Document:

Unassociated Document

    
      
        

      

    

    
      	 	
              THIS
                WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
                THIS
                WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
                AS
                AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
                STOCK
                ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR
                SALE,
                PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                STATEMENT AS TO THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
                OF THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
                LAWS OR
                AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOUSE OF BRUSSELS
                CHOCOLATES INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

            	 

    

    

    Right
      to
      Purchase up to 60,000 Shares of Common Stock of

    House
      of Brussels Chocolates Inc.

    (subject
      to adjustment as provided herein)

    

    COMMON
      STOCK PURCHASE WARRANT

    

    
      	
              No.
                _________________

            	
              Issue
                Date: July __, 2005

            

    

    

    HOUSE
      OF
      BRUSSELS CHOCOLATES INC., a corporation organized under the laws of the State
      of
      Nevada (the “Company”), hereby certifies that, for value received, LAURUS MASTER
      FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms set
      forth below, to purchase from the Company (as defined herein) from and after
      the
      Issue Date of this Warrant and at any time or from time to time before 5:00
      p.m., New York time, through the close of business July __, 2012 (the
“Expiration Date”), up to 60,000 fully paid and nonassessable shares of Common
      Stock (as hereinafter defined), $0.001 par value per share, at the applicable
      Exercise Price per share (as defined below). The number and character of such
      shares of Common Stock and the applicable Exercise Price per share are subject
      to adjustment as provided herein.

    

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

    

    (a)    The
      term
“Company” shall include the Company and any person or entity which shall
      succeed, or assume the obligations of, the Company hereunder. 

    

    (b)    The
      term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.001 per
      share; and (ii) any other securities into which or for which any of the
      securities described in the preceding clause (i) may be converted or exchanged
      pursuant to a plan of recapitalization, reorganization, merger, sale of assets
      or otherwise.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)    The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of the Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of the Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 4 or otherwise. 

    

    (d)    The
      “Exercise Price” applicable under this Warrant shall be a price of
      $1.20.

    

    1.    Exercise
      of Warrant.
      

    

    1.1    Number
      of Shares Issuable upon Exercise.
      From
      and after the date hereof through and including the Expiration Date, the Holder
      shall be entitled to receive, upon exercise of this Warrant in whole or in
      part,
      by delivery of an original or fax copy of an exercise notice in the form
      attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of
      the Company, subject to adjustment pursuant to Section 4.

    

    1.2    Fair
      Market Value.
      For
      purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
      particular date (the “Determination Date”) shall mean: 

    

    (a)    If
      the
      Company’s Common Stock is traded on the American Stock Exchange or another
      national exchange or is quoted on the National or SmallCap Market of The Nasdaq
      Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
      respectively, reported for the last business day immediately preceding the
      Determination Date.

    

    (b)    If
      the
      Company’s Common Stock is not traded on the American Stock Exchange or another
      national exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board,
      then the mean of the average of the closing bid and asked prices reported for
      the last business day immediately preceding the Determination Date.

    

    (c)    Except
      as
      provided in clause (d) below, if the Company’s Common Stock is not publicly
      traded, then as the Holder and the Company agree or in the absence of agreement
      by arbitration in accordance with the rules then in effect of the American
      Arbitration Association, before a single arbitrator to be chosen from a panel
      of
      persons qualified by education and training to pass on the matter to be
      decided.

    

    (d)    If
      the
      Determination Date is the date of a liquidation, dissolution or winding up,
      or
      any event deemed to be a liquidation, dissolution or winding up pursuant to
      the
      Company’s charter, then all amounts to be payable per share to holders of the
      Common Stock pursuant to the charter in the event of such liquidation,
      dissolution or winding up, plus all other amounts to be payable per share in
      respect of the Common Stock in liquidation under the charter, assuming for
      the
      purposes of this clause (d) that all of the shares of Common Stock then issuable
      upon exercise of the Warrant are outstanding at the Determination
      Date.

