Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
the 24th day of January, 2017, by and between Towerstream, a Delaware
corporation (the “Company”) and Ernest Ortega, an individual (“Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive desires to be employed by the Company as its Chief
Executive Officer and the Company wishes to employ the Executive in such
capacity, commencing on and as of January 24, 2017 (the “Effective Date”).

 

NOW, THEREFORE, in consideration of the foregoing and their respective covenants
and agreements contained in this document, the Company and the Executive hereby
agree as follows:

 

1. Employment and Duties. The Company agrees to employ and the Executive agrees
to serve as the Company’s Chief Executive Officer. The duties and
responsibilities of the Executive shall include the duties and responsibilities
as the Company’s Board of Directors (“Board”) may from time to time assign to
the Executive and reasonably commensurate with those duties and responsibilities
normally associated with and appropriate for someone in the position of Chief
Executive Officer.

 

The Executive shall devote his full time efforts and services to the business
and affairs of the Company and its subsidiaries. Nothing in this Section 1 shall
prohibit the Executive from: (A) serving as a director or member of any other
board, committee thereof of any other entity or organization, (B) delivering
lectures, fulfilling speaking engagements, and any writing or publication
relating to his area of expertise, (C) serving as a director or trustee of any
governmental, charitable or educational organization or (D) engaging in
additional activities in connection with personal investments and community
affairs, including, without limitation, professional or charitable or similar
organization committees, boards, memberships or similar associations or
affiliations, provided, however, such activities are not in competition with the
business and affairs of the Company or would tend to cast executive of Company
in a negative light in the reasonable judgment of the Board.

  

2. Term. The term of this Agreement shall commence on the Effective Date and
shall continue for a period of eighteen (18) months following the Effective Date
and shall be automatically renewed for successive one (1) year periods
thereafter unless either party provides the other party with written notice of
his or its intention not to renew this Agreement at least three (3) months prior
to the expiration of the initial term or any renewal term of this Agreement.
“Employment Period” shall mean the initial eighteen (18) month term plus
renewals, if any.

 

3. Place of Employment. The Executive’s services shall be performed at the
Company’s principal executive offices, currently located at 88 Silva Lane,
Middletown, Rhode Island, provided that the Executive may be required to travel
on Company business during the Employment Period. It expected that Executive
will be physically present in the Rhode Island office four (4) days per week.

 

4. Base Salary and Board Fees. The Company agrees to pay the Executive a base
salary (“Base Salary”) of $350,000.00 per annum for the position of Chief
Executive Officer. Annual adjustments after the first year of the Employment
Period shall be determined by the Board. The Base Salary shall be paid in
periodic installments in accordance with the Company’s regular payroll
practices.

 

5. Incentive Compensation and Bonuses.

 

(a) Annual Bonus: For each fiscal year during the term of employment, the
Executive shall be eligible to receive a cash bonus (the “Annual Bonus”) in the
amount of up to $300,000, as may be determined from time to time by the Board in
its discretion. The Annual Bonus shall be paid by the Company to the Executive
promptly after determination that the relevant targets, if any, have been met,
it being understood that the attainment of any financial targets associated with
any bonus shall not be determined until following the completion of the
Company’s annual audit and public announcement of such results and shall be paid
promptly following the Company’s announcement of earnings. Annual targets and
payment structures will be mutually agreed upon within 30 calendar days of this
document. In the event that the Compensation Committee is unable to act or if
there shall be no such Compensation Committee, then all references herein to the
Compensation Committee (except in the proviso to this sentence) shall be deemed
to be references to the Board. Upon his termination from employment, the
Executive shall be entitled to receive a pro-rata portion of the Annual Bonus
calculated based upon his final day of employment, regardless of whether he is
employed by the Company through the conclusion of the fiscal quarter or year, as
the case may be, on which the Annual Bonus is based.

