PERSONAL SERVICES
AGREEMENT
This Personal Services Agreement
(the “ Agreement ”) is entered into
this 27th day of September, 2005, by and between Newport
Entertainment Group, Inc., a Nevada corporation (the “
Company ”) with its principal place of
business at 8000 Spring Mountain Road, Las Vegas, Nevada, and J.
Wade Mezey, Esq., LL.M. (“ Executive
”) to be effective as of January 1, 2006 (the “
Effective Date ”).
PREMISES
WHEREAS , the Company desires to employ Executive
pursuant to the terms and conditions and for the consideration set
forth in this Agreement and Executive desires to enter the employ
of the Company pursuant to such terms and conditions and for such
consideration;
WHEREAS , the provisions of this Agreement are a
condition of Executive being employed by Company, of
Executive’s having access to confidential business and
technological information, and of Executive’s being eligible
to receive certain benefits of the Company. This Agreement is
entered into, and is reasonably necessary, to protect confidential
information and customer relationships to which Executive may have
access, and to protect the goodwill and other business interests of
the Company; and
WHEREAS , the provisions of this Agreement are also a
condition to Executive’s agreement to provide personal
services to the Company.
NOW
THEREFORE , in
consideration of the mutual promises and covenants agreed to
herein, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as
follows:
AGREEMENT
|
|
Position,
Term, Duties, Responsibilities .
|
(a)
Position . Executive shall be employed by the Company as
its President and Chief operating Officer to act in accordance with
the terms and conditions hereinafter set forth. Additionally,
during the Employment Period, the Company agrees that it shall
recommend to the Board the election of the Employee as a Director
of the Company on the Commencement Date or as soon as practical
thereafter. Upon the expiration of his term as a Director during
the Employment Period, the Company agrees to use its best efforts
to cause him to be re-nominated for election and to recommend his
election.
(b)
Duties . Executive shall faithfully and diligently
render such services and perform such related duties and
responsibilities as are customarily performed by a person holding
such title and as otherwise may, from time to time, be reasonably
assigned to Executive by the Company’s Board of Directors
(the “ Board ”). Executive shall
comply with the provisions of this Agreement and all reasonable
rules, regulations and administrative directions now or hereafter
established by the Company.
(c)
Other Activities
. During Executive’s
employment with the Company, Executive shall devote his entire
business time, attention and energies to the performance of his
duties and functions under this Agreement; provided, however, that
nothing in this Agreement shall prevent Executive from: (i) serving
as a director of any entity that is not a Competitive Business (as
defined in Section 5(a)); (ii) managing his personal investments
and affairs and the personal investments and affairs of any of his
family members; (iii) acquiring any interest in any entity, whether
or not part of a control group, that is directly or indirectly
owned or controlled, in whole or in part, by Executive and/or one
or more members of his family, or a partnership, trust or other
entity held by or for the benefit of Executive and/or one or more
members of his family, and/or (iv) performing any services for any
entity, whether or not part of a control group, that is directly or
indirectly owned or controlled, in whole or in part, by Executive
and/or one or more members of his family, or a partnership, trust
or other entity held by or for the benefit of Executive and/or one
or more members of his family; provided, however, that any service
shall be insubstantial and shall not include any active involvement
in the management of such entity and provided further that such
entities do not constitute a Competitive Business (as defined in
Section 5(a)).
(d)
Term . This Agreement shall be for a term beginning
on the Effective Date and terminating the earlier of (i) the date
which is five (5) years from the Effective Date (the
“Expiration Date ”), or (ii) the date
on which Executive’s employment is terminated pursuant to
Section 3 of this Agreement (the “ Initial
Term ”); provided that, unless earlier terminated
pursuant to Section 3 of this Agreement, the Initial Term shall be
automatically extended for additional one-year terms (each a
“ Renewal Term” ) upon the expiration
of the Initial Term or any such Renewal Term unless the Board or
Executive delivers to the other at least thirty (30) days prior to
the expiration of the Initial Term or the then current Renewal
Term, as the case may be, a written notice specifying that the term
of the Executive’s employment will not be renewed at the end
of the Initial Term or such Renewal Term, as the case may be (the
“ Term Termination Notice ”). The
Initial Term or, in the event that the Executive’s employment
hereunder is earlier terminated pursuant to Section 3 or renewed as
provided in this Section 1 (c), such shorter or longer period, as
the case may be, is hereinafter called the “
Term .”
|
|
Compensation, Bonuses and Benefits
.
|
(a)
Base Salary
. During Executive’s
employment with the Company, the Company shall pay Executive a base
annual salary (the “ Base Salary ”) of
$240,000.00. The Base Salary shall be payable in accordance with
the Company’s normal payroll schedule, less all applicable
tax withholdings for state and federal income taxes, FICA and other
deductions as required by law and/or authorized by Executive. The
Executive’s Base Salary shall be reviewed by the Compensation
Committee of the Board (the “ Compensation
Committee ”) no less frequently than annually to
determine whether or not it should be changed (if it is decreased
it will be subject to the provisions of Section 3(g) Termination
for Good Reason) in light of the duties and responsibilities of the
Executive and the performance thereof, and, if it is determined by
the Compensation Committee in its sole discretion that an increase
is merited, such increase shall be promptly put into effect and the
base salary of the Executive as so increased shall constitute the
Base Salary of the Executive for purposes of this Agreement from
and after such date.