    

    1.3    Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of this Warrant, upon the request
      of
      the holder hereof acknowledge in writing its continuing obligation to afford
      to
      such holder any rights to which such holder shall continue to be entitled after
      such exercise in accordance with the provisions of this Warrant. If the holder
      shall fail to make any such request, such failure shall not affect the
      continuing obligation of the Company to afford to such holder any such rights.
      

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    1.4    Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
      shall have all the powers and duties of a warrant agent (as hereinafter
      described) and shall accept, in its own name for the account of the Company
      or
      such successor person as may be entitled thereto, all amounts otherwise payable
      to the Company or such successor, as the case may be, on exercise of this
      Warrant pursuant to this Section 1.

    

    2.    Procedure
      for Exercise.

    

    2.1    Delivery
      of Stock Certificates, Etc., on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder as the record owner of such
      shares as of the close of business on the date on which this Warrant shall
      have
      been surrendered and payment made for such shares in accordance herewith. As
      soon as practicable after the exercise and payment of this Warrant in full
      or in
      part, and in any event within three (3) business days thereafter, the Company
      at
      its expense (including the payment by it of any applicable issue taxes) will
      cause to be issued in the name of and delivered to the Holder, or as such Holder
      (upon payment by such Holder of any applicable transfer taxes) may direct in
      compliance with applicable securities laws, a certificate or certificates for
      the number of duly and validly issued, fully paid and nonassessable shares
      of
      Common Stock (or Other Securities) to which such Holder shall be entitled on
      such exercise, plus, in lieu of any fractional share to which such holder would
      otherwise be entitled, cash equal to such fraction multiplied by the then Fair
      Market Value of one full share, together with any other stock or other
      securities and property (including cash, where applicable) to which such Holder
      is entitled upon such exercise pursuant to Section 1 or otherwise.

    

    2.2    Exercise.
      

    

    Payment
      may be made either in cash or by certified or official bank check payable to
      the
      order of the Company equal to the applicable aggregate Exercise Price, for
      the
      number of Common Shares specified in such Exercise Notice (as such exercise
      number shall be adjusted to reflect any adjustment in the total number of shares
      of Common Stock issuable to the Holder per the terms of this Warrant) and the
      Holder shall thereupon be entitled to receive the number of duly authorized,
      validly issued, fully-paid and non-assessable shares of Common Stock (or Other
      Securities) determined as provided herein. 

    

    3.    Effect
      of Reorganization, Etc.; Adjustment of Exercise Price.

    

    3.1    Reorganization,
      Consolidation, Merger, Etc.
      In case
      at any time or from time to time, the Company shall (a) effect a reorganization,
      (b) consolidate with or merge into any other person, or (c) transfer all or
      substantially all of its properties or assets to any other person under any
      plan
      or arrangement contemplating the dissolution of the Company, then, in each
      such
      case, as a condition to the consummation of such a transaction, proper and
      adequate provision shall be made by the Company whereby the Holder of this
      Warrant, on the exercise hereof as provided in Section 1 at any time after
      the
      consummation of such reorganization, consolidation or merger or the effective
      date of such dissolution, as the case may be, shall receive, in lieu of the
      Common Stock (or Other Securities) issuable on such exercise prior to such
      consummation or such effective date, the stock and other securities and property
      (including cash) to which such Holder would have been entitled upon such
      consummation or in connection with such dissolution, as the case may be, if
      such
      Holder had so exercised this Warrant, immediately prior thereto, all subject
      to
      further adjustment thereafter as provided in Section 4.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    3.2    Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, concurrently with
      any distributions made to holders of its Common Stock, shall at its expense
      deliver or cause to be delivered to the Holder the stock and other securities
      and property (including cash, where applicable) receivable by the Holder of
      this
      Warrant pursuant to Section 3.1, or, if the Holder shall so instruct the
      Company, to a bank or trust company specified by the Holder and having its
      principal office in New York, NY as trustee for the Holder of this
      Warrant.

