EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this “ Agreement
”) is made and entered into this 2nd day of
February 2009, by and between NTN Buzztime, Inc., a Delaware
corporation (the “ Company ”), and Terry
Bateman, an individual (the “ Executive
”).
RECITALS
THE PARTIES ENTER THIS AGREEMENT
on the basis of the following facts,
understandings and intentions:
A. The Company desires that the Executive be
employed by the Company to carry out the duties and
responsibilities described below, all on the terms and conditions
hereinafter set forth, effective as of February 2, 2009 (the
“ Effective Date ”).
B. The Executive desires to accept such employment
on such terms and conditions.
C. This Agreement shall govern the
employment relationship between the Executive and the Company from
and after the Effective Date and supersedes and negates all
previous agreements with respect to such relationship.
NOW, THEREFORE
, in consideration of the above
recitals incorporated herein and the mutual covenants and promises
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged,
the parties agree as follows:
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Retention; Authorization to Work in the United
States . Subject to the terms and conditions
expressly set forth in this Agreement, the Company does hereby
hire, engage and employ the Executive and the Executive does hereby
accept and agree to such hiring, engagement and
employment. Executive’s employment with the
Company is “at-will” and either the Company or
Executive may terminate his employment with the Company at any time
for any or no reason, subject to the terms and conditions set forth
in this Agreement. The period of time during which
Executive remains employed by the Company is referred to as the
“Period of Employment.” Notwithstanding
anything else set forth in this Agreement, the Company's hiring of
Executive is conditioned upon, prior to the Effective Date,
Executive passing a background check, negative alcohol/drug screen
result and compliance with federal I-9
requirements.
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Duties . During the Period of Employment,
the Executive shall serve the Company as its Chief Executive
Officer (the “CEO”) and shall have the powers, duties
and obligations of management typically vested in the office of the
CEO, of a corporation, subject to the directives of the
Company’s Board of Directors (the “Board
”) and the corporate policies of the Company as they are in
effect and as amended from time to time throughout the Period of
Employment (including, without limitation, the Company’s
business conduct and ethics policies). Specifically, the
CEO will work closely with the Board and senior management to
launch and execute the overall strategic and operational direction
for the Company. The Executive will establish Company
policies and objectives in accordance with board directives to
achieve sustainable and cumulative growth over time. Moreover, the
CEO will establish responsibilities and procedures for attaining
objectives and reviews of operations and financial statements to
evaluate achievement of those objectives. During the Period of
Employment, the Executive shall report to the
Board. Upon the termination of the Executive’s
employment for any reason other than Cause as defined in Section
4.4, the Executive may retain his board seat at the Board’s
discretion.
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No Other
Employment. During the Period of Employment, the
Executive shall both (i) devote substantially all of the
Executive’s business time, energy and skill to the
performance of the Executive’s duties for the Company, and
(ii) hold no other employment. The Executive's service
on the boards of directors (or similar body) of other business
entities, or the provision of other services thereto, is subject to
the prior written approval of the Board, which may not be
unreasonably withheld. The Company shall have the right
to require the Executive to resign from any board or similar body
on which he may then serve if the Board reasonably determines that
the Executive’s service on such board or body interferes with
the effective discharge of the Executive’s duties and
responsibilities to the Company or that any business related to
such service is then in competition with any business of the
Company or any of its affiliates, successors or
assigns. Nothing in this Section 1.3 shall be
construed as preventing Executive from engaging in the investment
of his personal assets.
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No Breach
of Contract . The Executive hereby represents to
the Company that: (i) the execution and delivery of this
Agreement by the Executive and the Company and the performance by
the Executive of the Executive’s duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any
other agreement or policy to which the Executive is a party or
otherwise bound; (ii) the Executive has no information
(including, without limitation, confidential information and trade
secrets) relating to any other person or entity which would
prevent, or be violated by, the Executive entering into this
Agreement or carrying out his duties hereunder; and
(iii) except as set forth on Exhibit A hereto, the
Executive is not bound by any confidentiality, trade secret or
similar agreement (other than this Agreement and the
Confidentiality and Work for Hire Agreement attached hereto as
Exhibit B (the “ Confidentiality and Work for
Hire Agreement ”) with any other person or
entity.
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Location . The Executive acknowledges that the
Company’s principal executive offices are currently located
in Carlsbad, California with east coast offices in New York City,
New York. The Executive agrees that he will work from
the Company’s principal executive offices at least once per
month and at least 2-3 times per month from the east coast
office. The Executive acknowledges that he may be
required to travel from time to time in the course of performing
his duties for the Company.
