EMPLOYMENTAGREEMENT

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           THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 22nd day of August, 2008, by and between Cornerworld Corporation (“Cornerworld or Corporation”) and its subsidiaries and affiliates; (collectively be referred to where appropriate as the “Company”) and Scott Beck (“Employee”).

WHEREAS, the Company wishes to employ Employee in the position of CEO of Cornerworld Corporation and its subsidiaries and affiliates and Employee wishes to be so employed;

WHEREAS, this Agreement is being delivered pursuant to the board resolution on August 22, 2008 with unanimous consent of the board;

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

1.           Employment.    Cornerworld hereby agrees to employ Employee, and Employee hereby agrees to accept such employment and agrees to perform the services specified herein upon the terms and conditions set forth in this Agreement.  The initial term of this Agreement shall commence on September 1, 2008 through August 31, 2011 (the “Initial Term”).  Following the Initial Term, the Employee and the Company may elect to continue this Agreement on such terms as the parties may agree to.

           a.           Duties.    Employee shall be employed in the position of CEO of Cornerworld effective as of the date of execution of this Agreement.  Employee shall perform his obligations hereunder diligently, faithfully and to the best of Employee’s abilities.  Employee shall comply in all material respects with all policies and procedures applicable to employees of Cornerworld generally and to Employee specifically.

           b.           Salary.   Upon commencement of employment, Employee’s annual base salary (“Base Salary”) shall be $250,000.   Employee shall be paid on a bi-monthly basis in accordance with the Company’s normal payroll practices.  The Base Salary shall not decrease at any time during the Initial Term of this Agreement.  Thereafter, any adjustments to Employee’s annual Base Salary shall be within the sole discretion of the Board of Directors of the Corporation.

 

    c.           Bonus.   In addition to the payment of the Base Salary amounts referred to above, Employee will receive additional bonus compensation in an amount as set forth below:

(i) Employee shall be entitle to a bonus fee of .75% of all equity and debt capital raises for the Corporation or any of its subsidiaries and a 1.25% fee on the total transaction value on all Mergers and Acquisitions that the Corporation or any of its subsidiaries completes.  In the event that the seller is paid a combination of cash and stock, employee will receive its payment in both cash and stock reflecting the split on a pro-rata basis equal to the structure of the target companies, whether effected in a single transaction or a series of related transactions in which the voting power of a counterparty is combined with or transferred to the Corporation. All such fees due to employee will be payable out of proceeds at closing.

(ii) Employee shall be entitled to a Warrant Upon the closing of an Equity or Debt Financing. The Corporation will issue employee a warrant to purchase such number of shares of common stock equal to 2% of

 

 

 

 

(iii) Employee shall be entitled to a Warrant Upon the closing of a Mergers and or Acquisition Transaction by the Corporation.  Upon the closing of a Transaction the Corporation will issue to employee a warrant to purchase such number of shares of common stock equal to 2% of the Transaction Value.  The warrant will be valid for nine years post closing and shall contain standard anti-dilution protection for structural events such as stock splits or combinations and shall have a strike price equal to the average closing price for the Corporation’s common stock during the five days preceding the closing of the Transaction. The warrants may be exchanged without the payment of any additional consideration for the Corporation’s stock based upon the values of the warrant and the stock at the time of the exchange (i.e., net issuance).   The shares underlying the warrant shall entitle their holder to one-time “piggyback” registration rights on any Cornerworld Corporation registration.

(iv) "Transaction Value" means the total value of all consideration (including cash, securities or other property) paid or received, directly or indirectly, in a Transaction plus the amount of any debt (including capitalized leases) and any other liabilities assumed in a Transaction, and amounts payable in connection with a Transaction in respect of employment or consulting agreements with the principals of the target company, to the extent not related to the provision of ongoing employment or consulting services.  If the Transaction takes the form of a recapitalization, "Transaction Value" will also include the value of all shares of the acquired company retained by the Corporation.  If any portion of Transaction Value is payable in the form of securities, the value of such securities, for purposes of calculating our transaction fee, will be determined based on the terms of the Transaction agreement and may at Corporation’s election be paid in the form of such securities received by Corporation.  Fees on amounts paid into escrow will be payable upon the release of such funds from escrow.  Fees relating to contingent payments other than escrowed amounts will be paid to Beck contemporaneously with Company’s actual receipt of such funds.