    

    3.3    Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the shares of stock and other securities and property receivable on the exercise
      of this Warrant after the consummation of such reorganization, consolidation
      or
      merger or the effective date of dissolution following any such transfer, as
      the
      case may be, and shall be binding upon the issuer of any such stock or other
      securities, including, in the case of any such transfer, the person acquiring
      all or substantially all of the properties or assets of the Company, whether
      or
      not such person shall have expressly assumed the terms of this Warrant as
      provided in Section 4. In the event this Warrant does not continue in full
      force
      and effect after the consummation of the transactions described in this Section
      3, then the Company’s securities and property (including cash, where applicable)
      receivable by the Holder of this Warrant will be delivered to the Holder or
      the
      Trustee as contemplated by Section 3.2.

    

    4.    Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common Stock
      as
      a dividend or other distribution on outstanding Common Stock, (b) subdivide
      its
      outstanding shares of Common Stock, or (c) combine its outstanding shares of
      the
      Common Stock into a smaller number of shares of the Common Stock, then, in
      each
      such event, the Exercise Price shall, simultaneously with the happening of
      such
      event, be adjusted by multiplying the then Exercise Price by a fraction, the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such event and the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event, and the
      product so obtained shall thereafter be the Exercise Price then in effect.
      The
      Exercise Price, as so adjusted, shall be readjusted in the same manner upon
      the
      happening of any successive event or events described herein in this Section
      4.
      The number of shares of Common Stock that the holder of this Warrant shall
      thereafter, on the exercise hereof as provided in Section 1, be entitled to
      receive shall be adjusted to a number determined by multiplying the number
      of
      shares of Common Stock that would otherwise (but for the provisions of this
      Section 4) be issuable on such exercise by a fraction of which (a) the numerator
      is the Exercise Price that would otherwise (but for the provisions of this
      Section 4) be in effect, and (b) the denominator is the Exercise Price in effect
      on the date of such exercise (taking into account the provisions of this Section
      4).

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    5.    Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of this Warrant, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of this
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or receivable
      by
      the Company for any additional shares of Common Stock (or Other Securities)
      issued or sold or deemed to have been issued or sold, (b) the number of shares
      of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
      and (c) the Exercise Price and the number of shares of Common Stock to be
      received upon exercise of this Warrant, in effect immediately prior to such
      adjustment or readjustment and as adjusted or readjusted as provided in this
      Warrant. The Company will forthwith mail a copy of each such certificate to
      the
      holder of this Warrant and any Warrant agent of the Company (appointed pursuant
      to Section 11 hereof).

    

    6.    Reservation
      of Stock, Etc., Issuable on Exercise of Warrant.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of this Warrant, shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of this
      Warrant.

    

    7.    Assignment;
      Exchange of Warrant.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
      Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
      hereto (the “Transferor Endorsement Form”) and together with evidence reasonably
      satisfactory to the Company demonstrating compliance with applicable securities
      laws, which shall include, without limitation, a legal opinion from the
      Transferor’s counsel (at the Company’s expense) that such transfer is exempt
      from the registration requirements of applicable securities laws, the Company
      at
      its expense (but with payment by the Transferor of any applicable transfer
      taxes) will issue and deliver to or on the order of the Transferor thereof
      a new
      Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
      specified in such Transferor Endorsement Form (each a “Transferee”), calling in
      the aggregate on the face or faces thereof for the number of shares of Common
      Stock called for on the face or faces of the Warrant so surrendered by the
      Transferor.

    

    8.    Replacement
      of Warrant.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense will execute and deliver, in lieu thereof, a new Warrant
      of like tenor.

