employee further agrees that on ________, he will return to the Company immediately all Company property, including, without limitation, keys, equipment, computer(s) and computer equipment, devices, Company cellular phones, Company credit cards, data, electronically stored information, lists, correspondence, notes, memos, reports, or other writings prepared by the Company or himself on behalf of the Company.

 

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8. Authorized Use of Trade Secrets/ Confidential Information. Notwithstanding the foregoing, Employee understands that Employee may disclose proprietary and/ or confidential information when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order that Employee divulge, disclose or make accessible such information. The Company hereby notifies Employee in accordance with the Defend Trade Secrets Act of 2016 that Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Company further notifies Employee that if Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Employee may disclose the Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

 

9. Knowing and Voluntary Release . Employee understands that it is his choice whether to enter into this Release and that his decision to do so is voluntary and is made knowingly.

 

10. No Prior Representations or Inducements . Employee represents and acknowledges that in executing this Release, he did not rely, has not relied, and expressly disavows reliance on any communications, statements, promises, inducements, or representation(s), oral or written, by any of the Released Parties, except as expressly contained in this Release.

 

11. Choice of Law . This Release shall, in all respects, be interpreted, enforced, and governed under the laws of the State of New York. The parties agree that the language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties.

 

12. Severability . The Company and Employee agree that should a court declare or determine that any provision of this Release is illegal or invalid, the validity of the remaining parts, terms or provisions of this Release will not be affected and any illegal or invalid part, term, or provision, will not be deemed to be a part of this Release.

 

13. Counterparts . The Company and Employee agree that this Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument.

 

Please read carefully as this document includes a release of claims.

 

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IN WITNESS WHEREOF, the Company and Employee hereto evidence their agreement by their signatures.

 

     
Employee Signature [Signature]   Company Representative [Signature]
     
     
Clifford Lerner   Company Representative [Printed Name]
     
     
Date   Date

 

 

 

18

 

 

Exhibit 10.6

 

EXECUTION COPY

 

FIRST AMENDMENT TO

RESTRICTED STOCK AWARD AGREEMENT

 

This FIRST AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT , dated as of October 7, 2016 (this “ Amendment ”), is hereby entered into by and between SNAP Interactive, Inc., a Delaware corporation (the “ Company ”), and Clifford Lerner (the “ Employee ”). Terms used in this Amendment with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Restricted Stock Award Agreement, by and between the Company and the Employee, dated March 3, 2016 (the “ Restricted Stock Agreement ”).

 

WHEREAS , the Company desires to enter into that certain Agreement and Plan of Merger (the “ Merger Agreement ”), by and between the Company, SAVM Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“ Merger Sub ”), and A.V.M. Software, Inc., a New York corporation (“ AVM ”), whereby Merger Sub will merge with and into AVM, with AVM continuing as the surviving corporation (the “ Merger ”);

 

WHEREAS , pursuant to Section 1.6(b) of the Merger Agreement, and as a condition to the consummation of the Merger, the Employee shall enter into an amendment to the Restricted Stock Agreement;

 

WHEREAS , in connection with the Merger, the Company and the Employee desire to amend the vesting provisions of the Restricted Stock Agreement as provided herein; and

 

WHEREAS , Section 21 of the Restricted Stock Agreement provides that it may only be changed or modified in a writing that is approved by the Employee and the Company’s Board of Directors (the “ Board ”).

 

NOW, THEREFORE , pursuant to Section 21 of the Restricted Stock Agreement, in consideration of the mutual promises, conditions, and covenants contained herein and in the Restricted Stock Agreement, and other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:

 

1. Section 2 of the Restricted Stock Agreement is amended by adding the following new paragraph to the end of Section 2 as follows:

 

For purposes of this Agreement, the following terms shall have the meanings set forth below:

 

(a) “ Closing Date ” has the meaning ascribed to such term in the Merger Agreement.

 

(b) “ Employment Agreement ” means that certain Executive Employment Agreement by and between the Company and the Employee, dated April 10, 2013, and as amended on October 13, 2015 and October 7, 2016.

 

(c) “ Merger ” means the transactions contemplated by the Merger Agreement.