 

 
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(b) Equity Awards and Incentive Compensation: During the term of employment, the
Executive shall be eligible to participate in any equity-based incentive
compensation plan or program adopted by the Company (such awards under such plan
or program, the “Share Awards”) as the Compensation Committee or Board may from
time to time determine. Share Awards shall be subject to applicable plan terms
and conditions and any additional terms and conditions as determined by the
Compensation Committee or the Board. On the Effective Date, the Board of
Directors of Company shall award and reserve for issuance options (the
“Options”) to purchase (i) an aggregate of 940,193 shares of common stock, of
which one third shall vest on the one (1) year anniversary of the Effective Date
and the remaining two thirds shall vest in eight (8) subsequent equal quarterly
installments following the one (1) year anniversary of the Effective Date and
(ii) 1,096,892 shares of common stock, 50% of which vest upon (A) three (3)
consecutive quarters with Positive Cash Flow and (B) 50% of which vest upon sale
of the Company’s grandfathered earth station assets in the greater Miami,
Florida area and related call sign license for gross proceeds equal to or
greater than $15,000,000.  The Options shall have an exercise price equal to the
fair market value of the Company’s common stock on the Effective Date.  The
Executive and Company agree that the attainment of any financial targets
associated with any Share Awards, including for the avoidance of doubt the
Options, shall not be determined until following the completion of the Company’s
annual audit and public announcement of such results and shall be paid promptly
following the Company’s announcement of earnings and that all Share Awards,
including for the avoidance of doubt the Options, not earned and vested on the
date of termination shall be forfeited.  “Positive Cash Flow” shall mean
positive cash income after all ordinary cash items have been paid.

 

6. Severance Compensation:

 

(a)     Upon termination of employment for any reason, the Executive shall be
entitled to: (A) all Base Salary earned through the date of termination to be
paid according to Section 4, (B) any Annual Bonuses earned through the date of
termination to be paid according to Section 5(a), (C) any and all reasonable
expenses paid or incurred by the Executive in connection with and related to the
performance of his duties and responsibilities for the Company during the period
ending on the termination date to be paid according to Section 8, (D) any
accrued but unused vacation time through the termination date in accordance with
Company policy, and (E) all Share Awards and Options earned and vested prior to
the date of termination (collectively, the “Separation Payment”); provided, that
the Executive executes an agreement releasing Company and its affiliates from
any liability associated with this Agreement and such release is irrevocable at
the time the Separation Payment is first payable under this Section 6(a)and the
Executive complies with his other obligations under Section 13 of this
Agreement.

 

(b)     In the event of a termination by the Company without Cause, by the
Executive for Good Reason or by the Executive within one hundred eighty days
(180) days of the occurrence of a Change of Control (as defined in Section
11(f)) and subject to the additional provisions of Section 11(d)(2), then in
addition to the severance compensation set forth in Section 6(a), Executive
shall also be entitled to his continued Base Salary through the balance of the
Employment Period, as renewed; provided, that the Executive executes an
agreement releasing Company and its affiliates from any liability associated
with this Agreement and such release is irrevocable at the time the Separation
Payment is first payable under this Section 6(b) and the Executive complies with
his other obligations under Section 13 of this Agreement.

 