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Base
Salary . The Executive’s base salary
(the “ Base Salary ”) shall be paid in
accordance with the Company’s regular payroll practices in
effect from time to time, but not less frequently than in monthly
installments. The Executive’s initial Base Salary
shall be at an annualized rate of Three Hundred Seventy Five
Thousand Dollars ($375,000). The Company will review the
Executive’s Base Salary at least annually and may increase
the Executive’s Base Salary from the rate then in effect
based on such review. Subject to the Executive’s continued
employment, review and approval of the Board, which approval may be
withheld in its sole discretion, the Company anticipates that the
annual adjustment in Base Salary will be between 3% - 5% percent
annually.
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Incentive
Bonus . During the Period of Employment,
the Executive shall be eligible to receive an annual incentive
bonus (“ Incentive Bonus ”) in an amount to be
determined by the Board in its sole discretion, based on the
achievement of performance objectives established by the Board for
that particular period. The Executive’s target
potential Incentive Bonus amount for the 2009 calendar year shall
be set at 50% of the Executive’s Base Salary. For
calendar year 2009 the Executive’s Incentive Bonus shall be
pro rated based on hire date and any approved leave of absence and
shall be based on and subject to the requirements set forth in the
2009 NTN Buzztime Corporate Incentive.
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For purposes of clarity, the Executive’s
target potential Incentive Bonus for 2009 shall be One Hundred
Eighty Seven Thousand Five Hundred Dollars ($187,500), which is
equal to fifty percent (50%) of his initial Base Salary.
The Executive will participate in establishing
the Incentive Bonus targets for 2010 and present to the Board
(1) such recommendations with respect to such targeted levels
that Executive determines in good faith are advisable, or
(2) such other modifications to the bonus program for 2010
(including, without limitation, any other performance factors on
which the Incentive Bonus determination may be based) as the
Executive determines in good faith are advisable. The
Board will consider in its sole discretion adjusting such targeted
levels and making such adjustment to the Incentive Bonus program in
good faith based on the Executive’s recommendations, but
shall have no obligation to make any such adjustment.
The Incentive Bonus, if any, will be paid to the
Executive within thirty (30) days after receipt of the independent
auditor’s report on the Company’s annual financial
statements for the year in question; provided that the Incentive
Bonus will not be deemed earned and will not be paid to the
Executive unless the Executive is employed by the Company on such
payment date. Payment of the Incentive Bonus, if any,
will be subject to withholdings in accordance with the
Company’s standard payroll procedures.
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Stock
Option Grants . Subject to this Section 2.3,
the Company will grant to the Executive an initial option (the
“ Initial Option ”) to purchase 1,750,000 shares
of the Company’s common stock, $0.005 par value per share
(“ Common Stock ”). The exercise
price per share for the Initial Option will be equal to the fair
market value of a share of the Common Stock on the date the Initial
Option is granted.
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In addition, subject to Executive's continuing
employment on such dates and approval, in each case, by the
compensation committee of the Company's board of directors, (i) the
Company will grant to the Executive on or about the first
anniversary date of the Effective Date an option (the “
Anniversary Option ”) to purchase 500,000 shares of
Common Stock. The Initial Option and the Anniversary
Option are collectively referred to as the “ Options
”. The exercise price per share for the
Anniversary Option will be equal to the fair market value of a
share of the Common Stock on the date such Option is
granted.
Each of the Options will be intended to qualify
as an “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended
(the “ Code ”), to the maximum extent possible
within the limitations of the Code. Each of the Options
will vest in forty-eight (48) substantially equal monthly
installments over the four-year period following the date of
grant. The vesting of each installment of each of the
Options will occur only if such vesting date occurs during the
Executive’s continued employment by the Company through the
respective vesting date. The maximum term of each of the
Options will be ten (10) years from the date of grant thereof,
subject to earlier termination upon the termination of the
Executive’s employment with the Company, a change in control
of the Company and similar events. The Initial Option
shall be granted under the NTN Buzztime, Inc. 2004 Performance
Incentive Plan (the “ Plan ”), a copy of which
has been provided to the Executive, and shall be subject to such
further terms and conditions as set forth in a written stock option
agreement to be entered into by the Company and the Executive to
evidence the Options (the “ Option Agreement
”). The Option Agreement shall be in substantially
the form attached hereto as Exhibit C . The
Anniversary Option, if any, will be granted under the Company's
equity incentive plan(s) as then in effect and shall be subject to
the terms and conditions of such plan(s) and to such further terms
and conditions as set forth in a written stock option agreement to
be entered into by the Company and the Executive to evidence such
Option.