    

    9.    Registration
      Rights.
      The
      Holder of this Warrant has been granted certain registration rights by the
      Company. These registration rights are set forth in a Registration Rights
      Agreement entered into by the Company and Purchaser dated as of March 29, 2005,
      as the same may be amended, modified or supplemented from time to
      time.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    10.   Maximum
      Exercise.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to exercise this Warrant in connection with that number of shares
      of
      Common Stock which would exceed the difference between (i) 4.99% of the
      outstanding shares of Common Stock and (ii) the number of shares of Common
      Stock
      beneficially owned by the Holder and issuable to the Holder upon exercise of
      this Warrant. For purposes of the immediately preceding sentence, beneficial
      ownership shall be determined in accordance with Section 13(d) of the Securities
      Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. The
      limitation described in the first sentence of this Section 10 shall
      automatically become null and void without any notice to the Company upon the
      occurrence and during the continuance of an Event of Default (as defined in
      the
      Security Agreement dated as of the date hereof among the Holder, the Company
      and
      various subsidiaries of the Company, as amended, modified, restated and/or
      supplemented from time to time), or upon 75 days prior notice to the
      Company.

    

    11.   Warrant
      Agent.
      The
      Company may, by written notice to the each Holder of the Warrant, appoint an
      agent for the purpose of issuing Common Stock (or Other Securities) on the
      exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
      to Section 7, and replacing this Warrant pursuant to Section 8, or any of the
      foregoing, and thereafter any such issuance, exchange or replacement, as the
      case may be, shall be made at such office by such agent.

    

    12.   Transfer
      on the Company’s Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary.

    

    13.   Notices,
      Etc.
      All
      notices and other communications from the Company to the Holder of this Warrant
      shall be mailed by first class registered or certified mail, postage prepaid,
      at
      such address as may have been furnished to the Company in writing by such Holder
      or, until any such Holder furnishes to the Company an address, then to, and
      at
      the address of, the last Holder of this Warrant who has so furnished an address
      to the Company.

    

    14.   Miscellaneous.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought. This Warrant shall
      be governed by and construed in accordance with the laws of State of New York
      without regard to principles of conflicts of laws. Any action brought concerning
      the transactions contemplated by this Warrant shall be brought only in the
      state
      courts of New York or in the federal courts located in the state of New York;
      provided, however, that the Holder may choose to waive this provision and bring
      an action outside the state of New York. The individuals executing this Warrant
      on behalf of the Company agree to submit to the jurisdiction of such courts
      and
      waive trial by jury. The prevailing party shall be entitled to recover from
      the
      other party its reasonable attorneys’ fees and costs. In the event that any
      provision of this Warrant is invalid or unenforceable under any applicable
      statute or rule of law, then such provision shall be deemed inoperative to
      the
      extent that it may conflict therewith and shall be deemed modified to conform
      with such statute or rule of law. Any such provision which may prove invalid
      or
      unenforceable under any law shall not affect the validity or enforceability
      of
      any other provision of this Warrant. The headings in this Warrant are for
      purposes of reference only, and shall not limit or otherwise affect any of
      the
      terms hereof. The invalidity or unenforceability of any provision hereof shall
      in no way affect the validity or enforceability of any other provision hereof.
      The Company acknowledges that legal counsel participated in the preparation
      of
      this Warrant and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Warrant to favor any party against the other
      party.

    

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      PAGE FOLLOWS]

    

    
      
        
          
          

        

        
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    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above. 

     

    
      	 	 	
              HOUSE
                OF BRUSSELS CHOCOLATES INC.

            
	
              WITNESS:

            	 	 
	 	 	
              By:

            	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

    

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

    

    FORM
      OF SUBSCRIPTION

    (To
      Be
      Signed Only On Exercise Of Warrant)

    

    
      
        	
                TO:

              	
                House
                  of Brussels Chocolate Inc. 

              

      

      
        	 	_____________________

      

      
        	 	_____________________

      

    

     

    Attention: Chief
      Financial Officer

    

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase 

    

    ________
      shares of the common stock covered by such warrant. 

     

    

    The
      undersigned herewith makes payment of the full Exercise Price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of 

    

    $__________
      in lawful money of the United States.

    

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to ______________________________________________ whose
      address is
      ___________________________________________________________________________.

    

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the “Securities Act”) or pursuant to an exemption from registration
      under the Securities Act.