 
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7. Clawback Rights. The Annual Bonus, and any and all stock based compensation
(such as options and equity awards) (collectively, the “Clawback Benefits”)
shall be subject to “Clawback Rights” as follows: during the period that the
Executive is employed by the Company and upon the termination of the Executive’s
employment and for a period of three (3) years thereafter, if there is a
restatement of any financial results from which any Clawback Benefits to the
Executive shall have been determined, the Executive agrees to repay any amounts
which were determined by reference to any Company financial results which were
later restated (as defined below), to the extent the Clawback Benefits amounts
paid exceed the Clawback Benefits amounts that would have been paid, based on
the restatement of the Company’s financial information. All Clawback Benefits
amounts resulting from such restated financial results shall be retroactively
adjusted by the Compensation Committee to take into account the restated
results, and any excess portion of the Clawback Benefits resulting from such
restated results shall be immediately surrendered to the Company and if not so
surrendered within ninety (90) days of the revised calculation being provided to
the Executive by the Compensation Committee following a publicly announced
restatement, the Company shall have the right to take any and all action to
effectuate such adjustment. The calculation of the revised Clawback Benefits
amount shall be determined by the Compensation Committee in good faith and in
accordance with applicable law, rules and regulations. All determinations by the
Compensation Committee with respect to the Clawback Rights shall be final and
binding on the Company and the Executive. The Clawback Rights shall terminate
following a Change of Control, subject to applicable law, rules and regulations.
For purposes of this Section 7, a restatement of financial results that requires
a repayment of a portion of the Clawback Benefits amounts shall mean a
restatement resulting from material non-compliance of the Company with any
financial reporting requirement under the federal securities laws and shall not
include a restatement of financial results resulting from subsequent changes in
accounting pronouncements or requirements which were not in effect on the date
the financial statements were originally prepared (“Restatements”). The parties
acknowledge it is their intention that the foregoing Clawback Rights as relates
to Restatements conform in all respects to the provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) and require
recovery of all “incentive-based” compensation, pursuant to the provisions of
the Dodd-Frank Act and any and all rules and regulations promulgated thereunder
from time to time in effect. Accordingly, the terms and provisions of this
Agreement shall be deemed automatically amended from time to time to assure
compliance with the Dodd-Frank Act and such rules and regulations as hereafter
may be adopted and in effect.

 

8. Expenses. The Executive shall be entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary travel, entertainment, and
other expenses incurred by the Executive while employed (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in the performance of his duties and responsibilities under this
Agreement; provided, that the Executive shall properly account for such expenses
in accordance with Company policies and procedures.

 

9. Other Benefits. During the term of this Agreement, the Executive shall be
eligible to participate in incentive, stock purchase, savings, retirement
(401(k)), and welfare benefit plans, including, without limitation, health,
medical, dental, vision, life (including accidental death and dismemberment) and
disability insurance plans (collectively, “Benefit Plans”), in substantially the
same manner and at substantially the same levels as the Company makes such
opportunities available to the Company’s managerial or salaried executive
employees and/or its senior executives.

 

The Company shall pay one hundred percent (100%) of the cost for any group
medical, vision and/or dental coverage elected by and for the Executive, his
spouse and children.

 

10. Vacation. During the term of this Agreement, the Executive shall be entitled
to accrue, on a pro rata basis, thirty (30) paid vacation days per year.
Vacation shall be taken at such times as are mutually convenient to the
Executive and the Company and no more than fifteen (15) consecutive days shall
be taken at any one time without Company approval in advance.

 

11. Termination of Employment:

 

(a) Death. If the Executive dies during the Employment Period, this Agreement
and the Executive’s employment with the Company shall automatically terminate
and the Company’s obligations to the Executive’s estate and to the Executive’s
Qualified Beneficiaries shall be those set forth in Section 6(a) regarding
severance compensation.

 

 
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(b) Disability. In the event that, during the term of this Agreement the
Executive shall be prevented from performing his essential functions hereunder
to the full extent required by the Company by reason of Disability (as defined
below), this Agreement and the Executive’s employment with the Company shall
automatically terminate. The Company’s obligation to the Executive under such
circumstances shall be those set forth in Section 6(a) regarding severance
compensation. For purposes of this Agreement, “Disability” shall mean a physical
or mental disability that prevents the performance by the Executive, with or
without reasonable accommodation, of his essential functions hereunder for an
aggregate of ninety (90) days or longer during any twelve (12) consecutive
months. The determination of the Executive’s Disability shall be made by an
independent physician who is reasonably acceptable to the Company and the
Executive (or his representative), be final and binding on the parties hereto
and be made taking into account such competent medical evidence as shall be
presented to such independent physician by the Executive and/or the Company or
by any physician or group of physicians or other competent medical experts
employed by the Executive and/or the Company to advise such independent
physician.

 

(c) Cause.