 

(d) “ Merger Agreement ” means that certain Agreement and Plan of Merger, by and between the Company, SAVM Acquisition Corporation, a Delaware corporation, and A.V.M. Software, Inc., a New York corporation, dated September 13, 2016.

 

 
 

 

2. Section 3 of the Restricted Stock Agreement is amended by deleting said Section in its entirety and replacing it with a new Section 3 as follows:

 

3.  Vesting .

 

(a) Except as specifically provided in this Agreement, the Awarded Shares shall vest as follows:

 

(i) Forty percent (40%) of the total Awarded Shares shall vest on the first anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(ii) An additional thirty percent (30%) of the total Awarded Shares shall vest on the second anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(iii) The remaining thirty percent (30%) of the total Awarded Shares shall vest on the third anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(b) Notwithstanding the foregoing and subject to Sections 3(c) and (d) below, if, following the Closing Date, the Employee incurs a Termination of Service by the Company without Cause (as that term is defined in the Employment Agreement) or by the Employee for Good Reason (as that term is defined in the Employment Agreement), then all of the Awarded Shares not previously vested shall thereupon immediately become fully vested upon the date of such Termination of Service.

 

(c) Notwithstanding the foregoing, if, following the Closing Date, a Change in Control occurs, then all of the Awarded Shares not previously vested shall thereupon immediately become fully vested upon the date of such Change in Control, provided that the Employee has not incurred a Termination of Service prior to that date. For the avoidance of doubt, the Merger shall not constitute a Change in Control for purposes of this Section 3(c) .

 

(d) Notwithstanding the foregoing, all of the Awarded Shares not previously vested shall become fully vested on the date of the Employee’s Termination of Service due to his death or Total and Permanent Disability.

 

  2  
 

 

(e) Notwithstanding the foregoing and in addition to the Company’s rights set forth in Section 25 , the Company shall have the right to require payment from the Employee, within ninety (90) days following the date the Awarded Shares vest, to cover any applicable taxes due upon the vesting of such Awarded Shares (the “ Withholding Obligation ”), and the Employee’s receipt of Common Stock for such vested Awarded Shares is specifically conditioned upon the Employee’s satisfaction of the Withholding Obligation. Payment of the Withholding Obligation may be made: (i) by the Employee directly to the Company; (ii) from a broker in connection with a sale of either shares to be acquired upon vesting of the Awarded Shares or other Common Stock of the Company owned by the Employee, provided such Common Stock was not acquired from the Company within the prior six (6) months; (iii) if the Board, in its sole discretion, so consents (which approval must include the affirmative vote of Jason Katz, provided he is serving as a member of the Board when such approval is sought), by the Company’s withholding of a number of shares of Common Stock to be acquired upon the vesting of the Awarded Shares, which shares so withheld have a fair market value equal to the Withholding Obligation; (iv) by such other method(s) (if any) as the Board, in its sole discretion, may consent (which approval must include the affirmative vote of Jason Katz, provided he is serving as a member of the Board when such approval is sought); or (v) by any combination of the above; provided, however, that (A) for Awarded Shares that vest in accordance with Section 3(a)(i) , if any, the Company shall withhold, in full or partial satisfaction of the Withholding Obligation related to such vested Awarded Shares, the number of shares of Common Stock that would otherwise be acquired upon vesting of such Awarded Shares, having a fair market value equal to the lesser of (1) the Withholding Obligation and (2) an amount equal to the difference between $200,000 and the fair market value of shares of Common Stock withheld, if any, to satisfy the tax withholding obligations under that certain Restricted Stock Award Agreement, by and between the Company and the Employee, dated December 14, 2011 and as amended October 7, 2016, not to exceed $200,000, with the remaining amount of the Withholding Obligation related to such vested Awarded Shares, if any, to be satisfied by the Employee in accordance with the terms of this Agreement; or (B) if the Awarded Shares become vested in accordance with Section 3(b) on or prior to the 2 nd anniversary of the Closing Date, the Employee shall have the right to select, from among the options discussed above in Section 3(e)(i) through Section 3(e)(v) , the manner in which payment of the Withholding Obligation is made, including, without limitation, by the Company withholding shares of Common Stock as described in Section 3(e)(iii) , regardless of the Board’s consent or lack thereof. The Employee shall forfeit any Awarded Shares for which he has not satisfied the Withholding Obligation in accordance with the terms of this Agreement.

