EXHIBIT 10.42
EMPLOYMENT AGREEMENT BY AND BETWEEN VIEWCAST.COM, INC. AND GARY
KLEMBARA EFFECTIVE AS OF SEPTEMBER 1, 2007
     This Employment Agreement (this “Agreement”) is made and entered into as of
the 1st day of September 2007 between ViewCast.com, Inc. (the “Employer”), a
corporation, and Gary Klembara (the “Executive”), residing at 2910 Oak Point
Drive, Garland, TX 75044. Where not otherwise defined herein, capitalized terms
used herein have the meanings set forth in Section 9.1 of this Agreement.
     WHEREAS, the Employer wishes to employ the Executive in an executive
capacity, as its Sr. Vice President of Sales, and Executive wishes to accept
such employment, on the terms and conditions set forth herein;
     NOW, THEREFORE, in consideration of the mutual promises, benefits and
covenants herein contained, the Employer and Executive hereby agree as follows:
     1. Effective Date: Term.
     1.1 This Agreement shall be effective as of September 1, 2007 (the
“Effective Date”).
     1.2 The Employer employs the Executive, and the Executive accepts such
employment, for an eighteen (18) month period commencing on the Effective Date
(the “Initial Term”).
     1.3 The Term of the Executive’s employment under this Agreement shall be
automatically renewed for additional one-year terms (each a Renewal Term”) upon
the expiration of the Initial Term or any Renewal Term unless the Employer or
the Executive delivers to the other, at least sixty (60) days prior to the
expiration of the Initial Term or the then current Renewal Term, as the case may
be, a written notice specifying that the Term of the Executive’s employment will
not be renewed at the end of the Initial Term or such Renewal Term, as the case
may be.
     1.4 This Agreement may be terminated prior to the expiration of the Initial
Term or any Renewal Term as provided in Section 4 of this Agreement.
     2. Position and Duties.
     2.1 During the Initial or Renewal Term of this Agreement, the Employer
shall employ the Executive to serve as its Sr. Vice President of Sales. The
Executive shall perform such executive, administrative and operational duties
customary for executives in such capacity or as may be assigned to the Executive
from time to time by the President and COO.

 

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     2.2 Executive agrees to serve the Employer faithfully and to the best of
the Executive’s ability and to devote substantially all of the Executive’s
business time, attention and efforts to the interests and business of the
Employer and its Subsidiaries.
     2.3 The Executive agrees at all times to perform all his duties in
accordance with applicable laws, rules and regulations and the policies and
procedures of the Employer applicable to senior executives in effect from time
to time.
     3. Compensation, Benefits and Expenses.
     3.1 Salary. During the period from the Effective Date through the Term of
this Agreement and except as otherwise provided in this Agreement, the Employer
shall pay to Executive an annual base salary of $165,000.00 (the “Base Salary
Amount”), in equal installments pursuant to the Employer’s standard payroll
policies and subject to such withholding or deductions as may be mutually agreed
between the Employer and the Executive or required by law.
     3.2 Incentive Compensation. In addition to the salary set forth in
Section 3.1, Executive, at Employer’s discretion, may earn incentive
compensation as deemed appropriate for the position each calendar year (see 2007
Incentive Compensation Plan as an example). Payment of any bonus or incentive
compensation shall be made in accordance with the Employer’s standard or
established payroll policies and shall be subject to such withholding or
deductions as may be mutually agreed between the Employer and the Executive or
required by law.
     3.3 Fringe Benefits. During the period of his employment, Executive shall
be entitled to participate in Employer’s plans for the welfare and benefit of
its employees available to senior executive officers generally to the extent
Executive satisfies the requirements provided in such plans with respect to the
position, tenure, salary, health and other qualifications for participation.
Executive will be entitled to 4 weeks annual vacation; no more than 2
consecutive weeks may be taken at any given time in each fiscal year. A maximum
of 40 hours accrued vacation may be carried over from one year to the next.
     3.4 Expenses. During the term of this Agreement, the Employer authorizes
Executive to incur reasonable and necessary out-of-pocket business expenses in
the course of performing his duties and rendering services hereunder in
accordance with Employer’s policies with respect thereto, and the Employer shall
reimburse Executive for all such expenses, provided (i) such expenses and the
purpose for which they were incurred are in accordance with Employer’s policies,
and (ii) the Executive timely submits to the Employer expense reports and
substantiation of the expenses in accordance with Employer’s policies.

