Exhibit 10.1

 

SECOND AMENDMENT

TO

EMPLOYMENT AGREEMENT

 

This Second Amendment (this “Amendment”) to the Employment Agreement (as defined
below) is made and entered into as of March 16, 2018 by Digital Turbine, Inc., a
Delaware corporation (the “Employer”), and William Stone (the “Executive”).
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Employment Agreement.

 

WHEREAS, the Employer and the Executive entered into that certain Employment
Agreement, dated as of September 9, 2014, as amended May 26, 2016 (as so
amended, the “Employment Agreement”), pursuant to which the Executive currently
is serving as Chief Executive Officer of the Employer;

 

WHEREAS, the Board of Directors has determined that the Employer should make
certain amendments to the Employment Agreement as further described herein; and

 

WHEREAS, the Employer and the Executive desire to enter into this Amendment to
effectuate such amendments to the Employment Agreement;

 

NOW, THEREFORE, in consideration of the foregoing, the mutual promises of the
parties hereto and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree to
amend the Employment Agreement, as follows:

 

1.       Amendment to Section 3 of the Employment Agreement. Section 3 of the
Employment Agreement is amended and restated to read as follows:

 

“3. Term. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement commenced on the Transition Date and shall continue
on an at-will basis, subject to termination by the Company or Executive at any
time (the period of time commencing on the Transition Date through the
termination of this Agreement being the “Term”)”

 

2.       Amendment to Section 4(b)(ii) of the Employment Agreement. Section
4(b)(ii) of the Employment Agreement is amended and restated to read as follows:

 

“(ii) Effective for the Stub Period, The Year 1 Period, the Year 2 Period, the
Year 3 Period (each, as defined in Schedule A), the Executive shall be eligible
to be paid an annual incentive bonus in cash in an amount of up to one hundred
fifty percent (150%) of the Executive’s Salary with respect to the applicable
period subject to satisfaction of performance-related milestones, as specified
on Schedule A. Effective for all periods after the Year 3 Period, the Executive
shall be eligible to the annual and long term incentive bonuses in the amounts,
and subject to the terms as conditions, as set forth in Schedule B.”

 

 

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3.       Amendment to Section 4(b)(iii) of the Employment Agreement. Section
4(b)(iii) of the Employment Agreement is amended and restated to read as
follows:

 

“(iii) Any bonus amounts due under subsection (b)(i) and (b)(ii) of this Section
4 (x) shall be paid within thirty (30) days after the revenue and EBITDA
criteria are determined for the applicable period in the manner described in
Schedule A and Schedule B, as applicable, but not later than two and one-half
(2-1/2) months following the later of the last day of the calendar year or the
last day of the Employer’s fiscal year in which the applicable period with
respect to which the bonus is determined ends, and (y) shall be conditioned on
the Executive being employed throughout the entire applicable period with
respect to which the bonus is determined.”

 

4.       Amendment to Section 4(f) of the Employment Agreement. Section 4(f) of
the Employment Agreement is amended and restated to read as follows:

 

“The Executive shall be entitled to a one-time bonus of One Hundred Thousand
Dollars ($100,000) payable within five (5) days of signing the Amendment to the
Employment Agreement entered on or about March 16, 2018.”

 

5.       Amendment to Section 6(d) of the Employment Agreement. Section 6(d) of
the Employment Agreement is amended and restated to read as follows:

 

