Document:

exhibit_10-6.htm

EXHIBIT 10.6

 

STUDIO ONE MEDIA, INC.

 

2009 Long-Term Incentive Plan

 

 

 

1.             Purposes of the Plan.  The Company, by means of the Plan, seeks to attract and retain the best available
qualified personnel for positions of substantial responsibility, such as Employees, Directors and Consultants, and to provide additional incentives to such personnel to exert maximum efforts for the success of the Company.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, and Restricted Stock Awards.

 

2.             Definitions.  As used herein, the following definitions shall apply:

 

“Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

“Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state laws, U.S. federal laws, the Code, the rules and regulations of
any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Awards are granted under the Plan.

 

“Awardholder” means the holder of an outstanding Option or Stock Award granted under the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Cause” shall, with respect to any Participant, have the meaning specified in the Award Agreement.  In
the absence of any definition in the Award Agreement, “Cause” shall have the equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment, consulting, change in control or other agreement for the performance of services between the Participant and the Company or a Related Entity or, in the absence of any such definition in such agreement, such term shall mean (i) the failure by the Participant to perform his or her duties as assigned by
the Company (or a Related Entity) in a reasonable manner, (ii) any violation or breach by the Participant of his or her employment, consulting or other similar agreement with the Company (or a Related Entity), if any, (iii) any violation or breach by the Participant of his or her confidential information and invention assignment, non-competition, non-solicitation, non-disclosure and/or other similar agreement with the Company or a Related Entity, if any, (iv) any act by the Participant of dishonesty
or bad faith with respect to the Company (or a Related Entity), (v) any material violation or breach by the Participant of the Company’s or a Related Entity’s policy for employee conduct, if any, (vi) use of alcohol, drugs or other similar substances in a manner that adversely affects the Participant’s work performance, or (vii) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon the Participant or the Company or any Related
Entity.  The good faith determination by the Plan Administrator of whether the Participant’s continuous service was terminated by the Company for “Cause” shall be final and binding for all purposes hereunder.

 

 

 

 

 

 

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“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)           any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (an “Exchange Act Person”) becomes the “beneficial owner” (as defined in Rule 13d-3
of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by any institutional investor, any affiliate thereof or any other Exchange Act Person that
acquires the Company’s securities in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (B) solely because the level of ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the
number of voting securities outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such acquisition, the Subject Person becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then a Change
in Control shall be deemed to occur;

 

(ii)           there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction; or

 

(iii)           there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, exclusive license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportion as their ownership of the Company immediately prior to such sale, lease, license or other disposition.

 

The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.

 

  

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Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any affiliate and the Awardholder shall supersede the foregoing definition with respect to Stock Awards or Options subject to such agreement (it being
understood, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply).

 

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means a committee of Directors or other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share.

 

“Company” means Studio One Media, Inc., a Delaware corporation.

 

“Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

 

“Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)           a sale, lease or license, or other disposition of all or substantially all, as determined by the Board, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)           a sale or other disposition of at least thirty percent (30%) of the outstanding securities of the Company; or

 

(iii)           a merger, consolidation or similar transaction whether or not the Company is the surviving Company.

 

“Director” means a member of the Board.

 

“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

“Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  Neither service as a Director
nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

 

  

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(i)           If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)           If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

 

(iii)           In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

“Good Reason” shall, with respect to any Participant, have the meaning specified in the Award Agreement.  In the absence of any definition in the Award Agreement, “Good
Reason” shall have the equivalent meaning (or the same meaning as “good reason” or “for good reason”) set forth in any employment, consulting, change in control or other agreement for the performance of services between the Participant and the Company or a Related Entity or, in the absence of any such definition in such agreement(s), such term shall mean (i) the assignment to the Participant of any duties inconsistent in any material respect with the Participant’s position
(including status, offices, titles and reporting requirements), authority, duties or responsibilities as assigned by the Company (or a Related Entity) or any other action by the Company (or a Related Entity) which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company (or a Related Entity) promptly after receipt of notice thereof given
by the Participant; (ii) any failure by the Company (or a Related Entity) to comply with its obligations to the Participant as agreed upon, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company (or a Related Entity) promptly after receipt of notice thereof given by the Participant; (iii) the Company’s (or Related Entity’s) requiring the Participant to be based at any office or location more than fifty (50) miles from
the location of employment as of the date of Award, except for travel reasonably required in the performance of the Participant’s responsibilities; (iv) any purported termination by the Company (or a Related Entity) of the Participant’s continuous service otherwise than for Cause, as defined Section 2(e), death, or by reason of the Participant’s Disability as defined in Section 2(o); or (v) any reduction in the Participant’s base salary (unless such reduction is part of
Company-wide reduction that affects a majority of the persons of comparable level to the Participant).  The Participant must give the Company written notice of any event the Participant believes constitutes Good Reason.  Such notice must be delivered to the Company within 90 days of the first occurrence of such event and the Company shall have 30 days to cure, if possible.