(v) In addition to the payment of the Base Salary amounts referred to above, Employee will receive additional bonus compensation in an amount equal to 5% of Cornerworld’s EBITDA per year unless a greater annual amount is approved by the Board of Directors.  Such bonus amounts shall be calculated as of April 30 of each year, commencing with April 30, 2009 (each a “Calculation Date”), and paid to Employee as follows:  50% of the bonus amount shall be paid promptly following the Calculation Date, 25% of the bonus amount shall be paid 6 months following the Calculation Date, and 25% of the bonus amount shall be paid 12 months following the Calculation Date, in each case with all applicable deductions made. The payment of each earned bonus amount shall be made at the time of and in connection with the first payroll payment made by the Company following each respective April 30 due date.  Employee does not have to be employed by Cornerworld on the payment date to be entitled to receive the bonus amount set forth above; once a payment is earned it must be paid in accordance with the payment terms.  Provided however if employee’s employment is terminated by the Company prior to such date for any reason or the Company removes Employee from the position of CEO, Employee shall be entitled to receive the bonus amount payable at such time as if he were employed by Cornerworld in the position of CEO at the time of payment.

(vi) In addition to any other fees due pursuant to this agreement; in the Event of a change of control or the sale of over 51% of the company’s stock (calculated by the greater of non-diluted or fully-diluted ownership), Employee shall be paid a one time bonus fee of the greater of five percent (5%) of the post money valuation of the company or Two Million Dollars ($2,000,000).  The fee shall be due and payable at the time of the sale.  The company may not terminate the employee or effectuate a sale, transfer, hypothecate, spin off or other method available in order to avoid paying this bonus fee.

 

 

 

 

(vii) For purposes of this Agreement, EBITDA shall mean earnings before interest, taxes, depreciation and amortization and excluding any extraordinary expenses not incurred in the ordinary course of Cornerworld’s business and which are not part of Cornerworld’s historical operations (e.g., excluding all transaction fees and similar fees and expenses or extraordinary fees not in the course of normal operations.).

(viii) The terms of Employee’s bonus eligibility and measurement for the bonus set forth above shall not change during the Initial Term without express agreement of both parties stated in writing.  Thereafter, any adjustments to Employee’s bonus entitlement, including Employee’s eligibility for any bonus payments and/or programs and/or the measurement criteria for any bonus is within the sole discretion of the Corporation.

 

    d.           Benefits.  Employee shall be entitled to employee benefits and other perquisites consistent with the Company’s policies in place from time to time that are generally available to the employees of the Company.

           e.           Reimbursement of Expenses.  The Company shall pay or reimburse Employee for all reasonable travel, entertainment and other business expenses actually incurred or paid by Employee in the performance of his duties hereunder upon presentation of expense statements and/or such other supporting information as the Company may reasonably require of Employee and in accordance with and subject to the Company’s general procedures and policies.

           f.           At-Will.  Employee’s employment with Cornerworld exists only at the will of both the Company and Employee.  Either the Company or Employee may terminate the employment relationship at any time for any reason, with or without cause, by the giving of verbal or written notice of termination.   Nothing in this agreement shall be construed to alter Employee’s at-will status in any way, to specify any term of employment or to otherwise interfere with the at-will nature of Employee’s employment with the Company.