“(d)       Disability. If the Executive shall become Disabled so as to be unable
to perform the essential functions of the Executive’s then existing position or
positions under this Agreement with or without reasonable accommodation, the
Board of Directors may remove the Executive from any responsibilities and/or
reassign the Executive to another position with the Employer during the period
of such Disability. Notwithstanding any such removal or reassignment, the
Executive shall continue to receive the Executive’s full Salary (less any
disability pay or sick pay benefits to which the Executive may be entitled under
the Employer’s policies) and benefits under Section 4 of this Agreement (except
to the extent that the Executive may be ineligible for one or more such benefits
under applicable plan terms) for a period of time equal to twelve (12) months
payable at the same time as such amounts would otherwise have been paid to the
Executive had he continued in his current capacity. If the Executive is unable
to perform substantial services of any kind for the Employer during this period,
such period shall be considered a paid leave of absence and the Executive shall
have the contractual right to return to employment at any time during such
period. If the Executive’s Disability continues beyond such twelve (12) month
period, the Executive’s employment may be terminated by the Employer by reason
of Disability at any time thereafter. For purposes hereof, the term “Disabled”
or “Disability” shall mean a written determination that the Executive, as
certified by at least two (2) duly licensed and qualified physicians, one (1)
approved by the Board of Directors of the Employer and one (1) physician
approved by the Executive (the “Examining Physicians”), or, in the event of the
Executive’s total physical or mental disability, the Executive’s legal
representative, that the Executive suffers from a physical or mental impairment
that renders the Executive unable to perform the Executive’s regular personal
duties under this Agreement and that such impairment can reasonably be expected
to continue for a period of three (3) consecutive months or for shorter periods
aggregating ninety (90) days in any twelve (12) month period; provided, however,
that the Executive’s primary care physician may not serve as one of the
Examining Physicians without the consent of the Employer and the Executive (or
the Executive’s legal representation). The Executive shall cooperate with any
reasonable request of a physician to submit to a physical examination for
purposes of such certification. Nothing in this Section 6(d) shall be construed
to waive the Executive’s rights, if any, under existing law including, without
limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq.
and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.”

 

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6.       Amendment to Section 6(e) of the Employment Agreement. Section 6(e) of
the Employment Agreement is amended and restated to read as follows:

 

“ (e) Termination by the Executive for Good Reason. Subject to the payment of
Termination Benefits pursuant to Section 7(b), the Executive’s employment under
this Agreement may be terminated by the Executive for Good Reason. For purposes
of this Agreement, “Good Reason” shall be present where Executive gives notice
to the Board of Directors of his voluntary resignation within thirty (30) days
after the occurrence of any of the following, without Executive’s written
consent: (i) breach by the Employer of the insurance or indemnification
provisions herein or in Executive’s indemnification agreement with Employer as
in effect on the date hereof or failure of the Employer to pay or cause to be
paid or delivered any amounts or options due Executive when due under the terms
and conditions hereunder, in each case subject to a thirty (30) day cure period
by the Employer following reasonably specific written notice by the Executive;
(ii) the Executive’s not reporting directly to the Board of Directors, subject
to a thirty (30) day cure period by the Employer following reasonably specific
written notice by the Executive, unless the sole reason for such failure to
report to the Board of Directors is that a Change of Control occurred and as a
result the Executive’s reporting structure in the buyer’s organization puts
Executive at effectively the same or higher level of overall responsibility and
authority (comparing the positions in each organization) as was the case
immediately prior to such Change of Control, as reasonably determined by the
Board of Directors prior to such Change of Control; or (iii) material diminution
in Executive’s position, duties, authority or responsibility, without Cause,
subject to a thirty (30) day cure period by the Employer following reasonably
specific written notice by the Executive. If the Executive fails to resign
within sixty (60) days after the expiration of the applicable cure period, then
such event will not be a basis to resign for Good Reason.”

 

7.       Amendment to Section 7(a) of the Employment Agreement. Section 7(a) of
the Employment Agreement is amended by deleting from the first sentence thereof
the words “during or upon expiration of the Term.”