 

“Incentive Stock Option” means an Option intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

 

“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

 

 

  

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“Option” means a stock option granted pursuant to the Plan.

 

“Option Agreement” means a written or electronic agreement between the Company and an Awardholder evidencing the terms and conditions of an individual Option.  The
Option Agreement is subject to the terms and conditions of the Plan.

 

“Optioned Stock” means the Common Stock subject to an Option or a Stock Award.

 

“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

“Plan” means this 2008 Long-Term Incentive Plan.

 

“Restricted Stock” means Shares issued pursuant to a Stock Award or Shares of restricted stock issued pursuant to an Option that are subject to a repurchase option by the
Company.

 

“Restricted Stock Agreement”  means a written or electronic agreement between the Company and the Awardholder evidencing the terms and conditions of the individual
Stock Award.  The Restricted Stock Agreement is subject to the terms and conditions of the Plan.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Service Provider” means an Employee, Director or Consultant.

 

“Share” means a share of the Common Stock, as adjusted in accordance with Section 13 below.

 

“Stock Award” means a right to receive or purchase Common Stock pursuant to Section 11 below.

 

“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.             Stock Subject to the Plan.

 

General.  Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is One Million Five Hundred Thousand
(1,500,000) Shares.  The Shares may be authorized but unissued, or reacquired Common Stock.

 

Availability of Shares Not Delivered under Awards.

 

(i)           If any Shares subject to an Option or Stock Award, are forfeited, expire or otherwise terminate without issuance of such Shares, or any Option or Stock Award, is settled for cash or otherwise does not result in the issuance of all or a portion of the Shares subject to
such Option or Stock Award, the Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for Award under the Plan, subject to Section 3(b)(iv) below.

 

 

 

 

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(ii)           If any Shares issued pursuant to an Option or Stock Award are forfeited back to or repurchased by the Company, including, but not limited to, any repurchase or forfeiture caused by the failure to meet a contingency or condition required for the vesting of such shares,
then the Shares not acquired under such Option or Stock Award shall revert to and again become available for issuance under the Plan.

 

(iii)           In the event that any Option or Stock Award granted hereunder is exercised through the tendering of  Shares (either actually or by attestation) or by the withholding of Shares by the Company, or withholding tax liabilities arising from such Option or Stock
Award are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then only the number of Shares issued net of the Shares tendered or withheld shall be counted for purposes of determining the maximum number of Shares available for grant under the Plan.

 

(iv)           Notwithstanding anything in this Section 3(b) to the contrary and solely for purposes of determining whether Shares are available for the grant of Incentive Stock Options, the maximum aggregate number of shares that may be granted under this Plan shall be determined
without regard to any Shares restored pursuant to this Section 3(b) that, if taken into account, would cause the Plan to fail the requirement under Code Section 422 that the Plan designate a maximum aggregate number of shares that may be issued.

 

4.             Administration of the Plan.

 

Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

 

Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee,
and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)           to determine the Fair Market Value;

 

(ii)           to select the Service Providers to whom Options and Stock Awards  may from time to time be granted hereunder;

 

(iii)           to approve forms of agreement for use under the Plan;

 

(iv)           to determine the terms and conditions of any Option or Stock Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the number of Shares subject to the award, the time or times when Options or Stock Awards
may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

 

  

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(v)           to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(vi)           to allow or require Awardholders to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Award that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Awardholders to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

 

(vii)           to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

 

Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Awardholders.