 

(1) At any time during the Employment Period, the Company may terminate this
Agreement and the Executive’s employment hereunder for Cause. For purposes of
this Agreement, “Cause” shall mean: (a) the willful and continued failure of the
Executive to perform substantially his duties and responsibilities for the
Company (other than any such failure resulting from the Executive’s death or
Disability) after a written demand by the Board for substantial performance is
delivered to the Executive by the Company, which specifically identifies the
manner in which the Board believes that the Executive has not substantially
performed his duties and responsibilities, which willful and continued failure
is not cured by the Executive within thirty (30) days following his receipt of
such written demand; (b) the conviction of, or plea of guilty or nolo contendere
to, a felony, or (c) fraud, dishonesty or gross misconduct which is materially
and demonstratively injurious to the Company. Termination under clauses (b) or
(c) of this Section 11(c)(1) shall not be subject to cure.

  

(2) For purposes of this Section 11(c), no act, or failure to act, on the part
of the Executive shall be considered “willful” unless done, or omitted to be
done, by him in bad faith and without reasonable belief that his action or
omission was in, or not opposed to, the best interest of the Company. Between
the time the Executive receives written demand regarding substantial
performance, as set forth in subparagraph (1) above, and prior to an actual
termination for Cause, the Executive will be entitled to appear (with counsel)
before the full Board to present information regarding his views on the Cause
event. After such hearing, termination for Cause must be approved by a majority
vote of the full Board (other than the Executive). After providing the written
demand regarding substantial performance, the Board may suspend the Executive
with full pay and benefits until a final determination by the full Board has
been made.

 

(3) Upon termination of this Agreement for Cause, the Company shall have no
further obligations or liability to the Executive or his heirs, administrators
or executors with respect to compensation and benefits thereafter, except for
the obligation to pay the severance compensation set forth in Section 6(a). The
Company shall deduct, from all payments made hereunder, all applicable taxes,
including income tax, FICA and FUTA, and other appropriate deductions.

 

(d) For Good Reason or a Change of Control or Without Cause.

 

(1) At any time during the term of this Agreement and subject to the conditions
set forth in Section 11(d)(2) below, the Executive may terminate this Agreement
and the Executive’s employment with the Company for “Good Reason” or on account
of a “Change of Control”.  For purposes of this Agreement, “Good Reason” shall
mean the occurrence of any of the following events without Executive’s consent:
(A) the assignment to the Executive of duties that are significantly different
from, and/or that result in a substantial diminution of, the duties that he
assumed on the Effective Date (including reporting to anyone other than solely
and directly to the Board); provided, however, for the absence of doubt
following a Change of Control, should the Executive be required to serve in a
diminished capacity in a division or unit of another entity (including the
acquiring entity), such event shall constitute Good Reason; (B) the assignment
to the Executive of a title that is different from and subordinate to the title
Chief Executive Officer of the Company, provided, however, for the absence of
doubt following a Change of Control, should the Executive be required to serve
in a diminished capacity in a division or unit of another entity (including the
acquiring entity), such event shall constitute Good Reason regardless of the
title of the Executive in such acquiring company, division or unit; or (C)
material breach by the Company of this Agreement.

 

 
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(2) The Executive shall not be entitled to terminate this Agreement for Good
Reason unless and until he shall have delivered written notice to the Company
within ninety (90) days of the date upon which the facts giving rise to Good
Reason occurred of his intention to terminate this Agreement and his employment
with the Company for Good Reason, which notice specifies in reasonable detail
the circumstances claimed to provide the basis for such termination for Good
Reason, and the Company shall not have eliminated the circumstances constituting
Good Reason within thirty (30) days of its receipt from the Executive of such
written notice. In the event the Executive elects to terminate this Agreement
for Good Reason in accordance with Section 11(d)(1), such election must be made
within the twenty-four (24) months following the initial existence of one or
more of the conditions constituting Good Reason as provided in Section 11(d)(1).
In the event the Executive elects to terminate this Agreement for a Change in
Control in accordance with Section 11(d)(1), such election must be made within
one hundred eighty (180) days of the occurrence of the Change of Control.