     

    
      	
              Dated:

            	 	 	 
	 	 	 	
              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

            
	 	 	 	
              Address:

            	 
	 	 	 	 	 

    

    

      
        
          
          

        

        
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    EXHIBIT
      B

    

    FORM
      OF TRANSFEROR ENDORSEMENT

    (To
      Be
      Signed Only On Transfer Of Warrant)

    

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading “Transferees” the right represented by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of House of Brussels Chocolate Inc. into which the within Warrant relates
      specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
      person Attorney to transfer its respective right on the books of House of
      Brussels Chocolate Inc. with full power of substitution in the
      premises.

    

    
      	
              Transferees

            	 	
              Address

            	 	
              Percentage
                Transferred

            	 	
              Number
                Transferred

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    
      	
              Dated:

            	 	 	 
	 	 	 	
              (Signature
                must conform to name of holder as specified on the face of the
                Warrant)

            
	 	 	 	
              Address:

            	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	
              SIGNED
                IN THE PRESENCE OF:

            
	 	 	 	 
	 	 	 	
              (Name)

            

    

    

     

     

    

    
      	ACCEPTED AND AGREED:	 
	[TRANSFEREE]	 
	 	 
	 	 
	
              (Name)

            	 

    

     

    9Exhibit 10.1

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

                  EMPLOYMENT AGREEMENT (this "Agreement"), dated as of July 20,
2005 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 DONALD A. BERNARD, an individual residing at 85 Tintern Lane,
Scarsdale, New York 10583 ("Employee").

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

         WHEREAS, Employer and Employee are parties to that certain Employment
Agreement, dated September 29, 1995, as amended by a First Amendment to
Employment Agreement dated as of May 2, 1997, a Second Amendment to Employment
Agreement dated as of November 14, 2001, and a Third Amendment to Employment
Agreement dated as of June 17, 2003, pursuant to which Employee serves as
Executive Vice President and Chief Financial Officer of Employer (as amended,
the "Existing Agreement");

         WHEREAS, Employee's current term of employment under the Existing
Agreement ends on March 31, 2006; and

         WHEREAS, Employer desires to continue to employ Employee, and Employee
desires to continue in the employ of Employer, commencing April 1, 2006, 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.       Term of Employment; Termination of Existing Agreement. Until
April 1, 2006, Employee's employment with Employer shall continue to be subject
to the terms and provisions of the Existing Agreement, which shall remain in
full force and effect until such date. Effective April 1, 2006, provided that
Employee's employment with Employer has not been previously terminated pursuant
to the Existing Agreement (i) Employer shall employ Employee, and Employee shall
accept such employment, on the terms and conditions set forth in this Agreement,
and (ii) the Existing Agreement shall terminate and be of no further force or
effect. The term of Employee's employment under this Agreement shall be for a
three-year term ending on March 31, 2009 and shall not be subject to renewal or
extension.

         2.       Position, Employment Duties and Responsibilities. Employee
shall be employed as a Vice President with such duties and responsibilities as
shall be assigned to him from time to time by the Board of Directors. Effective
April 1, 2006, Employee shall resign from his positions (x) as a director and
the Chief Financial Officer and Executive Vice President of Employer, and (y) as
a manager and officer of each of Employer's subsidiaries. Throughout the term of
Employee's employment under this Agreement, Employee shall not be required to
devote more than 10 working days in any calendar month to the performance of his
duties hereunder.
<PAGE>

         3.       Working Facilities. Employee will work out of Employer's
office located in New York, New York or at such other location as shall be
mutually agreed to by Employer and Employee.

         4.       Compensation and Benefits.

                  4.1      Salary. For all of the services rendered by Employee
to Employer, Employer shall pay to Employee an annual salary of one hundred
thousand dollars ($100,000), payable in reasonable periodic installments in
accordance with Employer's regular payroll practices in effect from time to
time.

                  4.2      No Bonus. Employee shall not be eligible to
participate in or receive awards or bonuses under Employer's currently existing
or hereafter adopted bonus or compensation plans, including without limitation,
Employer's 2002 Management Bonus Plan and Employer's 2002 Long-Term Incentive
Plan.