 

5.             Eligibility.  Nonstatutory Stock Options and Stock Awards may be granted to Service Providers.  Incentive
Stock Options may be granted only to Employees.

 

6.             Limitations.

 

Incentive Stock Option Limit.  Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Awardholder during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market
Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

 

At-Will Employment.  Neither the Plan nor any Option or Stock Awards shall confer upon any Awardholder any right with respect to continuing the Awardholder’s relationship
as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

 

7.             Term of Plan.  Subject to stockholder approval in accordance with Section 19, the Plan shall
become effective upon its adoption by the Board.  Unless sooner terminated under Section 16, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the most recent Board approval of an increase in the number of Shares reserved for issuance under the Plan (contingent on stockholder approval of such increase).

 

8.             Term of Option.  The maximum term of each Option shall be stated in the Option Agreement; provided,
however, that the maximum term shall be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option granted to an Awardholder who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the maximum term of the Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the Option Agreement.

 

 

 

 

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9.             Option Exercise Price and Consideration.

 

Exercise Price.  The per Share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject
to the following:

 

(i)             In the case of an Incentive Stock Option

 

(A)           granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

 

(B)           granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(ii)            If an Option is granted with a per Share exercise price below the per Share Fair Market Value of the Common Stock on the grant date, then the Option shall contain such additional terms as necessary to comply with Section 409A of the Code.

 

(iii)           Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

 

Forms of Consideration.  The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator
(and, in the case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of, without limitation, (i) cash, (ii) check, (iii) according to a deferred payment or other similar arrangement with the Awardholder, (iv) other Shares, (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, (vi) any other form of legal consideration as determined by the Administrator
or (vii) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.  Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company (or from the
Option itself at or before the time of exercise), shall be paid only by Shares that have been held for such period of time required to avoid a charge to earnings for financial accounting purposes.

 

 

 

  

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10.           Exercise of Option.

 

Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be exercisable according to the terms of the Plan at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement.  An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (ii) full payment for the Shares with respect to which the Option is exercised and (iii) any additional documentation required by the
Company.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Awardholder or, if requested by the Awardholder, in the name of the Awardholder and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive allocations of profits or losses or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for an allocation of profit or loss or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.   An
Awardholder shall only be entitled to prospective allocations of profit or loss upon issuance of Shares pursuant to an Option exercise.

 

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

Termination of Relationship as a Service Provider.  If an Awardholder ceases to be a Service Provider other than due to death or Disability, such Awardholder may exercise his
or her Option within thirty (30) days after the Awardholder ceases to be a Service Provider or such other period of time as specified in the Option Agreement (but  in no event later than the expiration of the maximum term of the Option as set forth in the Plan or, if less, in the Option Agreement), and only to the extent that the Option is vested and exercisable on the date of termination.   If an Awardholder ceases to be a Service Provider as a result of the Awardholder’s death
or Disability, the Awardholder (or in the case of the Awardholder’s death, the Awardholder’s estate, designated beneficiary or by the person(s) to whom the Option is transferred pursuant to the Awardholder’s will or in accordance with the laws of descent and distribution) may exercise the Awardholder’s Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested and exercisable on the date of termination
(but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).  On the date of termination, any Shares subject to the Option that are not vested or subject to vesting acceleration may not be exercised by the Awardholder and shall revert to the Plan.  If, after termination, the Awardholder does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

 

 

 

 

  

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Leaves of Absence.

 

(i)           Unless the Administrator provides otherwise, vesting of Options granted hereunder to Service Providers shall be suspended during any unpaid leave of absence in excess of ninety (90) days.

 

(ii)           A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

 

(iii)           For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company
is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Awardholder shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

 

11.           Stock Awards.

 

Rights to Purchase.  Stock Awards may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan.  After
the Administrator determines that it will offer Stock Awards under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer.  The offer shall be accepted by execution of a Restricted Stock Agreement in the form determined by the Administrator.

 

Forfeiture or Repurchase Option.  Unless the Administrator determines otherwise, the Restricted Stock Agreement shall grant the Company a forfeiture right or repurchase option (depending
upon whether the Awardholder paid for such Stock Award) exercisable upon termination of the purchaser’s service with the Company for any reason (including death or disability).  The forfeiture right or repurchase option shall lapse at such rate as the Administrator may determine.

