Document:

exv10w3

 

Exhibit 10.3

METHODE ELECTRONICS, INC.

AMENDED AND RESTATED

RESTRICTED STOCK UNIT AWARD AGREEMENT

(EXECUTIVE AWARD / PERFORMANCE-BASED)

     This agreement (the “Award Agreement”) effective as of August 7, 2006 (the “Award Date”), is
entered into by and between Methode Electronics, Inc., a Delaware corporation (the “Company”) and
Donald W. Duda (the “Grantee”). This Award Agreement amends and restates the Restricted Stock
Award Agreement by and between the Company and the Grantee dated August 7, 2006 (the “Predecessor
Agreement”). As of the date this Award Agreement is accepted by both parties, the Predecessor
Agreement will be void and otherwise superseded by this Award Agreement, and the Grantee will
return any Restricted Stock awarded to him under the Predecessor Agreement. All capitalized terms
used and not otherwise defined herein shall have the meanings ascribed to them by the Methode
Electronics, Inc. 2004 Stock Plan (the “Plan”).

     1. General. This Award Agreement and the Restricted Stock Units awarded herein are
subject to all of the provisions of the Plan applicable to Restricted Stock Units. Unless
otherwise provided herein, the Plan provisions are incorporated by reference and made a part hereof
to the same extent as if set forth in their entirety herein. A copy of the Plan is on file in the
offices of the Company.

     2. Grant. The Company hereby grants to Grantee a total of 100,000 Restricted Stock
Units (the “Restricted Stock Units”), subject to the restrictions set forth in Section 3 hereof and
the Plan.

     3. Restrictions.

	 	(a)	 	None of the Restricted Stock Units may be sold, transferred, pledged,
hypothecated or otherwise encumbered or disposed of.
	 
	 	(b)	 	Any Restricted Stock Units that are not vested shall be forfeited to the
Company immediately upon termination of the Grantee’s employment with the Company and
all of its Subsidiaries and Affiliates.
	 
	 	(c)	 	Any Restricted Stock Units that are not vested may be forfeited to the Company
in accordance with Section 7 of this Award Agreement.

     4. Payment for Restricted Stock Units.

	 	(a)	 	The Company will pay one share of Common Stock to the Grantee for each vested
Restricted Stock Unit upon the earlier of the following events, but in no case earlier
than the date the Award becomes vested under Section 6:

	 	(i)	 	thirty (30) days after the Grantee’s date of termination of
employment with the Company and all of the Company’s Subsidiaries and
Affiliates; or

 

 

	 	(ii)	 	the last day of the Company’s fiscal year in which the payment
of Common Stock in satisfaction of the Restricted Stock Units becomes
deductible to the Company under Section 162(m) of the Code, in which case the
Company may pay out a portion of the Restricted Stock Unit Award if payment of
the entire Award would not be deductible to the Company and the remaining
portion of the Award shall be paid when, and to the extent, the payment becomes
deductible. If the Grantee has other outstanding vested awards that are
conditioned on payment being deductible to the Company, the vested awards that
do not have performance-based criteria shall be paid first and in the order
they were first granted.

	 	(b)	 	Notwithstanding the foregoing, in the event that the Grantee is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, any payment under
this Award Agreement shall be delayed until the earlier of (i) six months after the
Grantee’s separation from service with the Company and (ii) the Grantee’s death, if
such a delay is necessary to avoid the imposition of additional tax and interest on the
Grantee under Section 409A(a)(1)(B) of the Code.

     5. Rights as Stockholder. The Grantee shall have no rights as a stockholder with
respect to any Restricted Stock Units. The Grantee will only have stockholder rights after a stock
certificate is issued.

     6. Vesting.

	 	(a)	 	Vesting Date. The determination as to the number of Restricted Stock
Units which shall vest pursuant to Section 6(b) shall be made as of May 2, 2009 (the
“Vesting Date”), provided Grantee is employed by the Company (or a Subsidiary or
Affiliate thereof) continuously between the Award Date and the Vesting Date.
	 