 

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     4. Termination.
     4.1 Termination. The Executive’s employment by Employer shall terminate on
the earliest Date of Termination upon the occurrence of one of the following
events:
     4.1.1 the Executive’s death;
     4.1.2 the Executive is determined to be “permanently disabled” as defined
under the disability insurance policy covering the Executive;
     4.1.3 termination of Executive by Employer for “Cause”;

     4.1.4 termination of employment by Executive upon written notice to
Employer;
     4.1.5 termination of Executive by Employer without cause upon written
notice to Executive or termination by Executive for Good Reason;
     4.1.6 the expiration of this Agreement; or
     4.1.7 a Change of Control of the Employer, if the Executive’s employment
hereunder is terminated by the Employer or its successor (other than pursuant to
Section 4.1.3 above) after such Change of Control.
     4.2 Time of Termination. Executive’s employment with Employer (including
all positions held with Employer or its Subsidiaries or affiliates) shall
terminate immediately upon the Date of Termination without further action by
Employer.
     4.3 Effect of Termination of Employment.
     (a) Termination Due to Death. In the event the Executive’s employment is
terminated due to his death, his estate or designated beneficiaries shall be
entitled to the following:

  (i)   any amounts payable on death pursuant to any plans or policies of
Employer;     (ii)   any other amounts due but not yet paid from Employer to
Executive; and

     (b) Termination Due to Disability. In the event the Executive’s employment
is terminated due to his permanent or total disability, Executive or his legal
representative shall be entitled to the following:

  (i)   any amounts payable on disability pursuant to any plans or policies of
Employer; and     (ii)   any other amounts due but not yet paid from Employer to
Executive.

     (c) Termination for Cause. In the event Executive’s employment is
terminated by Employer for Cause, Executive shall receive:

  (i)   The equivalent of two (2) weeks Base Salary Amount in effect on the Date
of Termination, payable in accordance with Employer’s standard payroll policies;

 

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  (ii)   any other amounts due but not yet paid from Employer to Executive; and
    (iii)   reimbursement for three (3) months of COBRA premiums paid by
Executive.

     (d) Termination Without Cause or for Good Reason. In the event the
Executive’s employment is terminated by Employer without cause (other than by
death or disability) or by Executive for Good Reason, Executive shall be
entitled to the following:

  (i)   an amount equal to the Base Salary Amount in effect on the Date of
Termination for a period of twelve (12) months, payable in accordance with
Employer’s standard payroll periods and policies;     (ii)   any other amounts
due but not yet paid from Employer to Executive; and     (iii)   reimbursement
for six (6) months of COBRA premiums paid by Executive (Note: the executive has
the right to continue COBRA coverage for up to 18 months).

     (e) Termination upon Change of Control. If Executive’s employment hereunder
is terminated by the Employer or its successor (other than pursuant to
Section 4.1.3 above) after such Change of Control, Executive shall be entitled
to an amount equal to the Base Salary Amount in effect on the Date of
Termination for a period of twelve (12) months, payable in accordance with
Employer’s standard payroll periods and policies.
     5. Confidentiality.
     5.1 Confidential Information in General. The Executive has and will have
access to and participate in the development of or be acquainted with
confidential or proprietary information and trade secrets related to the
business of Employer, its Subsidiaries and affiliates (the “Companies”),
including but not limited to (i) business plans, operating plans, marketing
plans, bid strategies, bid proposals, financial reports, operating data,
budgets, wage and salary rates, pricing strategies and information, terms of
agreements with suppliers or customers and others, customer lists, formulas,
patents, devices, software programs, reports, correspondence, tapes, discs,
tangible property and specifications owned by or used in Employer’s business,
operating strengths and weaknesses of the Companies’ officers, directors,
employees, agents, suppliers and customers, (ii) information pertaining to
future developments such as, but not limited to research and development, future
marketing, distribution, delivery or merchandising plans or ideas and potential
new distribution for business locations, and (iii) other tangible and intangible
property, which are used in the business and operation of the Companies but not
made publicly available (the “Confidential Information”).

 