                  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 readily offered to and or made available to
Employer's employees; provided that to the extent he has not already done so, no
later than April 1, 2006, Employee will elect Medicare Part B coverage so as to
reduce Employer's costs in providing medical benefits to Employee.

                  4.4      Car Allowance. Employee shall be entitled to receive
a car allowance in the amount of five hundred dollars ($500.00) per month.

                  4.5      Travel, Entertainment and Other Business Expenses.
During the period of employment pursuant to this Agreement, Employee will be
reimbursed 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.

                  4.6      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 taxes, 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.       Nondisclosure and Non-Compete.

                  5.1      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.

                                       2
<PAGE>

                           (b)      "Business Associate(s)" shall mean and refer
to any and all individuals, partnerships, corporations, associations or other
business enterprises in any form which have 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(s)" shall mean and refer to any
and all of the past or current customers 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 of this Agreement.

                           (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.

                                       3
<PAGE>

                           (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
twenty four (24) 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.

                  5.2      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,
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 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 5.2(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.

                  5.3      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

                                       4
<PAGE>

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.

                  5.4      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 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.

                  5.5      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.

         6.       Termination.

                  6.1      Discharge for Cause. Employer may discharge Employee
at any time for cause, consisting of (i) Employee's criminal conduct
constituting a felony offense, (ii) alcohol or drug abuse which impairs
Employee's performance of his duties hereunder, (iii) incompetence, (iv)

                                       5
<PAGE>

Employee's willful misconduct in the discharge of his duties and
responsibilities to Employer or (v) Employee's willful violation of any express
direction or any reasonable rule or regulation established by Employer's Board
of Directors from time to time regarding the conduct of its business. In the
event that Employer wishes to discharge Employee for incompetence,
insubordination, willful misconduct, any willful violation of any express
direction or any reasonable rule or regulation established by Employer's Board
of Directors from time to time regarding the conduct of its business, or any
violation of Employee of the terms and conditions of this Agreement, Employer
shall notify Employee, orally or in writing, of Employer's intention to
discharge Employee and of the time (which shall be at least 48 hours after such
notice) and place when Employee may have a hearing before Employer's Board of
Directors. Following such hearing, the Board of Directors shall advise Employee
of its determination and, if Employee is to be terminated, of the date of
Employee's termination. In the event of any termination pursuant to this Section
6.1, Employer shall have no further obligations or liabilities hereunder after
the date of such discharge.

                  6.2      Death or Disability. This Agreement shall terminate
upon Employee's death, and Employer may terminate Employee's employment upon
Employee's Disability (as defined below). If Employee shall die during the term
of this Agreement or his employment shall terminate as a result of his
Disability, Employee or his estate, legatees or distributes, as applicable,
shall be entitled to receive his base salary following such termination of
employment for a period of up to the lesser of 12 months and the remaining term
of this Agreement.

                  6.3      For purposes of this Agreement, "Disability" shall
mean failure by reason of sickness, accident or physical or mental disability to
perform in all material respects the duties and responsibilities of employment
with Employer for a period of six (6) months in any period of twelve (12)
consecutive months; provided, however, that if Employee shall dispute the fact
that he is subject to Disability, the dispute shall be promptly referred to
final and binding arbitration in accordance with the then-current rules of the
American Arbitration Association by a physician jointly agreed upon by Employer
and Employee. The expense of the physician shall be borne jointly by Employer
and Employee.

         7.       Consequences Upon Termination.

                  7.1      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, provided, however, that in the event Employer terminates
Employee without cause (as set forth in Section 6.1), and not as a result of
Employee's Disability, Employer shall continue to be obligated to pay Employee
his salary and benefits under Sections 4.1, 4.3 and 4.4 for the remainder of the
term of this Agreement.

                  7.2      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.

                                       6
<PAGE>

                  7.3      Performance of Services. After the termination of
Employee's employment and for the remaining duration of the Restriction Period,
Employee shall notify Employer of the name and address of all persons for whom
Employee performs services for compensation and the nature of such services,
whether performed by Employee as a proprietor, partner, shareholder, investor,
manager, director, officer, employee, venturer, representative, agent, broker,
independent contractor, consultant or otherwise.