	 	(b)	 	Amount of Restricted Stock Units that Vest. Exhibit A sets
forth a table of percentages which vary based upon certain performance criteria of the
Company between the Award Date and the Vesting Date. Grantee shall vest in the
percentage of Restricted Stock Units granted to Grantee on the Award Date that
corresponds to the performance of the Company on the Vesting Date. The percentage used
to determine the amount of Grantee’s Restricted Stock Units that vest shall be
determined in the absolute discretion of the Committee. As set forth in Section 7(a),
the percentage of Restricted Stock Units not vested on the Vesting Date shall
be forfeited.
	 
	 	(c)	 	Termination of Employment Prior to the Vesting Date. Notwithstanding
the provisions of 6(a) and 6(b) herein, Restricted Stock Units granted hereunder shall
vest, in an amount determined according to the calculation set forth below, if the
Grantee’s employment with the Company and all of its Subsidiaries and Affiliates is
terminated prior to the Vesting Date, due to: (i) retirement on or after Grantee’s
sixty-fifth birthday; (ii) retirement on or after Grantee’s fifty-fifth birthday with
consent of the Company; (iii) retirement at any age on account of total and

 

 

	 	 	 	permanent disability as determined by the Company; (iv) death; or (v) a Change of
Control as defined in the Plan. For purposes of this Section 6(c), “Early
Termination Date” shall refer to the occurrence of one of the events set forth in
(i), (ii), (iii) and (iv), and “Change of Control Date” shall refer to the
occurrence of the event set forth in (v). For clarity, Exhibit B attached
hereto and incorporated herein sets forth an example in which the Restricted Stock
Units vest upon the Change of Control Date as described in Section 6(b)(v). If
Grantee’s employment terminates on the Early Termination Date or there is a Change
of Control, then Grantee’s Restricted Stock Units shall vest as of the Early
Termination Date or Change of Control Date, as follows: Grantee shall vest in the
percentage of Restricted Stock Units that, extrapolated from the performance growth
of the Company from the Award Date to the most recent prior fiscal quarter to the
Early Termination Date or the Change of Control Date, would have vested on the
Vesting Date, multiplied by the percentage set forth in Exhibit C (column (d))
corresponding to the number of months elapsed since April 30, 2006 (rounded up).
	 	(d)	 	Change of Control. In the event of a Change of Control, Section 6(c)
of this Award Agreement shall govern vesting hereunder, and Section 11.3 of the Plan
shall be inapplicable.

     7. Forfeiture.

	 	(a)	 	Forfeiture of Restricted Stock Units not Vested. As of the Vesting
Date, Grantee shall forfeit all Restricted Stock Units not vested pursuant to Section
6(b) or Section 6(c) hereof. By example, pursuant to Section 6(b), if Grantee vests in
65% of the Restricted Stock Units granted to Grantee on the Award Date, Grantee thereby
forfeits 35% of the Restricted Stock Units granted to Grantee on the Award Date.
	 
	 	(b)	 	Forfeiture if the Grantee Engages in Certain Activities. If at any
time the Grantee engages in any activity adverse, contrary or harmful to the interests
of the Company, including, but not limited to: (i) conduct related to the Grantee’s
employment for which either criminal or civil penalties against the Grantee may be
sought, (ii) while employed by the Company or any Subsidiary or Affiliate, serving as a
consultant, advisor or in any other capacity to an entity that is, or proposes to be,
in competition with or acting against the interests of the Company, (iii) employing or
recruiting any present, former or future employee of the Company, whether individually
or on behalf of another person or entity, that is, or proposes to be, in competition
with or acting against the interests of the Company, (iv) disclosing or misusing any
confidential information or material concerning the Company, or (v) participating in a
hostile takeover attempt, then the unvested Restricted Stock Units shall be forfeited
to the Company effective as of the date on which the Grantee entered into such
activity, unless terminated sooner by operation of another term or condition of this
Award Agreement or the Plan.