2.         Termination.

           a.           For purposes of this Agreement, "Cause" means (i) commission by Employee of any act or omission that would constitute a felony that involves Company property, or any crime of moral turpitude under Federal law or the law of the state or foreign law in which such action occurred; (ii) fraud, embezzlement, theft, disclosure of trade secrets or Confidential Information; (iii) reporting to work or working under the influence of alcohol, an illegal drug, an intoxicant or a controlled substance which renders Employee incapable of performing his material duties to the satisfaction of the Company, or (iv) violation by Employee of the confidentiality provisions of the Agreement.

           b.           For purposes of this Agreement, “Termination Date” is the date as of which the Employee incurs a termination of employment with the Company.  Any notice of termination of the Employee’s employment given by the Employee or the Company pursuant to the provisions of this Agreement shall specify the Termination Date.

3.           Obligations of Company on Termination.  Notwithstanding anything in this Agreement to the contrary, the Company's obligations on termination of Employee's employment shall be as described in this Section 3.

           a.           Obligations of the Company in the Case of Termination by the Company Without Cause, Death or Disability.  In the event that the Company terminates Employee's employment other than for Cause, the Company shall provide Employee with the following:

                      (i)           Amount of Severance Payment.  Subject to the provisions of this Section 3, in addition to any Base Salary and unreimbursed expenses accrued but unpaid as of the Termination Date (which shall be paid in accordance with the customary payroll practices of the Company), the Company shall pay Employee (the "Severance Payment") the following:

(A)           payment of the full amount of base salary for the days remaining of the contract for the full three (3) year period of the contract; paid in full within ten (10) days of the date of termination;

 

 

 

(B)           any bonus amount that would otherwise have been payable to Employee, payable on the next date on which a bonus amount would have otherwise been payable to Employee following the Termination Date, prorated through the Termination Date;

(C) any vacation pay accrued but unpaid as of the Termination Date, payable in a single lump sum payment on the Termination Date; and

(D) the lump sum payment of One Million Dollars ($1,000,000) paid in full within ten (10) days of the date of termination;

           b.           Obligations of the Company in case of Termination for Cause or Voluntary Resignation by Employee.  Upon termination of Employee's employment for Cause or Employee’s voluntary resignation, the Company shall have no payment or other obligations hereunder to Employee, except for the payment of any Base Salary, accrued but unpaid bonus amounts, benefits or unreimbursed expenses accrued but unpaid as of the date of such termination.

a.           Confidential Information.  Employee understands and acknowledges that, by virtue of Employee’s position, Employee will acquire and/or will have access to knowledge of various confidential, trade secret and/or proprietary information of the Company and/or its clients (all of which is hereinafter referred to as “Confidential Information”).  By way of illustration only, and not limitation, Confidential Information includes information regarding: (1) marketing, advertising, public relations and/or promotional strategies, programs, plans and methods; (2) pricing policies, methods and concepts, product and services strategies, training programs, and methods of operation and other business methods; (3) mailing lists and lists of and information relating to current, former and prospective clients and accounts of the Company; (4) terms of service contracts between the Company and its clients, accounts, vendors and/or suppliers; (5) business plans, expansion plans, management policies and other business policies and strategies; (6) business and sales forecasts, market analyses, costs, sales and revenue reports, budgets, other financial data which relates to the management and operation of the Company and its products and services, and other analyses not publicly disclosed; (7) competitors; (8) internally developed computer programs and software and specialized computer programs and source code; (9) internal procedures, programs, reports and forms of the Company; and (10) other confidential, trade secret and/or proprietary information that allows the Company to compete successfully.

 

      b.           Employee’s Use and Disclosure of Confidential Information.  Except in connection with and in furtherance of Employee’s work on the Company’s behalf, Employee shall not, without the Company’s prior written consent, at any time, directly or indirectly, use, disclose or otherwise communicate any Confidential Information to any person or entity.

c.           Records Containing Confidential Information.  All documents or other records (in whatever medium recorded) containing Confidential Information (“Confidential Documents”) prepared by or provided to Employee are and shall remain the sole property of Cornerworld and/or the Company.  Except with the Company’s prior written consent, Employee shall not copy or use any Confidential Document for any purpose not directly relating to Employee’s work on the Company’s behalf, or use, disclose or sell any Confidential Document to any person or entity other than the Company.  Upon the termination of Employee’s employment relationship or association with the Company or upon the Company’s request, Employee shall immediately deliver to the Company or its designee (and shall not keep in Employee’s possession or deliver to anyone else) all Confidential Documents and all other property belonging to the Company.  This paragraph shall not bar Employee from complying with any subpoena or court order, provided that Employee shall at the earliest practicable date provide a copy of the subpoena or court order to the Company’s General Counsel.