 

Other Provisions.  The Restricted Stock Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator
in its sole discretion.

 

Rights as a Stockholder.  Once the Stock Award is exercised, the purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when his or her purchase
is entered upon the records of the duly authorized transfer agent of the Company.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Award is exercised, except as provided in Section 13 of the Plan.

 

12.           Transfer Restrictions for Options, Stock Awards and Shares Issued Under the Plan.

 

(a)           Transfer Restrictions.

 

 

 

  

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(i)            Limited Transferability of Options and Stock Awards.  Unless determined otherwise by the Administrator, Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Awardholder, only by the Awardholder.  Stock Awards shall be transferable to the extent provided for by the Administrator in the Restricted Stock Agreement.

 

(ii)           Restrictions on Transfer of Shares.  Shares received upon the exercise of an Option or through a Stock Award may not be sold, transferred, assigned, pledged, encumbered or otherwise disposed
of, except in accordance with the Plan.  Except as otherwise provided in the Option Agreement or Restricted Stock Agreement, such restrictions on transfer, however, will not apply to (i) a gratuitous transfer of the Shares, provided, and only if, Awardholder obtains the Company’s prior written consent to such transfer, (ii) a transfer of title to the Shares effected pursuant to Awardholder’s will or the laws of intestate succession, or (c) a transfer to the Company in pledge
as security for any purchase-money indebtedness incurred by Awardholder in connection with the acquisition of the Shares.

 

(iii)           Transferee Obligations.  Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in Section 12(a)(ii) must, as a condition
precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement, to the same extent the Shares would be so subject if retained by Awardholder.

 

(b)           Company’s Right of First Refusal.

 

(i)           Before any Shares held by Awardholder may be sold or otherwise transferred (including any assignment, pledge, encumbrance or other disposition of the Shares, but not including a permitted transfer under Section 12(a)(ii)), the Company or its assignee will have an
assignable right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 12(b) (the “Right of First Refusal”).  Such Right of First Refusal shall terminate after the earlier of a Change in Control where the successor corporation or its parent has shares that are publicly traded.

 

(ii)           In the event Awardholder desires to accept a bona fide third-party offer for the sale or transfer of any or all of the Shares, Awardholder will promptly deliver to the Company a written notice (the “Notice”)
stating the terms and conditions of any proposed sale or transfer, including (a) Awardholder’s bona fide intention to sell or otherwise transfer such Shares, (b) the name of each proposed purchaser or other transferee (the “Proposed Transferee”), (c) the number of Shares to be transferred to each Proposed Transferee, and (d) the bona fide cash price or other consideration for which Awardholder proposes to transfer
the Shares (the “Offered Price”).  Awardholder will provide satisfactory proof that the disposition of such shares to such Proposed Transferee would not be in contravention of the provisions of Section 12(a) and Awardholder will offer to sell the Shares at the Offered Price to the Company.

 

(iii)           At any time within thirty (30) days after receipt of the Notice, the Company or its assignee may, by giving written notice to Awardholder, elect to purchase all or any portion
of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with Section 12(b)(iv).

 

 

 

 

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(iv)           The purchase price for the Shares purchased under this Section 12(b) will be the Offered Price.  If the Offered Price includes consideration other than cash, the cash equivalent value of the noncash consideration will be determined by the Board in good
faith.

 

(v)           Payment of the purchase price will be made, in the discretion of the Administrator, either (a) in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of Awardholder to the Company or such assignee, or by any combination thereof,
within thirty (30) days after receipt of the Notice or (b) in the manner and at the time(s) set forth in the Notice.

 

(vi)           If any of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee as provided in this Section, then Awardholder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price; provided that such sale or other transfer is consummated within 60 days after the date of the Notice; and provided, further, that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Shares in the hands of such Proposed Transferee.  If the Shares described in the Notice are not transferred to the Proposed
Transferee within such period, or if Awardholder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice will be given to the Company, and the Company or its assignee will again be offered the Right of First Refusal before any Shares held by Awardholder may be sold or otherwise transferred.