(b)
Deferred Compensation
. Executive agrees to defer his
annually salary until the Company’s registration statement is
deemed effective by the SEC or sooner on a mutually agreed upon
date.
(c)
Incentive Compensation
Program . During
Executive’s employment with the Company, Executive shall be
entitled to participate in such incentive compensation programs as
are from time to time established and approved by the Board in
accordance with the Company’s practice for similarly situated
employees.
(d)
Benefits . Executive shall be entitled to participate in
such employee benefit plans which the Company provides or may
establish from time to time for the benefit of employees, subject
to the terms of each such plan and subject to the right of the
Company and the Board to modify, revise or eliminate such benefit
plans from time to time in their sole discretion. Executive shall
pay for the portion of the cost of such benefits as is from
time-to-time established by the Company as the portion of such cost
to be paid by senior executives of the Company.
(e)
Costs and Expenses
. Executive shall be entitled to
reimbursement for all ordinary reasonable out-of-pocket business
expenses which are reasonably incurred by him in the furtherance of
the Company’s business, in accordance with the policies
adopted from time to time by the Company or the Board. Executive
will comply with the Company’s travel policies as established
from time to time by the Company or the Board.
(f)
Vacation . Executive shall be entitled to four weeks of
vacation with pay each year, which shall accrue in accordance with
the Company’s practice for senior executives of the Company.
Executive will schedule vacation periods to minimize disruption of
the Company’s business.
(g)
Allowances . Executive shall be entitled to an automobile
and cell phone allowance. The amount of the allowance shall be
determined by the compensation committee; however, such amount
shall not be less than $1,000 (in a combined total of the
allowances).
(h)
Retention Bonus . If the Executive is an active employee of
the Company on the one-year anniversary (the "Anniversary Date") of
the Effective Date, the Executive will be paid a bonus equal to
$100,000. If the Executive is an active employee of the Company on
each successive anniversary (the "Anniversary Date") of the
Effective Date, the Executive will be paid a bonus equal to
$200,000. In the sole discretion of the Executive, the amount of
the deferred may be converted into Common Stock at $.10 per
share.
(i) Signing
Bonus . Executive shall be entitled to a $75,000 signing bonus
to be paid within ninety (90) days of the Effective
Date.
(a)
Mutual Agreement
. Executive’s employment
under this Agreement may be terminated at any time by the mutual
agreement of the Company and Executive, expressed in
writing.
(b)
Voluntary . Executive’s employment under this
Agreement may be terminated by Executive with or without the
consent of the Company by giving written notice of his/her intent
to terminate with the effective date of termination at least four
weeks after the effective date of the notice of termination. After
such notice, the Company may accelerate the date such termination
will take effect pursuant to this paragraph (b) without being in
breach hereof.
(c)
Without Cause
. The Company may terminate
Executive’s employment under this Agreement at any time
without Cause effective immediately upon delivery of written notice
to Executive.
(d)
Disability or Death
. The Company may terminate
Executive’s employment under this Agreement upon the death or
disability of Executive. For purposes of this Agreement, Executive
shall be considered disabled if he/she is unable to perform his/her
duties under this Agreement as a result of injury, illness or other
disability for a period of 90 consecutive days, or 180 days in any
365 day period, and the Board reasonably determines that Executive
has been unable to perform his/her duties for the 180 day period as
a result of injury, illness or other disability.