 

 

	 	(c)	 	Right of Set-off. If the Grantee owes the Company any amount by virtue
of Section 7(b) above, then the Company (or any Subsidiary or Affiliate) may recover
such amount by setting it off from any amounts the Company (or any Subsidiary or
Affiliate) owes or may owe the Grantee from time to time. By accepting these
Restricted Stock Units and signing this Award Agreement in the space provided below,
the Grantee consents to a deduction of any amount the Grantee may owe the Company by
virtue of Section 7(b) above from any amounts the Company (or any Subsidiary or
Affiliate) owes or may owe the Grantee from time to time (including amounts owed to the
Grantee as wages or other compensation, fringe benefits, or vacation pay, as well as
any other amounts owed to the Grantee). Whether or not the Company elects to make any
set-off in whole or in part, if the Company does not recover by means of set-off the
full amount the Grantee owes it, calculated as set forth above, the Grantee agrees to
pay immediately the unpaid balance to the Company.
	 
	 	(d)	 	Committee Discretion. The Committee may release the Grantee from the
obligations under Section 7(b) above if the Committee determines in its sole discretion
that such action is in the best interest of the Company.

     8. Other Terms and Conditions. The Committee shall have the discretion to determine
such other terms and provisions hereof as stated in the Plan.

     9. Applicable Law. The validity, construction, interpretation and enforceability of
this Award Agreement shall be determined and governed by the laws of the State of Illinois without
regard to any conflicts or choice of law rules or principles that might otherwise refer
construction or interpretation of this Award Agreement to the substantive law of another
jurisdiction, and any litigation arising out of this Award Agreement shall be brought in the
Circuit Court of the State of Illinois or the United States District Court of the Eastern Division
of the Northern District of Illinois and the Grantee consents to the jurisdiction and venue of
those courts.

     10. Severability. The provisions of this Award Agreement are severable and if any one
or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part,
the remaining provisions, and any partially unenforceable provision to the extent enforceable in
any jurisdiction, shall nevertheless be binding and enforceable.

     11. Waiver. The waiver by the Company of a breach of any provision of this Award
Agreement by Grantee shall not operate or be construed as a waiver of any subsequent breach by
Grantee.

     12. Binding Effect. The provisions of this Award Agreement shall be binding upon the
parties hereto, their successors and assigns, including, without limitation, the Company, its
successors or assigns, the estate of the Grantee and the executors, administrators or trustees of
such estate and any receiver, trustee in bankruptcy or representative of the creditors of the
Grantee.

 

 

     13. Withholding. Grantee agrees, as a condition of this grant, to make acceptable
arrangements to pay any withholding or other taxes that may be due as a result of the vesting of
the Restricted Stock Units acquired under this grant. In the event that the Company determines
that any federal, state, local or foreign tax or withholding payment is required relating to the
vesting of shares arising from this grant, the Company shall have the right to require such
payments from Grantee, or withhold such amounts from other payments due Grantee from the Company or
any Subsidiary or Affiliate.

     14. No Retention Rights. Nothing herein contained shall confer on the Grantee any
right with respect to continuation of employment by the Company or its Subsidiaries or Affiliates,
or interfere with the right of the Company or its Subsidiaries or Affiliates to terminate at any
time the employment of the Grantee.

     15. Construction. This Award Agreement is subject to and shall be construed in
accordance with the Plan, the terms of which are explicitly made applicable hereto. In the event
of any conflict between the provisions hereof and those of the Plan, the provisions of the Plan
shall govern.

GRANTEE

	 	 	 	 	 
	 	 	 
	/s/ Donald W. Duda
 	 
	Donald W. Duda 	 
	 	 
	 

METHODE ELECTRONICS, INC.

	 	 	 	 	 
	 	 	 
	 	By:  	    /s/ Douglas A. Koman
 	 
	 	 	Douglas A. Koman 	 
	 	Its: 	Vice President, Corporate Finance and Chief Financial OfficerEXHIBIT 10.1

                              EMPLOYMENT AGREEMENT
                              --------------------

         This EMPLOYMENT AGREEMENT, dated as of April 2, 2007 by and between
COACTIVE MARKETING GROUP, INC., a Delaware corporation with its principal place
of business at 75 Ninth Avenue, New York, New York 10011 ("Employer") and BRIAN
MURPHY, an individual residing at 225 Central Park West, Apt. 1420, New York,
New York 10024 ("Employee").