 

8.       Amendment to Section 7(b) of the Employment Agreement. Section 7(b) of
the Employment Agreement is amended and restated to read as follows:

 

“ (b) Termination by the Employer Without Cause or by the Executive for Good
Reason. In the event of termination of the Executive’s employment with the
Employer pursuant to Section 6(b) or 6(e) above, and subject to the Executive’s
execution and delivery of a release of any and all legal claims in a form
satisfactory to the Employer, and expiration of any revocation period without
the release being revoked, within forty-five (45) days following the Termination
Date (the “Release Period”), the Employer shall provide to the Executive, in
addition to the Accrued Compensation, the following termination benefits
(“Termination Benefits”):

 

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(i) continuation of the Executive’s Salary at the rate and in accordance with
the Employer’s payroll practices then in effect pursuant to Section 4(a); and

 

(ii) continuation of any executive health and group health plan benefits to the
extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly
known as “COBRA”), subject to payment of premiums by the Employer to the extent
that the Employer was covering such premiums as of the Termination Date (if
permitted by law without violation of applicable discrimination rules, or, if
not, the equivalent after-tax value payable as additional severance at the same
time such premiums are otherwise payable); and

 

(iii) a pro-rated portion of the Annual Cash Incentive (as provided for in
Schedule B) applicable to the fiscal year in which the Termination Date occurs
(but, for clarity, not for any period after such fiscal year), based on the
percentage completion of such fiscal year (measured from April 1st of such year
through the Termination Date) and the degree of attainment of the applicable
Annual Financial Goals (as defined in Schedule B) as of the Termination Date, as
reasonably determined by the Compensation Committee, and paid at the same time
as a bonus would otherwise be payable under Section 4(b);

 

(iv) acceleration of vesting of the options amended and/or granted under this
Agreement on a pro-rata basis as if the vesting schedule had been monthly rather
than annual, advanced to the next month; and

 

(v)       acceleration of vesting of such number of PSUs that have been granted
to Executive under Schedule B but which are then unvested, determined, for each
then outstanding granted but unvested grant, by multiplying the PSUs that
Executive would receive at each applicable “Target” level of performance, by a
fraction, the numerator of which is the number of calendar months elapsed from
the Grant Date of the applicable grant of PSUs through the Termination Date, and
the denominator of which is 36 months.

 

The Termination Benefits set forth in subsections 7(b)(i) and (ii) and above
shall continue effective for a period starting on the Termination Date and
ending on the first anniversary of the Termination Date (the “Termination
Benefits Period”); provided, however, (i) that if the termination pursuant to
Section 6(b) or 6(e) above occurs within twelve (12) months of a Change of
Control, then the Termination Benefits Period shall be a period of eighteen (18)
consecutive months starting on the Termination Date; and (ii) that in the event
that the Executive commences any employment during the Termination Benefits
Period, the benefits provided under Section 7(b)(ii) shall cease effective as of
the date Executive qualifies for group health plan benefits in his new
employment. The Employer’s liability for Salary continuation pursuant to Section
7(b)(i) shall not be reduced by the amount of any severance pay paid to the
Executive pursuant to any severance pay plan or stay bonus plan of the Employer.
Notwithstanding the foregoing, nothing in this Section 7(b) shall be construed
to affect the Executive’s right to receive COBRA continuation entirely at the
Executive’s own cost to the extent that the Executive may continue to be
entitled to COBRA continuation after Employer-paid premiums cease. The Executive
shall be obligated to give prompt notice of the date of commencement of any
employment during the Termination Benefits Period and shall respond promptly to
any reasonable inquiries concerning any employment in which the Executive
engages during the Termination Benefits Period.

 

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The Employer acknowledges and agrees that under certain circumstances involving
the termination of the Executive’s employment and/or a Change of Control
transaction involving the Employer, the Executive shall be entitled to
accelerated vesting on his options to purchase shares of capital stock of the
Employer, all to the extent provided in that certain Stock Option Agreements
referred to in Section 4(e) hereof.

 

Any Termination Benefits (subject to Executive’s timely execution, delivery and
nonrevocation of the required release) that otherwise would become due any
payable prior to the end of the Release Period (including Salary continuation
payments and COBRA premium payments otherwise due during the Release Period)
shall be paid on Employer’s first regular payroll date following the end of the
Release Period.”