Upon the occurrence of a Change in Control, 50%
of the then unvested portion of the Options shall accelerate and
the remaining portion of unvested Options may be accelerated by the
Board, in its discretion. For purposes hereof, a “
Change in Control ” means any of the following
transactions if approved by the Board of Directors: (i)
the consummation of a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other
corporation or entity regardless of which entity is the survivor,
other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power of the
voting securities of the Company, such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation; or (ii) consummation of the sale or disposition by
the Company of all or substantially all of the Company’s
assets.
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Retirement, Welfare and Fringe
Benefits . During the Period of Employment,
the Executive shall be entitled to participate in all employee
pension and welfare benefit plans and programs, and fringe benefit
plans and programs, made available by the Company to the
Company’s employees generally, in accordance with the
eligibility and participation provisions of such plans and as such
plans or programs may be in effect from time to
time. Without limiting the generality of the foregoing,
during the Period of Employment, the Company shall provide to the
Executive the following benefits:
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At no expense
to the Executive, coverage of the Executive, his spouse (if any)
and any of his children who qualify as “dependents”
within the meaning of Section 152 of the Code under a major
medical insurance program with an annual cumulative deductible
amount of no more than $1,000;
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Coverage of the
Executive by term life insurance, payable to his designated
beneficiary, in the amount of $1,000,000 and, in the event of
accidental death or dismemberment, in the amount of $2,000,000,
with the premium for such coverage not to exceed $4,000 per
year.
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Reimbursement of Business
Expenses . The Company will reimburse
Executive for all reasonable business expenses the Executive incurs
during the Period of Employment in the course and scope of the
Executive’s duties, subject to the Company’s expense
reimbursement policies in effect from time to
time. Executive will be required to provide
substantiation of all of such expenses on Company approved expense
report forms in accordance with Company policies. These
payments may be made as direct payments of the Executive’s
invoices or bills or by reimbursement to the Executive of costs
that are incurred. The Executive will be responsible for
all income and employment taxes due on such payments; the Company
will not provide a gross-up payment to cover such tax
liabilities.
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Paid Time
Off . During the Period of Employment,
the Executive shall accrue paid time off (“PTO”) and
shall be permitted time off in accordance with the Company’s
PTO policies in effect from time to time. Executive
shall accrue no less than three weeks of PTO per
year. The Executive shall also be entitled to all other
holiday and leave pay generally available to other executives of
the Company.
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Termination of Employment
. The Executive’s
employment by the Company may be terminated either by the Company
or by Executive at any time for any or no reason and with or
without Cause (in any case, the date that the Executive’s
employment by the Company terminates and which constitutes a
"separation from service" within the meaning of Section 409A of the
Code is referred to as the “ Separation Date
”).
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Benefits
Upon Termination . If the Executive’s employment
with the Company is terminated for any reason by the Company or by
the Executive, the Company shall have no further obligation to make
or provide to the Executive, and the Executive shall have no
further right to receive or obtain from the Company, any payments
or benefits except as follows:
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The Company
shall pay the Executive (or, in the event of his death, the
Executive’s estate) any Accrued Obligations (as defined in
Section 4.4) within 10 days following the Separation
Date;
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If the
Executive’s employment with the Company is terminated by the
Company without Cause (as defined in Section 4.4), the Company
shall pay (in addition to the Accrued Obligations), subject to tax
withholding and other authorized deductions and subject to the
requirements of Section 4.3, an amount equal to the sum of one
(1) month of severance pay for every two (2) months the Executive
is employed to a maximum of six (6) months calculated at the
Executive’s then-current Base Salary rate in effect on the
Separation Date as severance pay, which shall be payable in
substantially equal installments on a bi-weekly basis over a period
of 6 months. The first installment of any severance pay
payable under this Section 4.2(b) shall commence within 15 days
following the 45-day period in which Executive is required to
execute and not revoke the general release agreement in accordance
with Section 4.3.
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In the event of
any termination of Executive’s employment for any reason,
including any termination by the Company without Cause, the
Executive’s outstanding stock options, restricted stock and
other equity-based awards, including the Initial Option and the
Anniversary Option, if any, shall continue to be governed in
accordance with their terms (including, without limitation, the
terms applicable to a termination of the
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