                              W I T N E S S E T H :
                              - - - - - - - - - -

         WHEREAS, Employer operates a sales promotion and marketing services
business;

         WHEREAS, Employee and Employer's wholly-owned subsidiary, U.S. Concepts
LLC, a Delaware limited liability company ("USC"), are parties to an Employment
Agreement, dated as of December 29, 1998 (as amended from time to time, the
"Original Employment Agreement") pursuant to which USC currently employs
Employee; and

         WHEREAS, Employer desires to employ Employee, and Employee desires to
be employed by Employer, on the terms and conditions set forth below;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:

         1.       Employment. Employer hereby employs Employee and Employee
hereby accepts employment by Employer for the period and on the terms and
conditions set forth in this Agreement.

         2.       Position, Employment Duties and Responsibilities. Employee
shall be employed as Vice Chairman of Employer, subject to such reasonable
duties and responsibilities granted, and restrictions imposed, by Employer's
Chief Executive Officer, and subject to Employer's company policies and
procedures. Throughout the term of this Agreement, Employee shall devote his
entire working time, energy and skill and best efforts to the performance of his
duties hereunder in a manner which will faithfully and diligently seek to
further the business and interests of Employer and its subsidiaries. Employee's
direct reporting responsibility is to Employer's President and Chief Executive
Officer.

         3.       Working Facilities. Employee will work out of Employer's
office located in New York, New York. Employee shall not be required to relocate
his office from New York, New York.

         4.       Compensation and Benefits.
                  -------------------------

                  4.1      Salary. For all of the services rendered by Employee
to Employer, Employer shall pay to Employee an annual base salary of three
hundred sixty two thousand dollars ($362,000), payable in reasonable periodic
installments in accordance with Employer's regular payroll practices in effect
from time to time. Employee's salary may be increased (but not decreased) from
time to time as the Board of Directors of Employer (the "Board") may determine
in its sole discretion.

<PAGE>

                  4.2      Bonus. Employer from time to time may pay Employee
such bonuses or other additional compensation as the Board may determine in its
sole discretion, but Employee acknowledges that there is no agreement regarding
any such additional payments. Employee may also be eligible to receive bonuses
in accordance with the terms and provisions of a management bonus plan that may
be established for senior executives of Employer.

                  4.3      Employee Benefits. Employee shall be entitled to
participate in and be provided with health insurance, life insurance and other
benefit plans and programs offered to and or made available to Employer's
employees. In addition, Employee shall be entitled to paid holidays in
accordance with Employer's regular policy and twenty days of vacation in each
calendar year and reasonable absences for illness. Any vacation time not taken
during any calendar year of employment shall not be carried into any subsequent
calendar year, and Employer shall not be obligated to pay Employee for any
vacation time available to but not used by Employee within the prescribed
period.

                  4.4      Travel, Entertainment and Other Business Expenses.
During the period of employment pursuant to this Agreement, Employee will be
reimbursed promptly for reasonable expenses incurred for the benefit of Employer
in accordance with the general policy of Employer. Those reimbursable expenses
shall include properly documented, authorized or otherwise reasonably required,
travel, entertainment and other business expenses incurred by Employee, other
than those expenses related to or in connection with routine commutation to and
from Employee's home, in accordance with Employer's general policy.

                  4.5      Deductions. All references herein to compensation to
be paid to Employee are to the gross amounts thereof which are due hereunder.
Employer shall have the right to deduct therefrom all taxes which may be
required to be deducted or withheld under any provision of the law (including,
without limitation, social security payments, income tax withholding and any
other deduction required by law) now in effect or which may become effective at
any time during the term of this Agreement.

         5.       Term; Severance.
                  ---------------

                  5.1      Term. This Agreement shall be for a term of three (3)
years, commencing on the date hereof and ending on April 2, 2010, unless sooner
terminated as hereinafter provided. The term of this Agreement shall
automatically continue after the initial three-year term unless and until either
party terminates this Agreement by providing the other party with no less than
ninety (90) days prior written notice of termination effective on or after the
third anniversary of the date hereof.