 

      d.           Ownership of Proprietary Property.  To the greatest extent possible, any Work Product shall be deemed to be “work made for hire” (as defined in the Copyright Act, 17 U.S.C.A. § 101 et seq., as amended) and owned exclusively by the Company.  Employee hereby unconditionally and irrevocably transfers and assigns to the Company all rights, title and interest Employee currently has or in the future may have, by operation of law or

 

 

 

 

e.           Additional Acknowledgments of Employee.  Employee acknowledges that a breach of any of the covenants contained in this Section 5 will cause irreparable damage to the Company, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, Employee agrees that if Employee breaches or threatens to breach any covenant contained in this Section 4, in addition to any other remedy that may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief.

5.           Survival.  Employee’s obligations under this Agreement shall survive the termination of Employee’s employment relationship or association with the Company and shall thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of any contract or any other duty owed or claimed to be owed by the Company to Employee.

6.           Notices.  Employee also agrees and acknowledges that the Company has the right to independently contact any potential or actual future employer of Employee to notify such employer of Employee’s obligations under Section 4 of this Agreement and notify such actual or potential employer of the Company’s understanding of the requirements of this Agreement and what steps, if any, the Company intends to take to insure compliance with or enforcement of this Agreement.

7.           Prior Disclosure.  Employee represents and warrants that he has not used or disclosed any confidential information, trade secret, copyright or any other intellectual property he may have obtained from Company prior to signing this Agreement, in any way inconsistent with the provisions of this Agreement.

8.           Confidential Information of Prior Employers.  Employee will not disclose or use during the period of his employment with the Company, any proprietary or confidential information, trade secret, copyright or any other intellectual property belonging to a previous employer or other third party which Employee may have acquired because of employment with an employer other than the Company or acquired from any other third party, whether such information is in Employee’s memory or embodied in a writing or other physical form.

9.           Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

10.           Complete Agreement. This Agreement constitutes the entire agreement among the parties and supersedes all other prior agreements and understandings, both written and oral, with respect to the subject matter hereof.

11.           Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

12.           Successors and Assigns; Assignment.  Employee expressly consents that Cornerworld may assign the rights and benefits given to it in this Agreement and this Agreement shall survive any sale of assets, merger, consolidation, or other change in corporate structure.

13.           Choice of Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Texas.   The parties agree that all actions and proceedings relating to this Agreement shall be litigated in Dallas County, Texas.

 

 

 

 

14.           Amendment and Waiver. This Agreement may not be changed or amended except in writing signed by the parties.   The waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of such provision or the breach of any other provision contained in this Agreement.

15.           Headings. The headings contained in this Agreement are inserted for convenience only.  They do not constitute a part of this Agreement and in no way define, limit or describe the intent of this Agreement or any provisions hereof.

16.           Construction. This Agreement shall not be construed against any party by reason of the fact that the party may be responsible for the drafting of this Agreement or any provision hereof.

17.           Knowledge of Rights and Duties.  Employee has carefully reviewed and completely read all of the provisions of this Agreement and understands and has been advised that he/she may consult with counsel of his choice for any explanation of his rights, duties, obligations and responsibilities under this Agreement, should Employee so desire.  Employee acknowledges that he/she enters into this Agreement of his own free will.

IN WITNESS WHEREOF, Employee and Cornerworld have executed this Agreement as of the day and year first above written.

	/s/ Scott N. Beck
	Scott Beck – Chairman
	August 22, 2008
	Date

 

 

	/s/ Scott N. Beck
	Scott Beck – Chairman
	August 22, 2008
	Date