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     5.2 Assignment. The Executive hereby assigns to Employer, in consideration
of his employment, all Confidential Information in the possession of Executive
at any time during the term of this Agreement, whether or not made or conceived
during working hours, alone or with others, which relates, directly or
indirectly, to businesses or proposed businesses of the Companies, and Executive
agrees that all such Confidential Information shall be the exclusive property of
the Companies. The Executive shall establish and maintain written records of all
such Confidential Information with respect to the inventions or similar
intellectual property for the benefits of the Companies and shall execute and
deliver to the Companies any specific assignments or other documents appropriate
to vest title in such Confidential Information in the Companies or to obtain for
the Companies legal protection for such Confidential Information.
     5.3 Non-Disclosure. The Executive shall not disclose, use or make known for
his or another’s benefit any Confidential Information of the Companies or use
such Confidential Information in any way except in the best interests of the
Companies in the performance of Executive’s duties under this Agreement.
     5.4 Continuing Obligations. The obligations of Executive under this
Section 5 shall survive the termination of Executive’s employment and the
expiration or termination of this Agreement for a period of twelve (12) months.
     6. Return of Employer’s Property.
     Immediately upon termination of the Executive’s employment with the
Employer, the Executive shall deliver to the Employer all Confidential
Information, documents, correspondence, notebooks, reports, computer programs,
names of full-time and part time employees and consultants, and all other
materials and copies thereof (including computer discs and other electronic
media) relating in any way to the business of the Employer in any way obtained
by the Executive during the periods of this employment with the Employer.
Immediately upon termination of the Executive’s employment with the Employer,
the Executive shall deliver to the Employer all tangible property of Employer in
the possession of Executive, including without limitation, telephones, facsimile
machines, computers, leased automobiles and credit cards. The obligations of
Executive under this Section 6 shall survive the termination of Executive’s
employment and the expiration for termination of this Agreement.
     7. Non-Competition and Non-Solicitation.
     7.1 Non-Compete. For a period of eighteen (18) months following the
termination of Executive’s employment by Employer (the “Non-competition
Period”), the Executive will not, directly or indirectly, without the written
consent of the Board of Directors, own, manage, operate, control, be employed
by, consult with or participate in or be connected with any entity

 

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owning or having financial interest in, whether direct or indirect, a business
entity which is in the same line or lines of business as the Employer or its
Subsidiaries. For purposes of this Section 7.1, each of the following
activities, without limitation, shall be deemed to constitute proscribed
activities during the Non-competition Period: to engage in, work with, have an
interest in (other than interests of less than 1% in companies with securities
traded on a nationally recognized stock exchange or interdealer quotation
system), advise, consult, manage, operate, lend money to (other than interests
of less than 1% in companies traded on a nationally recognized stock exchange or
interdealer quotation system), guarantee the debts or obligations of, or permit
one’s name or any part thereof to be used in connection with an enterprise or
endeavor, either individually, in partnership or in conjunction with any person
or persons, firm, association, company or corporation, whether as principal,
director, agent, shareholder, partner, employee, consultant or in any other
manner whatsoever. For purposes of this Agreement, an “indirect” interest is
presumed to exist if an interest is held by a spouse, parent or child, in
addition to any other forms of indirect or beneficial interest.
     7.2 Non-Solicitation. During the Non-competition Period, the Executive will
not, directly or indirectly, solicit for employment, or advise or recommend any
person to employ or solicit for employment, any person Executive knows to be an
employee of the Employer or any of its Subsidiaries.
     7.3 Continuing Obligations. The obligations of Executive under this
Section 7 shall survive the termination of Executive’s employment and the
expiration or termination of this Agreement throughout the Non-competition
Period.
     8. Remedies.
     8.1 In the event of any breach or threatened breach, the parties to this
Agreement may seek to compel specific performance of the terms of this Agreement
through arbitration in accordance with the provisions of paragraph 9.2 of this
Agreement.
     9 Miscellaneous.
     9.1 Certain Definitions.
“Cause” shall mean: (i) the Executive is charged with fraud, embezzlement, theft
or other criminal conduct, (ii) dishonesty, disloyalty, insubordination or gross
negligence in the performance of duties, (iii) failure of the Executive to obey
the reasonable and lawful orders of the President and COO, which orders were
consistent with the duties of the Executive under this Agreement, after the
Executive had been given written notice of such failure and not less than thirty
(30) days to correct the misconduct; (iv) failure to provide requested
information, or (v) any act of fraud or serious moral turpitude.

 

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     “Change of Control” shall mean the occurrence of any one of the following
events:

  (i)   the Board of Directors of Employer approves a plan to sell or dispose of
by merger, consolidation or other transaction all or substantially all of
Employer’s operating assets (on a consolidated basis) or approves a plan of
liquidation; or     (ii)   the Employer combines with another company and is the
surviving corporation but immediately after the combination, the persons who
were the shareholders of the Employer immediately prior to the combination own
50% or less of all outstanding securities including vested options granted under
the Plan of the combined entity.

“Good Reason” shall mean a significant change in the nature and scope of the
authority, powers, functions, benefits or duties attached to the position of
Senior Vice President, Sales of the Employer as held by Executive as of the
Effective Date.
“Date of Termination” shall mean:

      (i)        if employment terminates because of Executive’s death, the date
of death;         (ii)       if employment terminates for “Cause”, the latest
date specified in Section 4.1.3 of this Agreement;         (iii)      if
employment terminates because of permanent or total disability, the date of
determination that Executive is so disabled as described in Section 4.1.2 of
this Agreement;         (iv)      if employment terminates due to expiration of
term, the date of expiration.