                  5.2      Severance. In the event (i) Employer terminates
Employee's employment under this Agreement for any reason other than for "Cause"
under Section 7, or (ii) Employee terminates his employment under this Agreement
for Good Reason (as defined below), Employee shall be entitled to receive
aggregate severance payments ("Severance Payments"), equal to Employee's then
monthly base salary under Section 4.1, multiplied by the "Service Factor." The

                                       2
<PAGE>

Service Factor shall be a whole number equal to the number of years (not
including fractional years) that have elapsed from the date that Employee
initially became an employee of Employer or one of its subsidiaries (i.e.,
December 29, 1998), and the date Employee's employment is terminated hereunder,
provided, however, that the Service Factor shall not be less than six (6) or
greater than twelve (12). The Severance Payments shall be paid to Employee in
equal monthly installments, each such installment equal to Employee's then
monthly base salary under Section 4.1, provided Employee is then in compliance
with his obligations under Section 6 of this Agreement. Notwithstanding the
foregoing, any amount payable under this Section 5.2 shall be reduced on a
dollar-for-dollar basis by the amount Employee earns for providing personal
services during the period for which Severance Payments would otherwise be due,
and Employee hereby agrees to mitigate the Severance Payments payable hereunder
by using reasonable efforts to obtain other employment during such period.

                  5.3      Good Reason. For the purposes hereof, "Good Reason"
shall mean the occurrence of any of the following events without Employee's
consent: (i) a reduction in Employee's base salary to an amount below $362,000,
(ii) the termination or material reduction of any material employee benefit or
perquisite enjoyed by the Employee (other than in connection with the
termination or reduction of such benefit or perquisite to all executives of
Employer or as may be required by law), (iii) Employer relocates its offices
outside of the greater New York metropolitan area requiring Employee to relocate
his primary residence in order to perform his duties and responsibilities
described herein; or (iv) the failure of Employer to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of Employer within thirty (30) calendar days
after the closing of a merger, consolidation, sale or similar transaction.
Notwithstanding the foregoing, following written notice from the Employee of any
of the events described in (i) through (iii) above, Employer shall have thirty
(30) calendar days in which to cure the alleged conduct. If Employer fails to
cure, the Employee's termination shall become effective on the 31st calendar day
following such written notice.

         6.       Nondisclosure and Non-Compete.
                  -----------------------------

                  6.1      Definitions. The following words and expressions used
in this Agreement shall have the respective meanings hereby assigned to them as
follows:

                           (a)      "Affiliate" shall mean any partnership,
firm, corporation, association, trust, unincorporated organization or other
entity, that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, Employer.

                           (b)      "Business Associate" shall mean and refer to
any individual, partnership, corporation, associations or other business
enterprise in any form which has had in the past, have currently, shall have or
be attempting to develop during the Restriction Period a business relationship
with Employer or any of its Affiliates as a customer or supplier.

                           (c)      "Customer" shall mean and refer to any past
or current customer of Employer or any of its Affiliates and shall also include
those prospective customers who are actively being marketed by Employer or any
of its Affiliates during the Term.

                                       3
<PAGE>

                           (d)      "Competitor" shall mean and refer to any
individual, partnership, corporation, association or other business enterprise
in any form, other than Employer and its Affiliates, which at any time during
the Restriction Period, either directly or indirectly, (i) engages in the
business of promotion marketing and sells to Customers in the Restriction Area
or (ii) engages in any other business directly competitive with Employer or any
of its Affiliates and sells to Customers in the Restriction Area.

                           (e)      "Confidential Information" shall mean and
refer to all information of Employer and its Affiliates which is not generally
known or available to the public or a Competitor (whether or not in written or
tangible form), the knowledge of which could benefit a Competitor, including
without limitation, all of the following types of information:

                           (i)      identities of, and information pertaining
                                    to, Customers, Personnel and Business
                                    Associates;

                           (ii)     research, projections, financial
                                    information, cost and pricing information,
                                    invoices and internal accounting statistics;

                           (iii)    product or service development plans and
                                    marketing strategies;

                           (iv)     purchasing methods; and

                           (v)      trade secrets, or other knowledge or
                                    processes of or developed by Employer or any
                                    of its Affiliates.