 

(3) In the event that the Executive terminates this Agreement and his employment
with the Company for Good Reason or within one hundred eighty (180) days of the
occurrence of a Change of Control, or the Company terminates this Agreement and
the Executive’s employment with the Company without Cause, the Company shall pay
or provide to the Executive (or, following his death, to the Executive’s heirs,
administrators or executors) the severance compensation set forth in Section
6(a) and Section 6(b) above. The Company shall deduct, from all payments made
hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions. Subject to the terms hereof, one-half (1/2) of the
compensation of payable under Section 6(a) and Section 6(b) shall be paid within
thirty (30) days of the Executive’s termination of employment (“Initial
Payment”), provided that the Executive has executed a release and that if the
release execution period begins in one taxable year and ends in another taxable
year, the Initial Payment shall not be made until the beginning of the taxable
year immediately following termination. The balance of the compensation payable
under Section 6(a) and Section 6(b) shall be paid in substantially equal
installments on the Company’s regular payroll dates beginning with the first
payroll date coincident with or immediately following the Initial Payment and
ending on the payroll date coincident with or immediately following the twelve
(12) month anniversary of the Initial Payment.

  

(e) Without “Good Reason” by the Executive. At any time during the term of this
Agreement, the Executive shall be entitled to terminate this Agreement and the
Executive’s employment with the Company without Good Reason and other than for a
Change of Control by providing prior written notice of at least three (3) months
to the Company. Upon termination by the Executive of this Agreement or the
Executive’s employment with the Company without Good Reason and other than for a
Change of Control, the Company shall have no further obligations or liability to
the Executive or his heirs, administrators or executors with respect to
compensation and benefits thereafter, except for the obligations set forth in
Section 6(a). The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.

 

(f) Change of Control. For purposes of this Agreement, “Change of Control” shall
mean the occurrence of any one or more of the following: (i) the accumulation
(if over time, in any consecutive twelve (12) month period), whether directly,
indirectly, beneficially or of record, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended) of more than fifty percent (50%) or more of the shares
of the outstanding Common Stock of the Company, whether by merger, consolidation
, sale or other transfer of shares of Common Stock (other than a merger or
consolidation where the stockholders of the Company prior to the merger or
consolidation are the holders of a majority of the voting securities of the
entity that survives such merger or consolidation) for purposes of clarity the
Company expects to sell a number of shares and/or convert outstanding senior
debt to either preferred or common stock not limited to the period of this
contract to raise funds and stabilize its balance sheet and any such sales shall
not constitute a change of control for purposes of this section or Agreement,
(ii) a sale of all or substantially all of the assets of the Company or (iii)
during any period of twelve (12) consecutive months, the individuals who, at the
beginning of such period, constitute the Board, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the twelve (12) month
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board; provided
that the following acquisitions shall not constitute a Change of Control for the
purposes of this Agreement: iv) any action by the Company’s senior lender,
Melody Capital, LLC. which would result in the senior lender, or its successor,
assuming control of the Board, the company’s assets or business, any acquisition
of Common Stock or securities convertible into Common Stock by any employee
benefit plan (or related trust) sponsored by or maintained by the Company.

 

 
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(g) Any termination of the Executive’s employment by the Company or by the
Executive (other than termination by reason of the Executive’s death) shall be
communicated by written Notice of Termination to the other party of this
Agreement. For purposes of this Agreement, a “Notice of Termination” shall mean
a written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status of the
Executive.

 

12. Confidential Information.

 

The Executive recognizes, acknowledges and agrees that he has had and will
continue to have access to secret and confidential information regarding the
Company, its subsidiaries and their respective businesses (“Confidential
Information”), including but not limited to, its products, methods, formulas,
software code, patents, sources of supply, customer dealings, data, know-how,
trade secrets and business plans, provided such information is not in or does
not hereafter become part of the public domain, or become known to others
through no fault of the Executive.  The Executive acknowledges that such
information is of great value to the Company, is the sole property of the
Company, and has been and will be acquired by him in confidence.  In
consideration of the obligations undertaken by the Company herein, the Executive
will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any information acquired by the Executive during
the course of his employment, which is treated as confidential by the Company,
and not otherwise in the public domain. The provisions of this Section 12 shall
survive the termination of the Executive’s employment hereunder.