 

3. The Restricted Stock Agreement, except as modified by this Amendment, shall remain in full force and effect.

 

4. Notwithstanding anything herein to the contrary, if the Merger is not consummated, then this Amendment shall be void and cease to be of further force or effect, and the agreements and obligations of the parties contained in the Restricted Stock Agreement shall continue to apply in accordance with the Restricted Stock Agreement’s terms, without giving effect to the terms of this Amendment.

 

[ Remainder of Page Intentionally Left Blank;

Signature Page to Follow. ]

 

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IN WITNESS WHEREOF , the Board, to evidence its consent to this Amendment, has caused this Amendment to be executed by a duly authorized officer of the Company, and the Employee, to evidence his consent and approval of all of the terms hereof, has duly executed this Amendment, as of the date first written above.

 

  SNAP INTERACTIVE, INC.:
     
  By: /s/ Alexander Harrington
  Name: Alexander Harrington
  Title: Chief Executive Officer
     
  THE Employee :
   
  /s/ Clifford Lerner
  Signature

 

  Name: Clifford Lerner
  Address 450 West 42 nd NY, NY 10036

  

Signature Page to

First Amendment to Restricted Stock Award Agreement

 

 

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Exhibit 10.7

 

EXECUTION COPY

 

FIRST AMENDMENT TO

RESTRICTED STOCK AWARD AGREEMENT

 

This FIRST AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT , dated as of October 7, 2016 (this “ Amendment ”), is hereby entered into by and between SNAP Interactive, Inc., a Delaware corporation (the “ Company ”), and Clifford Lerner (the “ Employee ”). Terms used in this Amendment with initial capital letters that are not otherwise defined herein shall have the meanings ascribed to such terms in the Restricted Stock Award Agreement, by and between the Company and the Employee, dated December 14, 2011 (the “ Restricted Stock Agreement ”).

 

WHEREAS , the Company desires to enter into that certain Agreement and Plan of Merger (the “ Merger Agreement ”), by and between the Company, SAVM Acquisition Corporation, a Delaware Corporation and wholly-owned subsidiary of the Company (“ Merger Sub ”), and A.V.M. Software, Inc., a New York corporation (“ AVM ”), whereby Merger Sub will merge with and into AVM, with AVM continuing as the surviving corporation (the “ Merger ”);

 

WHEREAS , pursuant to Section 1.6(b) of the Merger Agreement, and as a condition to the consummation of the Merger, the Employee shall enter into an amendment to the Restricted Stock Agreement;

 

WHEREAS , in connection with the Merger, the Company and the Employee desire to amend the vesting provisions of the Restricted Stock Agreement as provided herein; and

 

WHEREAS , Section 20 of the Restricted Stock Agreement provides that it may only be changed or modified in a writing that is approved by the Employee and the Company’s Board of Directors (the “ Board ”).

 

NOW, THEREFORE , pursuant to Section 20 of the Restricted Stock Agreement, in consideration of the mutual promises, conditions, and covenants contained herein and in the Restricted Stock Agreement, and other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:

 

1. Section 2 of the Restricted Stock Agreement is amended by adding the following new subsections (d), (e), (f), (g), and (h) to the end of Section 2 as follows:

 

(d) “ Closing Date ” has the meaning ascribed to such term in the Merger Agreement.

 

(e) “ Employment Agreement ” means that certain Executive Employment Agreement by and between the Company and the Employee, dated April 10, 2013, and as amended on October 13, 2015 and October 7, 2016.

 

(f) “ Merger ” means the transactions contemplated by the Merger Agreement.

 

(g) “ Merger Agreement ” means that certain Agreement and Plan of Merger, by and between the Company, SAVM Acquisition Corporation, a Delaware corporation, and A.V.M. Software, Inc., a New York corporation, dated September 13, 2016.