 

(vii)           Notwithstanding any other provision of this Agreement, Awardholder may not deliver a Notice and the Company may not exercise the Right of First Refusal earlier than six months and one day following the date of this Agreement (or any shorter period sufficient to avoid
a charge to the Company’s earnings for financial reporting purposes).

 

(c)           Vested Share Repurchase Right.

 

(i)           The Company or its assignee will have the right to repurchase the Shares (the “Vested Share Repurchase Right”) in the event Awardholder terminates as a Service Provider for any reason whatsoever,
including, without limitation, termination with or without Disability, death or cause.  Such Vested Share Repurchase Right shall terminate immediately after a Change in Control where the successor corporation or its parent has shares that are publicly traded.

 

(ii)           The Company may exercise the Vested Share Repurchase Right by giving Awardholder written notice within sixty (60) days after the date of Awardholder’s termination as a Service Provider (or exercise of the Option, if later).  Such notice will indicate
the Company’s election to exercise the Vested Share Repurchase Right, the number of Shares to be repurchased by the Company and the per-share repurchase price.  If the Company fails to give notice within such sixty (60) day period, the Vested Share Repurchase Right will terminate unless, to the extent permitted by applicable law, Awardholder and the Company have extended the time for the exercise of the Vested
Share Repurchase Right.

 

 

 

 

 

12

 

 

 

(iii)           Payment of the repurchase price will be made, at the option of the Company, either in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of Awardholder to the Company, or by any combination thereof, within thirty (30) days after
the Company mails written notice of exercise of the Vested Share Repurchase Right.  No interest will be paid on such amount.

 

(iv)           The repurchase price for the Shares subject to the Vested Share Repurchase Right will be equal to the aggregate Fair Market Value of such Shares on the date the Company mails written notice of exercise of the Vested Share Repurchase Right, as determined by the Board.  Awardholder
will deliver the certificate(s) representing the Shares subject to the Vested Share Repurchase Right, duly endorsed for transfer to the Company, at the same time the Company delivers payment to Awardholder.

 

(v)           Notwithstanding any other provision of this Agreement, the Company may not exercise the Vested Share Repurchase Right earlier than six months and one day following the date of this Agreement (or any shorter period sufficient to avoid a charge to the Company’s earnings
for financial reporting purposes) (the “Holding Period”).  To the extent a Holding Period is necessary to avoid such an accounting charge and to the extent permitted by applicable law, the sixty (60) day period specified in Section 12(c)(ii) will begin to run on the last day of such Holding Period.

 

(d)           Legends.  All certificates evidencing Shares subject to the Transfer provisions set forth in this Section shall bear the following
legend, in addition to any legend(s) required for reasons not related to this Agreement:

 

"The shares represented hereby may not be sold, assigned, transferred, encumbered or in any manner disposed of, except in compliance with the terms of a written stock repurchase agreement between the Company and the registered holder of the shares (or the predecessor in interest to the shares).  Such Agreement grants to the
Company certain repurchase rights upon the occurrence of certain events.  The Secretary of the Company will upon written request furnish a copy of such Agreement to the holder hereof without charge."

 

13.           Adjustments; Dissolution or Liquidation; Merger or Corporate Transaction.

 

Adjustments.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall adjust the number, kind, type and class of Shares that
may be delivered under the Plan and/or the number, kind, type, class, and exercise price of Shares covered by each outstanding Option or Stock Award.

 

 

 

 

  

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Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Awardholder as soon as practicable prior to the effective date of such proposed
transaction.  To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

 

Corporate Transaction.  In the event of a Corporate Transaction, each outstanding Option shall be assumed, continued or an equivalent option substituted by the successor corporation
or a Parent of the successor corporation (together, the “Successor Corporation”).  In the event that the Successor Corporation in a Corporate Transaction refuses to assume, continue or substitute for the Option, then the Option shall terminate immediately prior to the close of the Corporate Transaction.  The Administrator, in its sole discretion, shall determine whether each Option is assumed, continued, substituted
or terminated.  To the extent that the agreement relating to the Corporate Transaction provides for the treatment of each Option, the treatment in such agreement shall be determinative for the treatment of each Option for purposes of this Plan.  If such Option shall terminated immediately prior to and contingent upon a Corporate Transaction, the Administrator shall provide the Awardholder notice of such termination and a period of at least one business day to exercise such Option prior to
is termination in accordance with its terms.