                           (f)      "Confidential Materials" shall mean and
refer to any and all documents, materials, programs, recordings or any other
tangible media (including, without limitation, copies or reproductions of any of
the foregoing) in which Confidential Information may be contained.

                           (g)      "Personnel" shall mean and refer to any and
all employees, contractors, agents, brokers, consultants or other individuals
rendering services to Employer or any of its Affiliates for compensation in any
form, whether employed by or independent of Employer or any of its Affiliates.

                           (h)      "Restriction Area" shall mean and refer to
the United States.

                           (i)      "Restriction Period" shall mean and refer to
the period of time, commencing on Employee's date of employment and expiring
twelve (12) months after, for any reason whatsoever, (i) the employment
relationship between Employee and Employer or any of its Affiliates terminates
or (ii) Employee ceases to perform services for Employer or any of its
Affiliates, whichever occurs later.

                  6.2      Covenant Not to Compete.
                           -----------------------

                           (a)      During the Restriction Period, Employee
shall not directly or indirectly, own, manage, invest or acquire any economic
stake or interest in, or otherwise engage or participate in any manner
whatsoever in any Competitor (whether as a proprietor, partner, shareholder,

                                       4
<PAGE>

investor, manager, director, officer, employee, venturer, representative, agent,
broker, independent contractor, consultant, or other participant). Employee,
however, shall not be prohibited from owning a passive investment of less than
two percent (2%) of the outstanding shares of capital stock or bonds of a
corporation, which stock or bonds are listed on a national securities exchange
or are publicly traded in the over-the-counter market.

                           (b)      The parties recognize the possibility that
there might be some limited ways, which the parties do not now contemplate,
through which Employee might be able to participate in a Competitor, and which
pose no risk of harm to the interests of Employer or its Affiliates. If, prior
to beginning any such relationship with a Competitor, Employee makes a full
disclosure to Employer of the nature of Employee's proposed participation,
Employer agrees to evaluate in a timely manner whether it or its Affiliates will
suffer any risk of harm to it or their respective interests, and will notify
Employee if it has any objection to Employee's proposed participation; provided,
however, that Employer's failure to notify Employee shall not be deemed to be an
approval of Employee's proposed participation. Employer's determination in this
regard shall be final and not subject to review. If Employee fails to make the
prior disclosure required by this Section 6.2(b), it shall be conclusively
presumed and Employee shall be deemed to have admitted that his participation in
a Competitor during the Restriction Period will cause harm to the interests of
Employer or its Affiliates.

                  6.3      Covenant Not to Interfere.
                           -------------------------

                           (a)      During the Restriction Period, Employee
shall not, directly or indirectly, solicit, induce or influence, or attempt to
induce or influence, any Customer to terminate a relationship which has been
formed or is being formed with Employer or any of its Affiliates, or to reduce
the extent of, discourage the development of, or otherwise harm its relationship
with Employer or any of its Affiliates, including, without limitation, to
commence or increase its relationship with any Competitor.

                           (b)      During the Restriction Period, Employee
shall not, directly or indirectly, recruit, solicit, induce or influence, any
Personnel of Employer or any of its Affiliates to discontinue, reduce the extent
of, discourage the development of, or otherwise harm their relationship or
commitment to Employer or its Affiliates, including, without limitation, by
employing, seeking to employ or inducing or influencing a Competitor to employ
or seek to employ any Personnel of Employer or any of its Affiliates, or
inducing an employee of Employer or any of its Affiliates to leave employment by
Employer or its Affiliate, as the case may be.

                           (c)      During the Restriction Period, Employee
shall not, directly or indirectly, solicit, induce or influence, or attempt to
induce or influence, any Business Associate to discontinue, reduce the extent
of, discourage the development of, or otherwise harm its relationship with
Employer or any of its Affiliates, including, without limitation, by inducing a
Business Associate to commence, increase the extent of, develop or otherwise
enhance its relationship with any Competitor, or to refuse to do business with
Employer or any of its Affiliates.

                                       5
<PAGE>

                  6.4      Confidential Information.
                           ------------------------

                           (a)      Duty to Maintain Confidentiality. Employee
shall maintain in strict confidence and duly safeguard to the best of his
ability any and all Confidential Information. Employee covenants that Employee
will become familiar with and abide by all written policies and rules issued by
Employer now or in the future dealing with Confidential Information.