 

(b) The Executive affirms that he does not possess and will not rely upon the
protected trade secrets or confidential or proprietary information of any prior
employer(s) in providing services to the Company or its
subsidiaries.                        

 

(c) In the event that the Executive’s employment with the Company terminates for
any reason, the Executive shall deliver forthwith to the Company any and all
originals and copies, including those in electronic or digital formats, of
Confidential Information; provided, however, the Executive shall be entitled to
retain (i) papers and other materials of a personal nature, including, but not
limited to, photographs, correspondence, personal diaries, calendars and
rolodexes, personal files and phone books, (ii) information showing his
compensation or relating to reimbursement of expenses, (iii) information that he
reasonably believes may be needed for tax purposes and (iv) copies of plans,
programs and agreements relating to his employment, or termination thereof, with
the Company. The covenants and agreements in this Section 12 shall exclude
excludes information (A) which is in the public domain through no unauthorized
act or omission of Executive or (B) which becomes available to Executive on a
non-confidential basis from a source other than Company or its affiliates
without breach of such source’s confidentiality or non-disclosure obligations to
Company or any of its affiliates.

  

13. Non-Competition and Non-Solicitation.

 

(a) The Executive agrees and acknowledges that the Confidential Information that
the Executive has already received and will receive is valuable to the Company
and that its protection and maintenance constitutes a legitimate business
interest of the Company, to be protected by the non-competition restrictions set
forth herein. The Executive agrees and acknowledges that the non-competition
restrictions set forth herein are reasonable and necessary and do not impose
undue hardship or burdens on the Executive. The Executive also acknowledges that
the Company’s Business (as defined in Section 13(b) (1) below) is conducted
throughout the United States (the “Territory”), and that the Territory, scope of
prohibited competition, and time duration set forth in the non-competition
restrictions set forth below are reasonable and necessary to maintain the value
of the Confidential Information of, and to protect the goodwill and other
legitimate business interests of, the Company, its affiliates and/or its clients
or customers. The provisions of this Section 13 shall survive the termination of
the Executive’s employment hereunder for the time periods specified below.

 

 
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(b) The Executive hereby agrees and covenants that he shall not without the
prior written consent of the Company, directly or indirectly, in any capacity
whatsoever, including, without limitation, as an employee, employer, consultant,
principal, partner, shareholder, officer, director or any other individual or
representative capacity (other than (i) as a holder of less than two (2%)
percent of the outstanding securities of a company whose shares are traded on
any national securities exchange or (ii) as a limited partner, passive minority
interest holder in a venture capital fund, private equity fund or similar
investment entity which holds or may hold an equity or debt position in
portfolio companies that are competitive with the Company; provided however,
that the Executive shall be precluded from serving as an operating partner,
general partner, manager or governing board designee with respect to such
portfolio companies), or whether on the Executive's own behalf or on behalf of
any other person or entity or otherwise howsoever, during the Term and
thereafter to the extent described below, within the Territory:

 

(1) Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership, management,
operation or control of any business in competition with the Business of the
Company, as defined in the next sentence. For purposes hereof, the Company’s
“Business” shall mean the provision of fixed wireless services to businesses.

 

(2) Recruit, solicit or hire, or attempt to recruit, solicit or hire, any
employee, or independent contractor of the Company to leave the employment (or
independent contractor relationship) thereof, whether or not any such employee
or independent contractor is party to an employment agreement, for the purpose
of competing with the Business of the Company;

  

(3) Attempt in any manner to solicit or accept from any customer of the Company,
with whom Executive had significant contact during Executive’s employment by the
Company (whether under this Agreement or otherwise), business of the kind or
competitive with the business done by the Company with such customer or to
persuade or attempt to persuade any such customer to cease to do business or to
reduce the amount of business which such customer has customarily done or might
do with the Company, or if any such customer elects to move its business to a
person other than the Company, provide any services of the kind or competitive
with the business of the Company for such customer, or have any discussions
regarding any such service with such customer, on behalf of such other person
for the purpose of competing with the Business of the Company; or

 

(4) Interfere with any relationship, contractual or otherwise, between the
Company and any other party, including, without limitation, any supplier,
distributor, co-venturer or joint venturer of the Company, for the purpose of
soliciting such other party to discontinue or reduce its business with the
Company for the purpose of competing with the Business of the Company.