 

In the event that the Successor Corporation in a Corporate Transaction refuses to assume, continue or substitute for an Option, then the Awardholder shall fully vest in and have the right to exercise such Option as to all of the Shares subject to such Option, including Shares as to which such Option would not otherwise be vested
or exercisable.  If an Option becomes fully vested and exercisable in lieu of assumption, continuation or substitution in the event of a Corporate Transaction, the Administrator shall notify the Awardholder in writing or electronically that the Option shall be fully exercisable immediately prior to the close of the Corporate Transaction.  For the purposes of this Section, the Option shall be considered assumed, continued or substituted if, following the Corporate Transaction, the assumed,
continued or substituted option or right confers the right to purchase or receive, for each Share subject to the Option immediately prior to the Corporate Transaction, the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Corporate Transaction is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the Option, to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of common stock in the Corporate Transaction.

 

In the event of a Corporate Transaction, any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to a Stock Award (the “Repurchase Rights”) may continue or be assigned by the Company to the Successor Corporation,
in connection with such Corporate Transaction.  In the event any Repurchase Rights are not continued or assigned to the Successor Corporation, then such Repurchase Rights shall lapse and the Stock Award shall be fully vested as of the effective date of the Corporate Transaction.

 

 

 

  

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The Administrator, in its discretion, may (but is obligated to) either (x) accelerate the vesting of any Options and Stock Awards (including permitting the lapse of any repurchase rights held by the Company) and, if applicable, the time at which any Option may be exercised, in full or as to some percentage of the Option or Stock
Award to a date prior to the effective time of a Corporate Transaction contingent upon the effectiveness of such Corporate Transaction or (y) provide for a cash payment in exchange for the termination of any Option or Stock Award or any portion thereof contingent upon the effectiveness of such Corporate Transaction.

 

Change of Control.  The Administrator may, in its discretion, provide for the acceleration of vesting of Options or Stock Awards in the individual Option or Restricted Stock
Agreements.

 

14.           Code Section 409A.  If and to the extent that the Administrator believes that any Options or Stock Awards may constitute a “nonqualified deferred compensation plan” under Section 409A
of the Code, the terms and conditions set forth in the respective Option or Restricted Stock Agreement for such  Options or Stock Award shall be drafted in a manner that is intended to comply with, and shall be interpreted in a manner consistent with, the applicable requirements of Section 409A of the Code, unless otherwise agreed to in writing by the Awardholder and the Company.

 

15.           Time of Granting Options and Stock Awards.  The date of grant of an Option or Stock Award shall, for all purposes,
be the date on which the Administrator makes the determination granting such Option or Stock Award, or such later date as is determined by the Administrator.  Notice of the determination shall be given to each Service Provider to whom an Option or Stock Award is so granted within a reasonable time after the date of such grant.

 

16.           Amendment and Termination of the Plan.

 

Amendment and Termination.  The Administrator may at any time amend, alter, suspend or terminate the Plan.

 

Stockholder Approval.  The Administrator shall obtain stockholder approval of any Plan amendment to the extent the Administrator deems necessary and desirable to comply with
Applicable Laws.

 

Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Awardholder, unless mutually
agreed otherwise between the Awardholder and the Administrator, which agreement must be in writing and signed by the Awardholder and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

 

Amendment of Options and Stock Awards.  The Administrator may at any time, and from time to time, amend the terms of any one or more Options or Stock Awards; provided,
however, that the rights under any Option or Stock Award shall not be impaired by any such amendment unless the Awardholder consents in writing.

 

  

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17.           Conditions Upon Issuance of Shares.

 

Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Option or Stock Award unless the exercise of such Option or Stock Award and the issuance and delivery
of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

Investment Representations.  As a condition to the exercise of an Option or Stock Purchase Right, the Administrator may require the person exercising such Option or Stock Award
to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

18.           Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

19.           Stockholder Approval.  At the discretion of the Board, in order to comply with the requirements for the
grant of Incentive Stock Options or any Applicable Laws, the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted.  Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.