 

 

 

 

(h) “ Total and Permanent Disability ” means the Employee is qualified for long-term disability benefits under the Company’s or a subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the Employee is not eligible to participate in such plan or policy, that the Employee, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his duties of employment for a period of six (6) continuous months, as determined in good faith by the Board, based upon medical reports or other evidence satisfactory to the Board.

 

2. Section 3 of the Restricted Stock Agreement is amended by deleting said Section in its entirety and replacing it with a new Section 3 as follows:

 

3. Vesting .

 

(a) Except as specifically provided in this Agreement, the Awarded Shares shall vest as follows:

 

(i) Forty percent (40%) of the total Awarded Shares shall vest on the first anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(ii) An additional thirty percent (30%) of the total Awarded Shares shall vest on the second anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(iii) The remaining thirty percent (30%) of the total Awarded Shares shall vest on the third anniversary of the Closing Date, provided that the Employee has not incurred a Termination of Service prior to that date.

 

(b) Notwithstanding the foregoing and subject to Sections 3(c) and (d) below, if, following the Closing Date, the Employee incurs a Termination of Service by the Company without Cause (as that term is defined in the Employment Agreement) or by the Employee for Good Reason (as that term is defined in the Employment Agreement), then all of the Awarded Shares not previously vested shall thereupon immediately become fully vested upon the date of such Termination of Service.

 

(c) Notwithstanding the foregoing, if, following the Closing Date, a Change in Control occurs, then all of the Awarded Shares not previously vested shall thereupon immediately become fully vested upon the date of such Change in Control, provided that the Employee has not incurred a Termination of Service prior to that date. For the avoidance of doubt, the Merger shall not constitute a Change in Control for purposes of this Section 3(c) .

 

(d) Notwithstanding the foregoing, all of the Awarded Shares not previously vested shall become fully vested on the date of the Employee’s Termination of Service due to his death or Total and Permanent Disability.

 

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(e) Notwithstanding the foregoing and in addition to the Company’s rights set forth in Section 25 , the Company shall have the right to require payment from the Employee, within ninety (90) days following the date the Awarded Shares vest, to cover any applicable taxes due upon the vesting of such Awarded Shares (the “ Withholding Obligation ”), and the Employee’s receipt of Common Stock for such vested Awarded Shares is specifically conditioned upon the Employee’s satisfaction of the Withholding Obligation. Payment of the Withholding Obligation may be made: (i) by the Employee directly to the Company; (ii) from a broker in connection with a sale of either shares to be acquired upon vesting of the Awarded Shares or other Common Stock of the Company owned by the Employee, provided such Common Stock was not acquired from the Company within the prior six (6) months; (iii) if the Board, in its sole discretion, so consents (which approval must include the affirmative vote of Jason Katz, provided he is serving as a member of the Board when such approval is sought), by the Company’s withholding of a number of shares of Common Stock to be acquired upon the vesting of the Awarded Shares, which shares so withheld have a fair market value equal to the Withholding Obligation; (iv) by such other method(s) (if any) as the Board, in its sole discretion, may consent (which approval must include the affirmative vote of Jason Katz, provided he is serving as a member of the Board when such approval is sought); or (v) by any combination of the above; provided, however, that (A) for Awarded Shares that vest in accordance with Section 3(a)(i) , if any, the Company shall withhold, in full or partial satisfaction of the Withholding Obligation related to such vested Awarded Shares, the number of shares of Common Stock that would otherwise be acquired upon vesting of such Awarded Shares, having a fair market value equal to the lesser of (1) the Withholding Obligation and (2) an amount equal to the difference between $200,000 and the fair market value of shares of Common Stock withheld, if any, to satisfy the tax withholding obligations under that certain Restricted Stock Award Agreement, by and between the Company and the Employee, dated March 3, 2016 and as amended October 7, 2016, not to exceed $200,000, with the remaining amount of the Withholding Obligation related to such vested Awarded Shares, if any, to be satisfied by the Employee in accordance with the terms of this Agreement; or (B) if the Awarded Shares become vested in accordance with Section 3(b) on or prior to the 2 nd anniversary of the Closing Date, the Employee shall have the right to select, from among the options discussed above in Section 3(e)(i) through Section 3(e)(v) , the manner in which payment of the Withholding Obligation is made, including, without limitation, by the Company withholding shares of Common Stock as described in Section 3(e)(iii), regardless of the Board’s consent or lack thereof. The Employee shall forfeit any Awarded Shares for which he has not satisfied the Withholding Obligation in accordance with the terms of this Agreement.

