EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT is effective as of July 1, 2003, by and
between Netgroupie, a California corporation (“
Company ”), and Janak Vibhakar, an individual (“
Executive ”). In consideration of the mutual
covenants, terms and conditions hereinafter contained, and for
other good and valuable consideration, the parties hereby agree as
follows:
1. Term
of Employment . Company hereby employs Executive and Executive
hereby accepts such employment for the period commencing on
July 1, 2003 (the “ Commencement Date ”)
and terminating on the sixth (6th) anniversary of the Commencement
Date, unless sooner terminated as provided in this Agreement (the
“ Employment Term ”).
2.
Duties . Executive shall perform all the duties and
obligations of President of the Company. Executive shall perform
the services contemplated herein faithfully, diligently, to the
best of his ability and in the best interests of Company. Executive
shall devote substantially all his business time and efforts to the
rendition of such services to Company and related entities and
property. Executive shall at all times perform such services in
material compliance with, and to the extent of his authority, shall
ensure that Company is in material compliance with, any and all
laws, rules and regulations applicable to Company of which
Executive is aware. Executive shall, at all times during the
Employment Term, in all material respects adhere to and obey any
and all written internal rules and regulations governing the
conduct of Company’s employees, as established or modified
from time to time; provided, however, in the event of any conflict
between the provisions of this Agreement and any such rules or
regulations, the provisions of this Agreement shall
control.
a.
Base Salary . In consideration for Executive’s
services hereunder, Company shall pay Executive a monthly base
salary of Twenty Four Thousand Dollars ($24,000) during the first
twelve (12) months of the Employment Term (the “ Base
Salary ”). Thereafter, effective upon the first day of
each subsequent anniversary of the Employment Term, the Base Salary
shall be increased by five percent (5%) over the Base Salary during
the previous year. “ Base Salary ” shall refer
to the Base Salary after giving affect to any salary increases.
Payment shall be made in accordance with Company’s regular
payroll schedule from time to time (less any deductions required
for Social Security, state, federal and local withholding taxes,
and any other authorized or mandated withholdings).
b.
Deferred Compensation . Notwithstanding anything contained
in Section 3(a) to the contrary, any Base Salary
which is not paid in accordance with Company’s regular
payroll schedule shall accrue and Company shall defer payment of
any unpaid Base Salary (“ Deferred Compensation
”) in accordance with the following terms: (i) fifty
percent (50%) of the Deferred Compensation shall be payable upon
the Company’s receipt of gross revenues, computed in
accordance with generally accepted accounting principles, applied
consistently with past periods, together with any financing by the
Company calculated from the Commencement Date (collectively,
“ Gross Proceeds ”) equal to or greater than
Five Million Dollars ($5,000,000); and (ii) fifty percent
(50%) of the Deferred Compensation shall be payable upon the
Company’s receipt of Gross Proceeds equal to or greater than
Ten Million Dollars
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($10,000,000).
The Company shall record the Deferred Compensation on its books as
deferred compensation potentially owing to Executive. Company and
Executive agree that, as of the Commencement Date, Executive has
accrued Deferred Compensation equal to Three Hundred Sixty Thousand
Dollars ($360,000), based on fifteen (15) months of accrued
Base Salary prior to the Commencement Date.
c.
Bonus . In addition to any Base Salary, Company will pay ,
Executive a bonus (“ Bonus ”), equal
to:
(i)
Videocassette/DVD Distribution . $0.10 for each video
cassette, disc or DVD sold;
(ii)
Domestic Cable & Satellite Distribution . $0.02 for each
new subscriber added to any channel distributing NGTV or
programming released by the Company, plus 2% of all gross revenues,
computed in accordance with generally accepted accounting
principles, applied consistently with past periods, from domestic
cable, satellite, pay-per-view, or any other similar distribution
channels; and
(iii)
Ancillary Revenues . 2% of all gross revenues, not included
in Section 3(c)(i) or 3(c)(ii) , including but not
limited to revenues derived from licensing, merchandising and
sponsorships.
d.
Bonus Payments . At a reasonable time following the end of
each calendar year during the Employment Term, but no later than
March 31 of the applicable year, Company shall pay Executive
any Bonus accrued during the prior calendar year. Notwithstanding
anything contained in Section 3(c) to the
contrary, Executive’s Bonus shall accrue and Company shall
defer payment of the Bonus until such time that the Gross Proceeds
of the Company, and any subsidiaries, are equal to or exceed
Fifteen Million Dollars ($15,000,000). In addition, any Bonus
amounts in excess of 2% of the Gross Proceeds shall accrue and
Company shall defer payment of the Bonus until the following
calendar year. Any amounts due and not paid in the following
calendar year shall be deemed a “ Deferred Bonus
.” The Company shall record the Deferred Bonus on its books
as deferred compensation potentially owing to Executive.
e.
Sale of Company . In the event of a merger, consolidation,
liquidation, dissolution or winding up of the Company, the sale of
all or substantially all of the Company’s assets, or a
repurchase of any common or preferred stock (collectively a “
Material Event ”), Company will pay
Executive:
(i) a
management fee equal to 1.0% of any gross proceeds derived from any
of the foregoing transactions based on a valuation of the Company
up to Thirty Million Dollars ($30,000,000), plus 2% of any gross
proceeds derived from any of the foregoing transactions based on a
valuation of the Company equal to or greater than Thirty Million
Dollars ($30,000,000); and
(ii) all
amounts of compensation owing to Executive, including but not
limited to, Deferred Compensation and Deferred Bonus, each of which
shall be calculated and pro-rated for any partial calendar year.
All such amounts will be considered senior debt, and payable prior
to any other distributions.
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f.