 

With respect to the activities described in Paragraphs (1), (2), (3) and (4)
above, the restrictions of this Section 13(b) shall continue during the Term of
this Agreement and for a period of two (2) years thereafter.

 

14. Section 409A.

 

The provisions of this Agreement are intended to comply with or are exempt from
Section 409A of the Code (“Section 409A”) and the related Treasury Regulations
and shall be construed in a manner consistent with the requirements for avoiding
taxes or penalties under Section 409A. The Company and the Executive agree to
work together in good faith to consider amendments to this Agreement and to take
such reasonable actions necessary, appropriate or desirable to avoid imposition
of any additional tax under Section 409A or income recognition prior to actual
payment to the Executive under this Agreement.

 

It is intended that any expense reimbursement made under this Agreement shall be
exempt from Section 409A. Notwithstanding the foregoing, if any expense
reimbursement made under this Agreement shall be determined to be “deferred
compensation” subject to Section 409A (“Deferred Compensation”), then (a) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit, (b) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year (provided that this clause (b) shall not be
violated with regard to expenses reimbursed under any arrangement covered by
Section 105(b) of the Code solely because such expenses are subject to a limit
related to the period the arrangement is in effect) and (c) such payments shall
be made on or before the last day of the taxable year following the taxable year
in which the expense was incurred.

 

 
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With respect to the time of payments of any amount under this Agreement that is
Deferred Compensation, references in the Agreement to “termination of
employment” and substantially similar phrases, including a termination of
employment due to the Executive’s Disability, shall mean “Separation from
Service” from the Company within the meaning of Section 409A (determined after
applying the presumptions set forth in Treasury Regulation Section
1.409A-1(h)(1)). Each installment payable hereunder shall constitute a separate
payment for purposes of Treasury Regulation Section 1.409A-2(b), including
Treasury Regulation Section 1.409A-2(b)(2)(iii). Each payment that is made
within the terms of the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) is intended to meet the “short-term deferral”
rule. Each other payment is intended to be a payment upon an involuntary
termination from service and payable pursuant to Treasury Regulation Section
1.409A-1(b)(9)(iii), et. seq., to the maximum extent permitted by that
regulation, with any amount that is not exempt from Code Section 409A being
subject to Code Section 409A.

  

Notwithstanding anything to the contrary in this Agreement, if the Executive is
a “specified employee” within the meaning of Section 409A at the time of the
Executive’s termination, then only that portion of the severance and benefits
payable to the Executive pursuant to this Agreement, if any, and any other
severance payments or separation benefits which may be considered Deferred
Compensation (together, the “Deferred Separation Benefits”), which (when
considered together) do not exceed the Section 409A Limit (as defined herein)
may be made within the first six (6) months following the Executive’s
termination of employment in accordance with the payment schedule applicable to
each payment or benefit. Any portion of the Deferred Separation Benefits in
excess of the Section 409A Limit otherwise due to the Executive on or within the
six (6) month period following the Executive’s termination will accrue during
such six (6) month period and will become payable in one lump sum cash payment
on the date six (6) months and one (1) day following the date of the Executive’s
termination of employment. All subsequent Deferred Separation Benefits, if any,
will be payable in accordance with the payment schedule applicable to each
payment or benefit. Notwithstanding anything herein to the contrary, if the
Executive dies following termination but prior to the six (6) month anniversary
of the Executive’s termination date, then any payments delayed in accordance
with this paragraph will be payable in a lump sum as soon as administratively
practicable after the date of the Executive’s death and all other Deferred
Separation Benefits will be payable in accordance with the payment schedule
applicable to each payment or benefit.