 

3. The Restricted Stock Agreement, except as modified by this Amendment, shall remain in full force and effect.

 

4. Notwithstanding anything herein to the contrary, if the Merger is not consummated, then this Amendment shall be void and cease to be of further force or effect, and the agreements and obligations of the parties contained in the Restricted Stock Agreement shall continue to apply in accordance with the Restricted Stock Agreement’s terms, without giving effect to the terms of this Amendment.

 

[ Remainder of Page Intentionally Left Blank;

Signature Page to Follow. ]

 

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IN WITNESS WHEREOF , the Board, to evidence its consent to this Amendment, has caused this Amendment to be executed by a duly authorized officer of the Company, and the Employee, to evidence his consent and approval of all of the terms hereof, has duly executed this Amendment, as of the date first written above.

 

  SNAP INTERACTIVE, INC.:
     
  By: /s/ Alexander Harrington
  Name: Alexander Harrington
  Title: Chief Executive Officer
     
  THE Employee :
     
  /s/ Clifford Lerner
  Signature  

 

  Name: Clifford Lerner
  Address: 450 West 42 nd NY, NY 10036

 

Signature Page to

First Amendment to Restricted Stock Award Agreement

 

 

4

 

 

 

 

 

 

 

Exhibit 99.1  

 

SNAP INTERACTIVE AND PALTALK ANNOUNCE CLOSING OF
MERGER AND PLANNED REPAYMENT OF SENIOR NOTE

 

NEW YORK, NY, OCTOBER 10, 2016 / / -- A.V.M. Software, Inc. (d/b/a Paltalk) (" Paltalk ") and Snap Interactive, Inc. (" SNAP ") (OTCQB: STVI) today announced that they have closed the previously announced merger between Paltalk and SNAP, effective October 7, 2016.

 

Under the terms of the merger, which was structured as a stock-for-stock transaction and intended to qualify as a tax-free reorganization, Paltalk merged into a newly formed, wholly owned subsidiary of SNAP, with Paltalk surviving as a wholly owned subsidiary of SNAP.

 

As a result of the merger, the former Paltalk shareholders now own a majority of SNAP's outstanding common stock on a fully diluted basis.

 

Concurrently with the closing of the merger, SNAP intends to fully repay its 12% senior secured note in the principal amount of $3,000,000.

 

The mission of the combined company is to become the leading platform in connecting a global audience of users around interest categories and dating by leveraging live video and chat as the core method of communication. Transaction highlights include:

 

a combined user database of over 250 million registered users;

 

greater scale and diversification, with eight products and combined annual revenues estimated at approximately $30 million;

 

a strong balance sheet, with approximately $7.9 million of collective cash and cash equivalents at June 30, 2016, prior to giving effect to the repayment of SNAP's senior secured note, representing ample cash resources to fund growth and the redemption of SNAP's debt;

 

a global video communication network of social applications spanning chat and dating, with pioneering products in the dynamic and growing live video space;

 

a very large, international database available for cross-selling existing products, as well as anticipated new live video product introductions;

 

a "next wave" disruptive product opportunity incorporating the intersection of dating and real-time video;

 

a public vehicle with potential to execute additional acquisitions of companies in the $4 billion interactive dating industry; and

 

IP licensing opportunities related to Paltalk's 25 issued patents, which have generated tens of millions of dollars of licensing revenue.

 

Alex Harrington, who will continue as the Chief Executive Officer and interim Chief Financial Officer of SNAP following the merger, said, "We are delighted to announce the closing of the merger and the repayment of SNAP's senior note. We look forward to utilizing the combined company's resources to execute our strategic goals and undertake new growth initiatives." 