(e)
For Cause by the
Company . The Company may
terminate Executive’s employment for “Cause” at
any time prior to the expiration of the Term effective immediately
upon delivery of written notice to Executive. For purposes of this
Agreement, “Cause” shall mean:
(i)
Executive engaging in a material
act of theft, embezzlement, misappropriation of funds or property,
or fraud against, or with respect to the business, of the Company
or any affiliate;
|
|
|
|
Current use of
illegal drugs on or off the job;
|
(iii)
Executive has been determined as a
result of his/her incapacity due to physical or mental illness, by
two physicians selected by the president of the Las Vegas, Colorado
chapter of the American Medical Association, to be unable to
perform substantially and continuously the Executive’s
obligations under this Agreement for a period of three consecutive
months or for an aggregate of six months in any 12-month period (a
“ Disability ”);
(iv)
Executive commits a breach of any
material term of this Agreement and, if such breach is capable of
being cured, fails to cure such breach within 30 days of notice of
such breach;
(v)
Executive is charged with or found
guilty of, or pleads guilty or nolo contendere to a felony or a
crime involving moral turpitude;
(vi)
As a result of Executive’s
gross negligence or willful misconduct, Executive commits any act
that causes, or knowingly fails to take reasonable and appropriate
action to prevent, any material injury to the financial condition
or business reputation of the Company or any affiliate; however,
this shall not apply to any act of the Company or of its affiliates
or subsidiaries or any other employee thereof except to the extent
that such act was committed at the direction of, or with the
knowledge and consent of, Executive;
(vii)
Engaging in any offense punishable
by the termination of employment as set forth in the
Company’s employment policies manual, as said manual is now
in effect or as said manual is amended from time to time during the
term of this Agreement;
(f)
Termination After Change of
Control . Executive may
terminate his/her employment within three (3) months after a Change
of Control and prior to the expiration of the Term upon two (2)
weeks prior written notice to the Company.
(g)
Termination by the Employee with Good Reason. At the
election of the Employee upon Good Reason or otherwise, upon five
business days' prior written notice of termination employee may
terminate this Agreement. For purposes of this Agreement, "Good
Reason" for termination shall be deemed to exist solely if the
Employee terminates employment within one year after the occurrence
of any of the following without the explicit written consent of the
Employee: (a) diminution of title, responsibilities, authority or
duties; (b) a failure to be elected to or removal from the Board;
(c) a change in work location beyond a 50 mile radius from the
Employee's current location of employment (it being understood that
foreign business travel shall not constitute a "change in work
location" for these purposes unless it averages more than one
calendar week per month outside North America), (d) the failure of
the Company to obtain and deliver to the Employee a satisfactory
written agreement from any successor to the Company to assume and
agree to perform this Agreement, or (e) any breach of this
Agreement or any other material breach of this Agreement by the
Company.
“
Change of Control ” shall mean the
occurrence of one or more of the following:
( i)
a person (as defined in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (“ Exchange Act ”), other than
an already existing shareholder as of the date hereof, that have an
existing equity interest of 25% or greater, either individually or
collectively, directly or indirectly becomes the “beneficial
owner” (as defined in Rule 13d-3 promulgated pursuant to the
Exchange Act) of 50% or more of the securities or combined voting
power of the Company’s outstanding securities;
(ii)
a complete liquidation or
dissolution of the Company other than a liquidation or dissolution
occurring after any of the following transactions: the merger or
consolidation of the Company with an Affiliate, the transfer of 50%
or more of the Voting Stock of the Company to an Affiliate or
Affiliates or the sale or other transfer of all or substantially
all of the assets of the Company to an Affiliate or
Affiliates;
(iii)
the sale of all or substantially
all of the Company’s assets to a single purchaser or group of
affiliate purchasers, other than any Affiliate or Affiliates, in
one or a series of related transactions;
(iv)
the Company engages in a merger or
consolidation with another entity other than an Affiliate and
immediately after that merger or consolidation, the terms or
entities which were stockholders of the Company immediately prior
to that merger or consolidation hold, directly or indirectly, less
than 50% of the Voting Stock of the surviving entity; or
(v)
individuals who were members of the
Board immediately prior to any particular meeting of the
Company’s shareholders which involves a contest for the
election of directors, fail to constitute a majority of the members
of the Board following such election.
“
Affiliate ” shall mean any corporation,
partnership, trust or other entity of which the Company and/or any
of its Affiliates directly or indirectly owns a majority of the
outstanding shares of any class of equity security of such
corporation, partnership, trust or other entity and any
corporation, partnership, trust or other entity which directly or
indirectly owns a majority of the outstanding shares of any class
of equity security of the Company or any of its
Affiliates.
“
Voting Stock ” shall mean, with respect to a
corporation, the capital stock of any class or classes of that
corporation having general voting power under ordinary
circumstances, in the absence of contingencies, to elect directors
of such corporation and, with respect to any other entity, the
securities of that entity having such general voting power to elect
the members of the managing body of that entity.
(h)
Notice of Termination
. Any purported termination of
employment shall be communicated through written notice indicating
the specific provision in this Agreement relied upon. In addition,
notwithstanding the termination date specified in Executive’s
notice of termination to the Company under this Section 3, the
Company may, in its sole discretion, accelerate the termination
date to any earlier date up to and including the date it received
such notice and such date s