 

For purposes of this Agreement, “Section 409A Limit” shall mean a sum equal to
(x) the amounts payable within the terms of the “short-term deferral” rule under
Treasury Regulation Section 1.409A-1(b)(4) plus (y) the amount payable as
“separation pay due to involuntary separation from service” under Treasury
Regulation Section 1.409A-1(b)(9)(iii) equal to the lesser of two (2) times: (i)
the Executive’s annualized compensation from the Company based upon his annual
rate of pay during the Executive’s taxable year preceding his taxable year when
his employment terminated, as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1); and (ii) the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Code for
the year in which the Executive’s employment is terminated.

 

15. Miscellaneous.

 

(a) Neither the Executive nor the Company may assign or delegate any of their
rights or duties under this Agreement without the express written consent of the
other; provided, however, that the Company shall have the right to delegate its
obligation of payment of all sums due to the Executive hereunder, provided that
such delegation shall not relieve the Company of any of its obligations
hereunder.

 

(b) During the term of this Agreement, the Company (i) shall indemnify and hold
harmless the Executive and his heirs and representatives to the maximum extent
provided by the laws of the State of Delaware and by Company’s bylaws and (ii)
shall cover the Executive under the Company’s directors’ and officers’ liability
insurance on the same basis as it covers other senior executive officers and
directors of the Company.

 

(c) This Agreement constitutes and embodies the full and complete understanding
and agreement of the parties with respect to the Executive’s employment by the
Company, supersedes all prior understandings and agreements, whether oral or
written, between the Executive and the Company, and shall not be amended,
modified or changed except by an instrument in writing executed by the party to
be charged. If any provision of this Agreement, or the application thereof,
shall for any reason and to any extent be invalid or unenforceable, then the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall be interpreted so as reasonably to effect the
intent of the parties hereto.  The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that shall achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision. No waiver by either party of
any provision or condition to be performed shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time. The Executive and Company agree that the Consulting Agreement
by and between the Executive and the Company, dated as of September 16, 2016, as
amended to date, is null and void as of the Effective Date.

 

 
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(d) This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective successors, heirs,
beneficiaries and permitted assigns.

 

(e) The headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

(f) All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when personally delivered, sent by registered or certified mail,
return receipt requested, postage prepaid, or by reputable national overnight
delivery service (e.g., Federal Express) for overnight delivery to the party at
the address set forth in the preamble to this Agreement, or to such other
address as either party may hereafter give the other party notice of in
accordance with the provisions hereof. Notices shall be deemed given on the
sooner of the date actually received or the third business day after deposited
in the mail or one business day after deposited with an overnight delivery
service for overnight delivery.

 

(g) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, and each of the parties hereto
irrevocably consents to the jurisdiction and venue of the federal and state
courts located in the State of New York, County of New York, for any disputes
arising out of this Agreement, or the Executive’s employment with the Company.
The prevailing party in any dispute arising out of this Agreement shall be
entitled to his or its reasonable attorney’s fees and costs.

 

(h) This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one of the same instrument. The parties hereto have executed this
Agreement as of the date set forth above.

 

(i) The Executive represents and warrants to the Company, that he has the full
power and authority to enter into this Agreement and to perform his obligations
hereunder and that the execution and delivery of this Agreement and the
performance of his obligations hereunder will not conflict with any agreement to
which the Executive is a party.

 

(j) The Company represents and warrants to the Executive that it has the full
power and authority to enter into this Agreement and to perform its obligations
hereunder and that the execution and delivery of this Agreement and the
performance of its obligations hereunder will not conflict with any agreement to
which the Company is a party.

 

[Signature page follows immediately]

 

 
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IN WITNESS WHEREOF, the Executive and the Company have caused this Executive
Employment Agreement to be executed as of the date first above written.

 

 

TOWERSTREAM CORPORATION  

 

 

 

 

By: 

/s/ Philip Urso 

 

Name:

Philip Urso

 

Title: 

Chairman of the Board

 

Date Signed:

January 23, 2017

 

 

 

 

EXECUTIVE

 

 

 

 

 

By:

/s/ Ernest Ortega 

 

Name:

Ernest Ortega

 

Date Signed:

January 20, 2017

 

 

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