 

   

 

 

Mr. Harrington continued, "We believe the combination of SNAP and Paltalk will drive performance improvements and present a unique opportunity to capitalize on SNAP's strong operating capabilities and Paltalk's proven commercial track record. The alignment brings together an aggregated user database of over 250 million registered users, greater scale and product diversification and a strong balance sheet. We are enthusiastic about the combined company's prospects to deliver value to our stockholders, and believe we are well positioned to achieve our goal of listing on a national securities exchange."

 

Jason Katz, who serves as the Chairman of the Board, President and Chief Operating Officer of SNAP following the merger, said, "The closing of the merger represents a historic day for Paltalk and SNAP, putting together two pioneers in their respective industries. In 1999, Paltalk released Paltalk voice instant messenger, which was the first product to combine buddy list functionality with free unlimited voice-over-IP communication worldwide. In 2007, SNAP launched the first successful dating app on the Facebook Platform, which led to over 100 million installs. Since then, the proliferation of social networks, real time voice, video and dating represents an enormous commercial opportunity for the newly merged company. The combination of Paltalk's best in class real-time video and chat technology with SNAP's expertise in dating and analytics creates numerous exciting opportunities for the combined company."

 

SNAP has retained its transfer agent, Corporate Stock Transfer, Inc. (" CST "), to act as its exchange agent for the merger. CST will provide Paltalk's shareholders with a letter of transmittal providing instructions for the exchange of their Paltalk stock certificates for SNAP stock certificates. No action is required by SNAP shareholders, and the merged entity will trade under SNAP's ticker STVI.

 

Haynes and Boone, LLP served as legal counsel to SNAP and Pryor Cashman LLP served as legal counsel to Paltalk in connection with the merger.

 

Important Information for Investors and Stockholders:

 

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The issuance of the shares of SNAP's common stock in the merger was made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the " Securities Act "), pursuant to Section 4(a)(2) thereof and rule 506 of Regulation D promulgated thereunder. Such shares of SNAP common stock were not registered under the Securities Act and may not be offered or sold without registration unless an exemption from such registration is available.

 

IR Contact for SNAP:

 

IR@snap-interactive.com

 

About Snap Interactive, Inc.

 

Snap Interactive, Inc. develops, owns and operates dating applications for social networking websites and mobile platforms. The Grade is a patent-pending mobile dating application catering to high-quality singles. SNAP's flagship brand, FirstMet, is a multi-platform online dating site with a large user database of approximately 30 million users.

 

For more information, please visit http://www.snap-interactive.com .

 

The contents of SNAP's website are not part of this press release, and you should not consider the contents of SNAP's website in making an investment decision with respect to SNAP's common stock. 

 

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About Paltalk:

 

Paltalk is a leading provider of real-time, rich media, interactive social networking applications with more than 200 million registered users around the world. Paltalk is available on PC, Mac, iOS, Android and tablet devices. The Paltalk portfolio of products powers one of the world's largest collections of video-based communities, with thousands of live group conversations on topics such as Politics, Financial Markets, Music and Dating. Paltalk through a long history of technical innovation owns a portfolio of 25 patents. The Paltalk patents protect the company's proprietary technology platform that enables server group messaging for interactive applications on the internet. The technology has many applications, including online multiplayer video games and video conferencing. Paltalk was founded in 1998 and is based in New York City.

 

Forward-Looking Statements:

 

This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the control of the combined company, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation: risks and uncertainties associated with general economic, industry and market sector conditions; future growth and the ability to obtain additional financing to implement growth strategies; the ability to successfully develop and launch new applications, including dating applications with live video features; the ability to successfully combine the product portfolio of Snap and Paltalk; the ability to market products internationally and derive revenue therefrom; the ability to successfully license products and platforms; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers, new subscription transactions or monthly active users; the ability to enter into new advertising agreements; the ability to diversify new user acquisition channels or improve the conversion of users to paid subscribers; the ability to anticipate and respond to changing user and industry trends and preferences; industry competition; and circumstances that could disrupt the functioning of the applications of the combined company. More detailed information about SNAP and the risk factors that may affect the realization of forward-looking statements is set forth in SNAP's filings with the Securities and Exchange Commission (" SEC "), including SNAP's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov .

 

All forward-looking statements speak only as of the date on which they are made. SNAP undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws.

 

 

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