This Employment
Agreement (the “ Agreement ”) is made as of
April 10, 2006 (the “ Effective Date ”) by
and between John Burns (the “ Executive ”) and
NGTV, a California corporation (the “ Company
”).
WHEREAS ,
the Executive has certain experience and expertise that qualify him
to provide the managerial skills that the Company requires, and
thus the Company and Executive deem it in their respective best
interests to enter into an agreement providing for the
Executive’s employment as the Company’s Chief Executive
Officer, subject to the terms and conditions specified
herein;
NOW,
THEREFORE , for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in
consideration of the mutual covenants and obligations herein
contained, the parties hereto agree as follows:
1.
Position and Responsibilities . During the term of this
Agreement, the Executive agrees to serve as the Chief Executive
Officer of the Company. The Executive agrees to devote all of his
business time and efforts to the performance of his duties
hereunder. The Executive shall be responsible for the management of
all aspects of the Company’s operations and finances as
determined by the Board of Directors from time to time. All other
executive officers of the Company shall report to, and their
activities shall at all times be subject to the direction and
control of, the Executive except as the Board of Directors may
determine from time to time. The Executive shall at all times
report to, and his activities shall at all times be subject to the
direction and control of, the Board of Directors of the Company
(the “ Board of Directors ”), and the Executive
shall exercise such powers and comply with and perform, faithfully
and to the best of his ability, such directions and duties in
relation to the business and affairs of the Company as may from
time to time be vested in or requested of him. The Executive shall
not engage in any other business activity, whether or not for
profit, other than passive investments, that may conflict with the
Executive’s duties under this Agreement. Subject to
Section 2(C) below, the Executive shall generally perform his
duties and conduct his business at the principal offices of the
Company in Beverly Hills, California.
2.
Compensation: Salary and Other Benefits . During the term of
this Agreement, the Company shall pay the Executive the following
compensation for the Executive’s satisfactory performance of
his duties and obligations hereunder:
(A)
Base Salary . The Company will pay to the Executive a
monthly salary of $30,000 (the Executive’s “ Base
Salary ”) during the Term of this Agreement. Such Base
Salary shall be payable in conformity with the Company’s
customary practices for executive compensation, as such practices
shall be established or modified from time to time. The Base Salary
shall be subject to increase from time to time as approved by the
Board of Directors; provided, however, that the Base Salary shall
automatically increase annually by an amount no less than 5% of the
then current Base Salary.
(B)
Cash Bonus . During the Term, the Executive shall be
entitled to an annual cash bonus based upon his and the
Company’s performance during the year (the “ Cash
Bonus ”). The amount of each Cash Bonus, and the
performance objectives and measurements upon which it is based,
shall be determined by the Board of Directors in its sole
discretion. The Company currently anticipates that the Cash Bonus
shall be, at minimum, 30% of the Executive’s then current
Base Salary (the “Minimum Bonus”) if the Executive
achieves the lowest performance targets established by the Board of
Directors. The parties acknowledge and agree that the Minimum Bonus
is not a binding obligation of the Company and that the Cash Bonus
may be significantly greater or less than the Minimum Bonus, as
determined by the Board of Directors. The Executive shall be
entitled to a Cash Bonus for the year ending December 31, 2006
(pro rated to reflect the number of days in 2006 in which the
Executive was an employee of the Company).
So long as the
Executive has performed his obligations under this Agreement, if
annual performance-based bonuses are awarded by the Board to the
Company’s entire executive team with respect to the year
ending December 31, 2006, the Executive shall be entitled to a
bonus (pro rated to reflect the number of days in 2006 in which the
Executive was an employee of the Company) for the year ending
December 31, 2006.
(C)
Expenses . During the Term, the Company shall reimburse the
Executive for all reasonable and necessary business expenses
incurred and advanced by him in carrying out his duties under this
Agreement. Such expenses shall include, without limitation,
(i) temporary living expenses for the Executive in the Los
Angeles metropolitan area, up to a maximum of $5,000 per month, and
(ii) the reasonable costs of coach class air-fare from the
Executive’s second home in Napa Valley, California to the
Company’s executive offices in Beverly Hills, California (no
more than two roundtrips per month). The Executive shall present to
the Company an itemized account of all expenses in such form as may
be required by the Company from time to time.