         8.       Remedies.

                  8.1      Equitable Relief. The parties acknowledge that the
provisions and restrictions of this Agreement, including without limitation the
restrictions contained in Article 5 hereof, 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 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
hereof 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.

                  8.2      Modification of Restrictions; Full Restriction
Period. If the Restriction Period, the Restriction Area or the scope of activity
restricted in Article 5 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 5, 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 satisfaction of
Employer.

                  8.3      Arbitration. Except for the provisions of Sections
8.1 and 8.2 above, any controversy, dispute, or difference arising out of or
relative to this Agreement or the breach thereof shall first be submitted to
settlement by arbitration in New York, New York in accordance with the rules
which are then in effect of the American Arbitration Association, provided that
persons eligible to be selected as arbitrators shall be limited to
attorneys-at-law. 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.

         9.       Consideration for Restrictive Covenants. Employee acknowledges
that the execution of this Agreement and compliance with it by Employer shall

                                       7
<PAGE>

constitute fair and adequate consideration for Employee's compliance with the
restrictive covenants contained in the respective sections of this Agreement.

         10.      Release.

                  10.1     In exchange for the consideration provided for
herein, Employee for himself and for his heirs, executors, administrators and
assigns (hereinafter referred to collectively as "Releasors"), forever releases
and discharges Employer, and any of its subsidiaries, divisions, affiliates or
related business entities, successors and assigns and any of its past or present
shareholders, directors, officers, attorneys, agents, trustees, administrators,
employees or assigns (whether acting as agents for Employer or in their
individual capacities) (hereinafter referred to collectively as "Releasees"),
from any and all claims, demands, causes of action, fees and liabilities of any
kind whatsoever, whether known or unknown, which Releasors ever had, now have or
may have against Releasees by reason of any actual or alleged act, omission,
transaction, practice, conduct, occurrence or other matter up to and including
the date hereof, that relates to his employment by Employer or entering into
this Agreement, including but not limited to: (i) any claim of discrimination or
retaliation in employment (whether based on federal, state or local law,
statutory or decisional); and (ii) any claim arising under the Federal Age
Discrimination in Employment Act of 1997, as amended, and the applicable rules
and regulations thereunder.

                  10.2     Employee acknowledges that: (i) he has carefully read
this Agreement in its entirety; (ii) he has had an opportunity to consider fully
the terms of this Agreement; (iii) he fully understands the significance of all
the terms and conditions of this Agreement; (iv) he has discussed it with his
independent legal counsel, or has had a reasonable opportunity to do so; (v) he
has had answered to his satisfaction any questions he has asked with regard to
the meaning and significance of any of the provisions of this Agreement; (vi) he
has been given 21 days from the date he received a copy of this Agreement to
execute it; and (vii) he is signing this Agreement voluntarily and of his own
free will and assents to all the terms and conditions contained herein.

                  10.3     Employee has the right to revoke his consent to this
Agreement for seven days following his execution of this Agreement by sending
written notice to Employer addressed to Zev M. Bomrind, Esq., Kronish Lieb
Weiner & Hellman LLP, 1114 Avenue of the Americas, New York, New York 10036. In
order for Employee's revocation to be effective, it must be mailed to the above
addressee within the seven-day period. This Agreement shall become effective on
the eighth day following the execution of this Agreement, provided that Employee
has not timely revoked his consent to 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.

                                       8
<PAGE>

                  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     Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements 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.

                  11.4     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 cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the addresses set forth in the first paragraph of this
Agreement (and in the case of Employer, Attn: John Benfield), or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 11.4.

                  11.5     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.

                  11.6     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.

                  11.7     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.

                  11.8     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:
                                              ----------------------------------
                                          Name:  John Benfield
                                          Title: President

                                          -----------------------------------
                                          Donald A. Bernard

                                       10

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