 

 

 

 

 

 

 

 

16exhibit_10-7.htm

EXHIBIT 10.7

 

FORM OF INDEMNIFICATION AGREEMENT FOR OFFICERS AND DIRECTORS

 

THIS AGREEMENT (the “Agreement”) is made and entered into as of ________________, 20__ between Studio One Media, Inc., a Delaware corporation (the “Company”), and __________________ (“Indemnitee”).

 

WITNESSETH THAT:

 

WHEREAS, the Certificate of Incorporation of the Company requires the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Delaware law, which includes Section 145 of the Delaware General Corporation Law, as amended (“Law”);
and

 

WHEREAS, the Board of Directors of the Company has adopted Bylaws (the “Bylaws”) that permit the indemnification of the officers, directors, employees, or agents of the Company to the fullest extent permitted by applicable law; and

 

WHEREAS, in accordance with the authorization as provided by the Law, the Company may purchase and maintain a policy or policies of directors’ and officers’ liability insurance (“D & O Insurance”), covering certain liabilities which may be incurred
by its officers or directors in the performance of their obligations to the Company; and

 

WHEREAS, Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws and has provided valuable services to and for the Company; and

 

WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; and

 

WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations; and

WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate
of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the fullest extent (whether partial or complete) permitted under Delaware law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies;

 

NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:

1.           Indemnity of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from
time to time, and the Bylaws (or other applicable charter documents of the Company), as such may be amended, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute.  In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the
right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, or agent, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change.  In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, or agent, such change, to the extent not otherwise required by such
law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

 

 

1

 

 

 

(a)           Proceedings Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s
Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein,
if the Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, the Indemnitee had no reasonable cause to believe his conduct was unlawful.

 

(b)           Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status,
he was, is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides,
no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

 

(c)           Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s
Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section 1 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

2.           Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1, the Company shall and hereby does indemnify and hold harmless Indemnitee
against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of Indemnitee’s Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s
obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.

 

  

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3.           Contribution in the Event of Joint Liability.

 

(a)           Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding),
Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  Company shall not enter into any settlement of any action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides
for a full and final release of all claims asserted against Indemnitee.

 

(b)           Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action,
suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with Indemnitee
(or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered.

 

(c)           Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company other than the Indemnitee who may be jointly liable with Indemnitee.

 

4.           Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in
any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

5.           Advancement of Expenses.  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by
reason of Indemnitee’s Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.  Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Independent Counsel determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company
shall be entitled to be reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Independent Counsel that Indemnitee would not be permitted to be indemnified under applicable
law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).

 

  

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6.           Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be
permitted under the law and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)           To obtain indemnification (including, but not limited to, the advancement of Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as
is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by the Board of Directors;
provided, however, in the event the Board of Directors shall not agree to the indemnification of the Indemnitee with respect to such matter according to the terms of this Agreement within ten (10) days of receipt of the request from Indemnitee as provide in Section 6(a) hereof, or in the event the Board of Directors shall deny such indemnity, the determination with respect to Indemnitee’s entitlement and all rights hereunder shall be made by Independent Counsel selected as provided in Section 6(c) hereof.

 

(c)           If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by the Indemnitee.  The
Board of Directors may, within five (5) days after such written notice of selection shall have been given, deliver to the Indemnitee a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 16 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper
and timely objection, the person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and
not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed
shall act as Independent Counsel under Section 6(b) hereof.  The Company agrees to pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed, and to indemnify fully such counsel against any and all expenses (including attorneys’ fees) claims, liabilities,
loss and damages arising out of or in connection with this Agreement or the engagement of Independent Counsel pursuant hereto.

 

(d)           In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 6(a) of this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

 

(e)           Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to an Indemnitee by the officers of the Enterprise in the course
of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee
for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

 

 

 

 

4

 

 

 

(f)           If the Board of Directors or the person, persons or entity empowered or selected under Section 6(c) to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such thirty (30) day period may be extended
for a reasonable time, not to exceed an additional ten (10) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto.

 

(g)           Indemnitee and the officers and directors of the Company shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable
advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counselor member of the Board of Directors, of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee’s entitlement to indemnification.  Any costs or expenses (including attorneys’ fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(h)           The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee
is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

 

(i)           The person, persons or entity empowered or selected under Section 6(c) to determine whether Indemnitee is entitled to indemnification, shall, among other things, render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee
shall be permitted to be indemnified under applicable law and this Agreement.