(D)
Benefits . During the Term, the Executive shall be entitled
to participate in any other benefit plans, programs, policies and
fringe benefits which may be made available to the executive
officers of the Company generally, including, without limitation,
disability, medical, dental and life insurance and the
Company’s 401(k) savings plan.
(E)
Vacation . During the term hereof, the Executive shall be
entitled to accrue up to four (4) weeks of vacation per
calendar year. Vacation will accrue at the rate of 1.66 days
per complete month and any accrued but unused vacation time which
Executive has failed to take during the calendar year shall be
subject to the Company’s then prevailing vacation
policy.
(F)
Tax Withholding . All payments in this Section 2 shall
be subject to all applicable federal, state and local withholding,
payroll and other taxes.
(A)
Stock Option . Subject to the approval of the
Company’s Board of Directors, the Executive will be granted
the option to purchase 325,000 shares of the
Company’s
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Common Stock,
at an exercise price of $2.70 per share (the “ Stock
Option ”). The Stock Option will be subject to the terms
and conditions of a stock option agreement (the “ Option
Agreement ”) and the Company’s 2000 Equity
Incentive Plan, as amended. The Option Agreement shall provide,
among other things, that 125,000 shares of the Stock Option shall
be vested and exercisable as of the date of the grant of the Stock
Option and that 1/24 th of
the remaining 200,000 shares of the Stock Option shall vest and
become exercisable each month thereafter (so that all of the shares
underlying the Stock Option shall be vested after 24 months),
so long as the Executive remains an employee, consultant or member
of the Board of Directors of the Company.
(i)
Acceleration of Vesting on Change of Control Transaction .
In the event of a Change of Control Transaction (as defined in
below) all unvested shares of the Stock Option shall immediately
become vested and fully exercisable.
(ii) “
Change of Control Transaction ” means any transaction
or series of related transactions whereby (i) the Company is
acquired by another entity (including, without limitation, any
reorganization, merger or consolidation), or (ii) all or
substantially all of the assets of the Company are sold or
transferred; provided, however, that any transaction or series of
related transactions in which the stockholders of the Company prior
to the transaction hold more than 50% of the voting securities of
the surviving or acquiring entity immediately after the transaction
shall not be a Change of Control Transaction; and provided,
further, that the currently contemplated initial public offering of
the Company’s securities shall not be considered a Change of
Control Transaction.
4.
Term . The term of this Agreement shall commence on the
Effective Date and shall continue for two years through the second
anniversary of the Effective Date (the “ Term
”). In order for the Company to terminate the Executive at
the end of the Term without being required to pay the Executive the
severance required by Section 5(E) below, the Company must
provide the Executive with at least six months’ advance
written notice of the Company’s desire to terminate the
Executive at the end of the Term. The Agreement may be terminated
prior to the end of the Term, pursuant to Section 5
below.
5.
Termination . The date upon which this Agreement is deemed
to be terminated in accordance with any of the provisions of this
Section 5 is referred to herein as the “ Termination
Date ”.
(A)
Termination for Cause . The Company has the right and may
elect to terminate this Agreement and the Executive’s
employment for Cause at any time. “ Cause ”
means the occurrence or existence of any of the following:
(i) the repeated refusal of the Executive to render services
to the Company in accordance with his obligations under this
Agreement; (ii) an act of gross negligence or a breach of
fiduciary duty that materially damages the Company; (iii) the
commission by the Executive of an act of fraud or embezzlement with
respect to the Company; (iv) the conviction or plea of nolo
contendere by the Executive of a felony or civil violation
involving moral turpitude; or (vi) the Executive’s
material breach of this Agreement or any other agreement with the
Company (including the Code of Ethics). Termination of this
Agreement for Cause pursuant to this Section 5(A) shall be
communicated
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by a Notice of
Termination. A “ Notice of Termination ” shall
mean delivery to the Executive of a copy of a resolution or
resolutions duly adopted by the affirmative vote of not less than
two-thirds of the directors (other than the Executive, if the
Executive is then serving on the Board) present (in person or by
teleconference) and voting at a meeting of the Board called and
held for that purpose after reasonable notice to the Executive and
reasonable opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board prior to
such vote, finding that in the good faith opinion of the Board, the
Executive was guilty of conduct set forth in any of clauses
(i) through (vi) of this Section 5(A) and specifying
the particulars thereof in reasonable detail. For purposes of this
Section 5(A), this Agreement shall terminate on the
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