Restricted Stock . As additional consideration for
Executive’s services hereunder, Company will sell to
Executive, and Executive will purchase from Company, 7,500,000
shares of the Company’s common stock, no par value (the
“ Common Stock ”), for a purchase price of $750.
Executive and Company will negotiate in good faith a stock purchase
agreement within customary parameters.
4.
Benefits . Company shall provide Executive with the
following benefits during the Employment Term:
a.
Participation in Benefits Plans . Executive shall be
entitled to participate in all executive welfare and health benefit
plans and other employee benefit plans, including without
limitation, pension plans, established by Company from time to time
for the benefit of all executives of Company. Executive shall be
required to comply with the conditions attendant to coverage by
such plans and shall comply with and be entitled to benefits only
in accordance with the terms and conditions of such plans as they
may be amended from time to time. Nothing herein contained shall be
construed as requiring Company to establish or continue any
particular benefit plan in discharge of its obligations under this
Agreement.
b.
Vacation . Executive shall be entitled to not less than four
(4) weeks of paid vacation each year of the Employment Term.
Executive’s vacation shall be exercised pursuant to
Company’ usual policies applicable to executives of
Company.
c.
Personal Days . Executive shall be entitled to not less than
five (5) personal days each year of the Employment Term.
Executive’s personal days shall be exercised pursuant to
Company’ usual policies applicable to executives of
Company.
d.
Reimbursement for Expenses . Company shall reimburse
Executive for reasonable and necessary business and entertainment
expenses incurred by him in connection with the performance of his
duties hereunder including, without limitation, expenses for
business development, travel, meals and accommodations and related
expenditures in accordance with Company policies as amended from
time to time. Executive shall submit to Company periodic statements
of all expenses so incurred. Subject to such audits as Company may
deem necessary, Company shall reimburse Executive the full amount
of any such expenses advanced by him in the ordinary course of
business. Any and all frequent flyer miles accrued by Executive for
travel in connection with Executive’s employment with Company
shall be used at the sole discretion of Executive.
5.
Termination of Employment .
a.
Termination for Cause . Company may terminate
Executive’s employment upon the occurrence of any one or more
of the following events, which events shall be deemed termination
for cause:
(i)
Willful Breach . If Executive (X) willfully commits a
material breach of this Agreement or (Y) a material breach of
any fiduciary duties owed to Company.
(ii)
Wrongful Acts . If Executive is (X) convicted of a
felony or any other serious crime, (Y) commits fraud, or
(Z) is guilty of gross negligence in the operation of
Company.
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(iii)
Disability . If Executive is physically or mentally disabled
from the performance of a material portion of his duties for a
continuous period of ninety (90) days or greater, provided,
however, that if Executive’s disability is the result of a
serious health condition as defined by the federal Family and
Medical Leave Act (or its California equivalent) (“
FMLA ”), Executive’s employment shall not be
terminated during any period of FMLA-qualifying leave except as
permitted by the FMLA. If there should be a dispute between Company
and Executive as to Executive’s physical or mental disability
for purposes of this Agreement, the question shall be settled by
the opinion of an impartial reputable physician or psychiatrist
agreed upon by the parties or their representatives, or if the
parties cannot agree within ten (10) days after a request for
designation of such party, then a physician or psychiatrist
designated by the Los Angeles County Medical Association. The
certification of such physician or psychiatrist as to the
questioned dispute shall be final and binding upon the
parties.
b.
Termination Without Cause . Company may terminate
Executive’s employment under this Agreement at any time
without cause upon the vote or written consent of 2/3 of the vote
of the members of the Board of Directors.
c.
Effectiveness on Notice . Any termination under this
Section 5 shall be effective upon receipt of
notice by Executive of such termination or upon such other later
date as may be specified by Company in the notice (“
Termination Date ”).
d.
Effect of Termination .
(i)
Payment of Salary and Expense upon Termination . If the
Employment Term is terminated for any reason, all benefits provided
to Executive by Company hereunder shall thereupon cease and Company
shall pay or cause to be paid to Executive all accrued but unpaid
compensation, including all Deferred Compensation and Deferred
Bonus, vacation benefits and unless the termination is pursuant to
Section 5(a)(i)(Y) or Section
5(a)(ii) , a prorated portion of any Bonus paid to
Executive for the preceding calendar year. In addition, Company
will promptly reimburse Executive all unpaid expenses incurred
prior to the Termination Date.
(ii)
Termination Without Cause . If Company terminates Executive
without cause or the Employment Term is terminated due to
Executive’s death or disability, in addition to all amounts
owing to Executive, including but not limited to any Deferred
Compensation and Deferred Bonus, Company shall pay Executive the
Base Salary for the remainder of the Employment Term, including
annual increases, and an amount equal to the Bonus payments which
would accrue to Executive if the Employment Term was not
terminated., subject to required deductions for Social Security,
state, federal and local withholding taxes, and any other
authorized or mandated withholdings.
(iii)
Additional Rights of Executive Upon Termination . If the
Employment Term is terminated by either party for any reason,
Executive or Executive’s estate or successor in interest, by
written notice to Company within 180 days from the date of
Termination (“ Repurchase Notice ”), shall have
the right to require that Company purchase Executive’s vested
shares of Common Stock in Company (the “ Vested Shares
”) at fair market value. If the parties cannot agree on the
fair market value of the Vested Shares within thirty (30) from
the date of the Repurchase Notice, then the Company and Executive
shall designate a mutually agreeable independent third party to
determine the fair market value. If the parties
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cannot agree on
such independent third party within ten (10) days, then
Executive and Company shall each designate an independent Certified
Public Accountant, at their sole cost, to determine the fair market
value of the Vested Shares; the fair market value
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