 

7.           Remedies of Indemnitee.

 

(a)           In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination
of entitlement to indemnification shall have been made pursuant to Section 6(b) of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within five (5) days after a determination has been made that Indemnitee is entitled to indemnification or such determination
is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within one year following the date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

 

 

 

5

 

 

 

(b)           In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de
novo trial, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination under Section 6(b).

 

(c)           If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of
such indemnification under applicable law.

 

(d)           In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the
Company the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 16 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

 

(e)           The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound
by all the provisions of this Agreement.

 

8.           Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

 

(a)           The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation of the Company, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by the Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the
Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)           To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company (or related persons thereof) or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent (or related person thereof) under such policy or policies.

 

(c)           In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

 

 

 

6

 

 

 

(d)           The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

9.           Exception to Right of Indemnification.  Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding
brought by Indemnitee against the Company, or any claim therein, unless (a) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors of the Company; (b) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce his rights under this Agreement,; or the Independent Counsel has approved its initiation.

 

10.          Duration of Agreement.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the
request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  This
Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.  This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company
or any other Enterprise at the Company’s request.

 

11.          Security.  To the extent requested by the Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to the Indemnitee for the
Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

12.          Enforcement.

 

(a)           The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying
upon this Agreement in serving as an officer or director of the Company.

 

(b)           This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

13.           Period of Limitations.  No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's estate, spouse, heirs, executors
or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

 

 

 

 

7

 

 

14.           Attorneys' Fees.  In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be paid all attorneys’ fees and Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless as a part of such action the court of competent jurisdiction over such action determines that each of the material assertions made by Indemnitee as
a basis for such action were not made in good faith or were frivolous.  In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all attorneys’ fees and Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee's counterclaims and cross-claims made in such action), and shall be entitled to Expense
Advances with respect to such action, unless as a part of such action the court having jurisdiction over such action determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous.

 

15.           Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent
of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

16.           Definitions.  For purposes of this Agreement:

 

(a)           “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such
person is or was serving at the express written request of the Company.

 

(b)           “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the express written request of the Company as a director, officer, employee,
agent or fiduciary.

 

(d)           “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, fees of investigators, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery
service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding.

 

(e)           “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or any Enterprise, any officers
or directors of the Company or any Enterprise, or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict
of interest in representing either the Company or Indemnitee in n action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(f)           “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in
the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is, is threatened to be, or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting as any such capacity, or by reason
of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an Indemnitee
pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

 

 

 

 

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17.           Severability.  If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever:  (a)
the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

18.           Modification and Waiver.  No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

19.           Notice By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating
to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

 

20.           Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the
party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(a)           If to Indemnitee, to the address set forth below Indemnitee’s signature hereto.

 

(b)           If to the Company, to:

                Studio One Media, Inc.

7650 East Evans Road, Suite C

Scottsdale, Arizona 85260

Attn:  Chief Executive Officer

With a copy to:

Greenberg Traurig, LLP

2375 E. Camelback Road, Suite 700

Phoenix, Arizona 85016

Attn:  Quinn P. Williams, Esq.

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

21.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the
same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

 

 

 

9

 

 

 

22.           Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

23.           Governing Law.  The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict
of laws principles thereof.

 

24.           Consent to Jurisdiction.  The Company and Indemnitee each hereby consent to the jurisdiction of the courts of
the State of Arizona for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in the Courts of the State of Arizona, which shall be the exclusive and only proper forum for adjudicating such a claim.

 

25.           Gender.  Use of the masculine pronoun shall be deemed to include usage of the feminine and gender-neutral pronoun where appropriate.

 

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

 

 

	 	STUDIO ONE MEDIA, INC.	 
	 	 	 	 
	
 
	
 

By: 
	 	 
	 	
 

Name:
	 	 
	 	
 

Title:
	 	 
	 	 	 	 

 

 

	 	INDEMNITEE:	 
	 	 	 	 
	
 
	
 

 
	 	 
	 	
 

Name:
	 	 
	 	
 

Address:
	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

 

 
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