                           (b)      Covenant Not to Disclose, Use or Exploit.
Employee shall not, directly or indirectly, disclose to anyone or use or
otherwise exploit for the benefit of anyone, other than Employer and its
Affiliates, any Confidential Information.

                           (c)      Confidential Materials. All Confidential
Materials are and shall remain the exclusive property of Employer. No
Confidential Materials may be copied or otherwise reproduced, removed from the
premises of Employer, or entrusted to any person or entity (other than the
Personnel entitled to such materials by authorization of Employer) without prior
written permission from Employer.

                  6.5      Employer's Property. Any and all writings,
improvements, processes, procedures and/or techniques which Employee may make,
conceive, discover or develop, either solely or jointly with any other person or
persons, at any time during the term of this Agreement, whether during working
hours or at any other time and whether at request or upon the suggestion of
Employer or any Affiliate thereof, which relate to or are useful in connection
with any business now or hereafter carried on or contemplated by Employer or any
Affiliate thereof, including developments or expansions of its present fields of
operations, shall be the sole and exclusive property of Employer. Employee shall
make full disclosure to Employer of all such writings, improvements, processes,
procedures and techniques, and shall do everything necessary or desirable to
vest the absolute title thereto in Employer. Employee shall not be entitled to
any additional or special compensation or reimbursement regarding any and all
such writings, improvements, processes, procedures and techniques.

         7.       Discharge for Cause. Employer may discharge Employee at any
time for cause. For purposes of this Agreement, "Cause" shall mean only (a)
gross neglect of willful misconduct in the discharge of Employee's duties and
responsibilities to Employer, resulting, in either case, in material economic
harm to Employer, (b) material and repeated failure to comply with significant
corporate policies adopted by, or to obey reasonable and appropriate directions
within the scope of Employee's duties from, the Board (after written notice to
Employee in reasonable detail and a period of at least twenty (20) days to cure
such alleged conduct) which failure has a material adverse effect on the
business of Employer, (c) any act of willful misappropriation by Employee of
Employer's property or (d) any final conviction or plea of guilty or nolo
contendere with respect to a felony crime; provided, however, that prior to any
termination, Employer shall notify Employee that it intends to terminate
Employee for Cause, which written notice shall specify the act or acts upon
which a termination for Cause is based, and, before such termination shall
become effective, Employee shall be given the opportunity, within five (5) days
of Employee's receipt of such notice, to meet with the Board to discuss such act
or acts. If Employer terminates the employment of Employee for Cause, Employee
shall be entitled to receive his base salary through the effective date of
termination.

                                       6
<PAGE>

         8.       Consequences Upon Termination.
                  -----------------------------

                  8.1      Payment of Compensation Owed. Upon the termination of
Employee's employment and this Agreement for any reason whatsoever, Employer
shall promptly pay to Employee all compensation owed to Employee up until the
date of termination.

                  8.2      Return of Property. Upon the termination of
Employee's employment and this Agreement for any reason whatsoever, Employee
shall promptly return to Employer all Confidential Materials in his possession
or within Employee's control, all keys, credit cards, business card files and
other property belonging to Employer.

         9.       Remedies.
                  --------

                  9.1      Equitable Relief. The parties acknowledge that the
provisions and restrictions of Section 6 of this Agreement are reasonable and
necessary for the protection of the legitimate interests of Employer and
Employee. The parties further acknowledge that the provisions and restrictions
of Section 6 of this Agreement are unique, and that any breach or threatened
breach of any of these provisions or restrictions by Employee will provide
Employer with no adequate remedy at law, and the result will be irreparable harm
to Employer. Therefore, the parties agree that upon a breach or threatened
breach of the provisions or restrictions of Section 6 of this Agreement by
Employee, Employer shall be entitled, in addition to any other remedies which
may be available to it, to institute and maintain proceedings at law or in
equity, to recover damages, obtain specific performance or a temporary or
permanent injunction, without the necessity of establishing the likelihood of
irreparable injury or proving damages and without being required to post bond or
other security.

