EMPLOYMENT AGREEMENT

Retention and Duties.

 

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.

 

Duties.  During the Period of Employment, the Executive shall serve the Company as its Chief Operations Officer (the “COO”) and shall have the powers, duties and obligations of management typically vested in the office of the COO, of a corporation, subject to the directives of the Chief Executive Officer (the “CEO”) 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).  The Executive shall devote substantially all of the Executive’s business time, energy and skill to the performance of the Executive’s duties for the Company. As part of the accepting the role and duties of company management, the Executive will resign his position on the Board. During the Period of Employment, the Executive shall report to the CEO.

 

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.

 

Location.  The Executive acknowledges that the Company’s principal executive offices are currently located in Carlsbad, California.  The Executive agrees that he will work from the Company’s principal executive offices.  The Executive acknowledges that he may be required to travel from time to time in the course of performing his duties for the Company.

Compensation.

 

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 Base Salary shall be at an annualized rate of Three Hundred Thousand Dollars ($300,000).

 

Incentive Bonus.  During the Period of Employment, the Executive shall be eligible to receive an annual incentive bonus (“Incentive Bonus”) of 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 Plan.

 

Stock Option Grants.  Subject to this Section 2.3 and board compensation committee approval, the Company will grant to the Executive an initial option (the “Initial Option”) to purchase 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.

Benefits.

 

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.

 

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.  The Executive shall also be entitled to all other holiday and leave pay generally available to other executives of the Company.

 

Relocation Costs. Upon the commencement of the Period of Employment the company shall pay the Executive a one-time lump sum payment of Forty Thousand Dollars ($40,000) for relocation costs from Boulder Colorado to the San Diego California metropolitan area. This payment will be a direct payment to the Executive to cover actual and reasonable costs associated with relocation.

Termination.

 

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”).

 

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:

 

(a)

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;

 

(b)

If the Executive’s employment with the Company is terminated by the Company without Cause (as defined in Section 4.4(b)), 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 three (3) months calculated at the Executive’s then-current Base Salary rate in effect on the Separation Date as severance pay. 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.

 

Release; Exclusive Remedy.

 

(a)

This Section 4.3 shall apply notwithstanding anything else contained in this Agreement or any stock option, restricted stock or other equity-based award agreement to the contrary.  Notwithstanding any provision in this Agreement to the contrary, as a condition precedent to any Company obligation to the Executive pursuant to Section 4.2(b) or any agreement or obligation to accelerate vesting of any equity-based award in connection with the termination of the Executive’s employment, the Executive shall, upon or promptly following his Separation Date sign and not revoke a general release agreement in a form prescribed by the Company, and provided further that such general release agreement is executed and becomes effective no later than forty-five (45) days following the Executive's Separation Date. The Company shall have no obligation to make any payment to the Executive pursuant to Section 4.2(b) (or to accelerate the vesting of any equity-based award in the circumstances as may otherwise be contemplated by the applicable award agreement) unless and until the general release agreement contemplated by this Section 4.3 becomes irrevocable by the Executive in accordance with all applicable laws, rules and regulations.

 

(b)

The Executive agrees that the general release agreement described in Section 4.3(a) will include a complete release of all known and unknown claims pursuant to California Civil Code Section 1542 and will require that the Executive acknowledge, as a condition to the payment of any benefits under Section 4.2(b), as applicable, that the payments contemplated by Section 4.2 (and any applicable acceleration of vesting of an equity-based award in accordance with the terms of such award in connection with the termination of the Executive’s employment) shall constitute the exclusive and sole remedy for any termination of his employment, and the Executive will be required to covenant, as a condition to receiving any such payment (and any such accelerated vesting), not to assert or pursue any other remedies, at law or in equity, with respect to any termination of employment.  The Company and Executive acknowledge and agree that there is no duty of the Executive to mitigate damages under this Agreement.  All amounts paid to the Executive pursuant to Section 4.2 shall be paid without regard to whether the Executive has taken or takes actions to mitigate damages.

 

Certain Defined Terms.

 

(a)

As used herein, “Accrued Obligations” means:

 

(i)

any Base Salary that had accrued but had not been paid (including accrued and unpaid personal time off) on or before the Separation Date; and.

 

(ii)

any reimbursement due to the Executive for expenses incurred by the Executive on or before the Separation Date.

 

(b)

As used herein, “Cause” shall mean, as reasonably determined by the Company, (i) any act of personal dishonesty taken by the Executive in connection with his responsibilities as an employee of the Company which is intended to result in substantial personal enrichment of the Executive and is reasonably likely to result in material harm to the Company, (ii) the Executive’s conviction of a felony which the Company reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business, (iii) a willful act by the Executive which constitutes misconduct and is materially injurious to the Company, (iv) continued willful violations by the Executive of the Executive’s obligations to the Company after there has been delivered to the Executive a written demand for performance from the Company which describes the basis for the Company’s belief that the Executive has willfully violated his obligations to the Company.

 

Limitation on Benefits.