“Subsidiary” shall mean any entity in which Employer, directly or indirectly,
owns 50% or more of the voting securities or otherwise controls the ability to
elect a majority of the governing board.
     9.2 Dispute Resolution. Any disputes arising under or in connection with
this Agreement shall be subject to arbitration in accordance with rules and
procedures of the American Arbitration Association (“AAA”) with such changes as
the parties may agree. If within 10 days of a request for arbitration, the
parties have not agreed on the selection of an arbitrator willing to serve,
either party may request the AAA to appoint an arbitrator who shall arbitrate
the dispute and such appointment and determination shall be binding on the
parties. Neither party may commence any legal action or proceeding under this
Agreement, other than to enforce this provision, except that Employer may seek
judicial intervention for the purpose of obtaining injunctive relief to enforce
Executive’s obligations under paragraphs 5, 6, and 7, which shall specifically
survive the termination of this Agreement. Costs of arbitration, including,

 

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without limitation, costs of investigations, fees and expenses of the arbitrator
and attorneys shall be borne by the party incurring same.
     9.3 Notices. Any notices under this Agreement shall be in writing and shall
be given by personal delivery, by local courier service, by certified or
registered letter, return receipt requested, or by a nationally recognized
overnight delivery service; and shall be deemed given when delivered in person
or by local courier or upon actual receipt of the facsimile or certified or
registered letter, or on the business day next following delivery to a
nationally recognized overnight delivery service at the addresses set forth
below of this Agreement or to such other address or addresses as either party
shall have specified in writing to the other party hereto.

      If to the Employer:  
ViewCast.com, Inc.
   
3701 West Plano Parkway, Suite 300
   
Plano, TX 75075
   
 
If to Executive:  
Gary Klembara
   
2910 Oak Point Drive
   
Garland, TX 75044

     9.4 GOVERNING LAW. ALL QUESTIONS PERTAINING TO THE VALIDITY, CONSTRUCTION,
EXECUTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF TEXAS.
     9.5 Entire Agreement; Amendment or Modification. This Agreement constitutes
the entire agreement of the parties hereto with respect to the matters contained
herein. No modification or amendment of any of the provisions of such agreements
shall be effective unless in writing and signed by the Executive and Employer.
No failure to exercise any right or remedy hereunder shall operate as a waiver
thereof. No term or condition of this Agreement shall be deemed to have been
waived, nor shall a party be estopped from enforcing any provision of this
Agreement, except by a statement in writing signed by the Executive or Employer,
whichever party against whom such waiver or estoppel is sought. If any provision
of this Agreement is found to be unreasonably broad, it shall nevertheless be
enforceable to the extent reasonably necessary to protect the Employer and to
the greatest extent permitted by law. If any provision of this Agreement is
determined to be invalid or unenforceable, such provision shall be reformed to
the extent necessary to make it valid or enforceable and to carry out the
interest of the parties, or if such information is not possible, the remaining
provisions of this Agreement shall continue in full force and effect.

 

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     9.6 Binding Nature. This Agreement shall be binding upon and insure to the
benefit of the parties and their respective successors, heirs (in the case of
the Executive) and permitted assigns.
     9.7 Survival. The Executive’s obligations under Sections 5, 6, 7 and 8 will
survive the termination of Executive’s employment and the termination or
expiration of this Agreement. The Employer’s obligations under this Agreement
will survive the termination of Executive’s employment and the termination or
expiration of this Agreement until paid in full.
     9.8 Headings. The paragraph and subparagraph headings contained in this
Agreement are for reference purposes only and shall not affect the construction
or interpretation of this Agreement.
     9.9 Counterparts. This Agreement may be executed in several counterparts,
and all counterparts so executed shall constitute one agreement, binding on the
parties hereto, notwithstanding that both parties are not signatory to the
original or the same counterpart.
     10. Successors and Assigns. The rights and obligations of the parties
hereto shall inure to the benefit of and shall be binding upon successors and
assigns of Employer.
     11. Further Assurances. Executive shall cooperate and take such action as
may be reasonably requested by Employer in order to carry out the provisions and
purposes of this Agreement. Specifically, Executive certifies that he is in
compliance with the Immigration Reform and Control Act of 1986 (the “Act”) and
that he is legally entitled to work in the United States. Executive also agrees
to execute the Employment Verification Form I-9 as required by the Act and also
agrees to execute the Employee Proprietary Information Agreement in the form
attached hereto as Exhibit “A”.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written, but to be effective for all purposes as of the
Effective Date.

             VIEWCAST.COM, INC.
          By:  /s/ George Platt                        By:  /s/ John W. Slocum,
Jr.                       EXECUTIVE
          By:  /s/ Gary J. Klembara