                  9.2      Modification of Restrictions; Full Restriction
Period. If the Restriction Period, the Restriction Area or the scope of activity
restricted in Article 6 should be adjudged unreasonable in any proceeding, then
the Restriction Period shall be reduced by such number of months, the
Restriction Area shall be reduced by the elimination of such portion thereof or
the scope of the restricted activity shall be modified, or any or all of the
foregoing, so that such restrictions may be enforced in such area and for such
time as is adjudged to be reasonable. If Employee violates any of the
restrictions contained in Article 6, the Restriction Period shall not run in
favor of Employee from the time of commencement of any such violation until such
time as such violation shall be cured by Employee to the reasonable satisfaction
of Employer.

                  9.3      Arbitration. Except for the provisions of Sections
9.1 and 9.2 above, any controversy, dispute, or difference arising out of or
relative to this Agreement or the breach thereof shall be determined by
arbitration in New York City before three arbitrators. The arbitration shall be
governed by the Federal Arbitration Act and administered by the American
Arbitration Association under its Commercial Arbitration Rules, provided that
persons eligible to be selected as arbitrators shall be limited to
attorneys-at-law who have practiced law for at least 15 years as an attorney in
New York specializing in either general commercial litigation or general
corporate and commercial matters. A demand for arbitration under this provision
shall be made in writing to the other party within sixty (60) days of the date
the party demanding arbitration knew or should have known of the event giving
rise to the claim, but in no event more than two (2) years after the event
giving rise to the claim, or the claim shall be forever barred. The parties
agree that judgment upon any award rendered may be entered in any court having
jurisdiction thereof as an enforceable judgment or decree.

                                       7
<PAGE>

         10.      Consideration for Restrictive Covenants. Employee acknowledges
that the execution of this Agreement and compliance with it by Employer shall
constitute fair and adequate consideration for Employee's compliance with the
restrictive covenants contained in the respective sections of this Agreement.

         11.      Miscellaneous.
                  -------------

                  11.1     Governing Law. This Agreement, its interpretation,
performance and enforcement, and the rights and remedies of the parties hereto,
shall be governed and construed by the laws of the State of New York applicable
to contracts to be performed wholly within New York, without regard to
principles of conflicts of laws and without the aid of any canon, custom or rule
of law requiring construction against the drafter.

                  11.2     Waiver. A waiver by any party of any condition or the
breach of any term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
not be deemed or construed as a further or continuing waiver of any such
condition or the breach of any other term, covenant, representation, or warranty
set forth in this Agreement.

                  11.3     Additional Restrictions. The restrictions contained
in this Agreement are cumulative with, and not in replacement of, any other
restrictions to which Employee may otherwise be subject.

                  11.4     Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements (including, without limitation, the Original
Employment Agreement, which is hereby terminated and of no further force or
effect), and contemporaneous understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect to the subject
matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.

                  11.5     Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy, by telegram or by registered or
certified mail (postage prepaid, return receipt requested) 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 11.5):

                           (a)      if to Employer:

                                    CoActive Marketing Group, Inc.
                                    75 Ninth Avenue
                                    New York, New York 10011
                                    Telecopy:  (212) 660-3878
                                    Attention: President

                                       8
<PAGE>

                           (b)      if to Employee:

                                    16 Beach Lane
                                    Westhampton Beach, New York 11978

                  11.6     Headings. The descriptive 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.

                  11.7     Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

                  11.8     Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.

                  11.9     Amendment or Termination. No agreement shall be
effective to change, modify, waive, release, amend, terminate, discharge or
effect an abandonment of this Agreement, in whole or in part, unless such
agreement is in writing, refers expressly to this Agreement and is signed by the
party against whom enforcement of the change, modification, waiver, release,
amendment, termination, discharge or effectuation of the abandonment is sought.

                                       9
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.

                                       COACTIVE MARKETING GROUP, INC.

                                       By: /s/ CHARLIE TARZIAN
                                           -------------------------------------
                                           Charlie Tarzian, President and
                                           Chief Executive Officer

                                       /s/ BRIAN MURPHY
                                       -----------------------------------------
                                       Brian Murphy

                                       10

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