 

(a)

Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, the Executive under any other Company plan or agreement (such payments or benefits are collectively referred to as the “Benefits”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received all of the Benefits (such reduced amount if referred to hereinafter as the “Limited Benefit Amount”).  Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the Limited Benefit Amount, the Company shall reduce or eliminate the Benefits by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined).  Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive’s rights and entitlements to any benefits or compensation.

 

(b)

A determination as to whether the Benefits shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by the Company’s independent public accountants or another certified public accounting firm of national reputation designated by the Company (the “Accounting Firm”) at the Company’s expense.  The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and the Executive within five (5) days of the date of termination of the Executive’s employment, if applicable, or such other time as requested by the Company or the Executive (provided the Executive reasonably believes that any of the Benefits may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to any Benefits, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Benefits.  Unless the Executive provides written notice to the Company within ten (10) days of the delivery of the Determination to the Executive that he disputes such Determination, the Determination shall be binding, final and conclusive upon the Company and the Executive.

Proprietary Information; Inventions and Developments.  Concurrently with entering into this Agreement, the Executive will execute the Confidentiality and Work for Hire Agreement.

Withholding Tax.  Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due payable under or Pursuant to this Agreement such federal, state, and local income employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

Assignment.  This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that in the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

Section Headings.  The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.

Governing Law.  This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.

Severability.  If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

Entire Agreement.  This Agreement, together with the Option Agreements and the Exhibits contemplated hereby, including the Confidentiality and Work for Hire Agreement and Mutual Agreement to Arbitrate, embodies the entire agreement of the parties hereto respecting the matters within its scope.  This Agreement supersedes all prior and contemporaneous agreements of the parties hereto that directly or indirectly bears upon the subject matter hereof.  Any prior negotiations, correspondence, agreements, proposals or understandings relating to the subject matter hereof shall be deemed to have been merged into this Agreement, and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no force or effect.  There are no representations, warranties, or agreements, whether express or implied, or oral or written, with respect to the subject matter hereof, except as expressly set forth herein.

Modifications.  This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.  Without limiting the foregoing, the at-will nature of Executive's employment by the Company may only be modified in a writing approved by the CEO and executed by both the CEO and the Executive.

Waiver.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

Arbitration.  Any controversy arising out of or relating to the Executive’s employment (whether or not before or after the expiration of the Period of Employment), any termination of the Executive’s employment, this Agreement, the Confidentiality and Work for Hire Agreement referred to in Section 5, the Option Agreement or any other agreements relating to the grant to Executive of equity-based awards, including any Anniversary Option, the enforcement or interpretation of any of such agreements, or because of an alleged breach, default, or misrepresentation in connection with any of the provisions of any such agreement, including (without limitation) any state or federal statutory claims, shall be submitted to arbitration in accordance with the provisions set forth on Exhibit D hereto.

Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

Legal Counsel; Mutual Drafting.  Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice.  Each party has cooperated in the drafting, negotiation and preparation of this Agreement.  Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language.  The Executive agrees and acknowledges that he has read and understands this Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has had ample opportunity to do so.

Code Section 409A.

 

(a)

It is intended that any amounts payable under this Agreement and the Company’s exercise of authority or discretion hereunder shall comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Executive to any interest or additional tax imposed under Code Section 409A.  To the extent that any amount payable under this Agreement would trigger the additional tax imposed by Code Section 409A, the Agreement shall be modified to avoid such additional tax yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive.

 

(b)

Without limiting the generality of the foregoing, and notwithstanding any provision in this Agreement to the contrary, any payments made from the date of the Executive's termination of employment through March 15th of the calendar year following such termination, are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable pursuant to the "short-term deferral" rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations; to the extent such payments are made following said March 15th, they are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations made upon an involuntary separation from service and payable pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted by said provision, with any excess amount being regarded as subject to the distribution requirements of Section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code.  For purposes of the foregoing, if upon Executive's separation from service he is then a "specified employee" (within the meaning of Code Section 409A), then to the extent necessary to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall defer payment of "nonqualified deferred compensation" subject to Code Section 409A payable as a result of and within six (6) months following such separation from service under this Agreement until the earlier of (i) the first business day of the seventh month following Executive's separation from service, or (ii) ten (10) days after the Company receives notification of Executive's death.  If the Company determines that any other payments hereunder fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, then the payment of such benefit shall be delayed to the minimum extent necessary so that such payments are not subject to the provisions of Section 409A(a)(1) of the Code.  Any payments that are delayed as a result of this Section 23(b) shall be paid without interest.

 

•

Executive’s claims for workers’ compensation benefits, unemployment insurance, or state or federal disability insurance.

 

•

Either party's request for temporary injunctive relief prior to resolution of the dispute on its merits in an arbitration proceeding.

 

•

Any other dispute or claim that has been expressly excluded from arbitration by statute or binding legal precedent.

 

•

Any claims which, as a matter of law then in effect, cannot be the subject of a mandatory arbitration agreement.

 

 

Date:                                                                

 

 

  /s/ Kenneth Keymer                                                                 

Kenneth Keymer

 

 

 

Date:                                                                

NTN Buzztime, Inc.

 

 

  /s/ Terry Bateman                                                                 

By:  Terry Bateman

Title: CEO