 

9.       Amendment to Section 7(c) of the Employment Agreement. Section 7(c) of
the Employment Agreement is amended and restated to read as follows:

 

“(c) Termination by Reason of Cause, Death, Disability, Voluntary Termination by
the Executive or Company. If the Executive’s employment is terminated for any
reason other than (i) by the Employer without Cause under Section 6(b) or (ii)
by the Executive for Good Reason under Section 6(e), the Employer shall have no
further obligation to the Executive other than payment of his Accrued
Compensation.”

 

10.       Amendment to Section 8(g) of the Employment Agreement. Section 8(g) of
the Employment Agreement is amended by changing the reference therein to
“Schedule B” to be “Schedule C”.

 

11.       Addition of New Schedule B to Employment Agreement. A new Schedule B
is hereby added to the Employment Agreement, immediately after Schedule A, which
shall read as follows (and previous Schedule B is hereby renamed Schedule C):

 

Schedule B

Annual Cash Incentive:

 

Commencing for the fiscal year ending March 31, 2019 and continuing for each
fiscal year thereafter while the Executive is employed as the CEO of the
Company, the Compensation Committee of the Board will, within 30 days the
Board’s approval of the annual operating plan for a given fiscal year, but not
later than the end of the first fiscal quarter of the fiscal year, determine,
after consultation with the Executive, Threshold, Target and Stretch Target
revenue and earnings goals for that specific fiscal year, each representing an
increasingly higher level of achievement, which goals shall be provided in the
writing to the Executive (“Annual Financial Goals”). Earnings goals shall
generally be the same primary measure of profitability used by the Company in
its public guidance (such as Adjusted EBITDA), but the Committee retains the
right to use a different measure. If an extraordinary change occurs, such as a
merger or recapitalization, the Committee may, in its reasonable discretion,
revise the Annual Financial Goals after discussion with the Executive to
preserve the original incentive structure and degree of achievement as existed
prior to such change.

 

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The amount of the Threshold, Target and Stretch Target bonuses shall be 25%, 50%
and 100% of the Executive’s Base Salary for the applicable fiscal year, and
shall only be paid in cash. For example, for the fiscal year ending March 31,
2019, the Base Salary is $500,000, so the Threshold, Target and Stretch Target
bonus would be, if the applicable goals are achieved, $125,000; $250,000; and
$500,000.

 

Achievement of Annual Financial Goals shall be determined promptly after the
Company’s annual financial statements for the fiscal year for the applicable
period have been publicly issued and certified by the Company’s auditors. Any
interpretative issues in reconciling earnings goals to audited numbers shall (a)
be resolved as much as possible based on the Company’s publicly filed
reconciliations of the same and (b) as to any other questions shall be
determined in the reasonable discretion of the Compensation Committee after good
faith discussion with Executive.

 

The Committee retains the sole discretion to award a pro-rated amount of any
applicable bonus based on partial achievement, but the Company and the Committee
has no obligation to do so and Executive confirms he has no expectation that the
Company or the Committee will do so.

 

Annual Cash Incentive

Threshold Bonus

 

 

 

Target Bonus

 

 

 

Stretch Target Bonus

 

 

 

Revenue Goal (40%) Executive receives 40% of the Threshold Bonus only if the
applicable Revenue goal is achieved. Executive receives 40% of the Target Bonus
only if the applicable Revenue goal is achieved. Executive receives 40% of the
Stretch Target Bonus only if the applicable Revenue goal is achieved. Earnings
Goal (40%) Executive receives 40% of the Threshold Bonus only if the applicable
earnings goal is achieved. Executive receives 40% of the Target Bonus only if
the applicable earnings goal is achieved. Executive receives 40% of the Stretch
Target Bonus only if the applicable earnings goal is achieved. Discretionary
(20%) Executives receives 20% of the highest bonus tier he has earned if, in the
sole discretion of the Compensation Committee, he has achieved exceptional
results for the Company in the areas of compliance and operations and such other
areas of focus as the Committee deems appropriate.  If Executive has not earned
any bonus tier, the Committee retains the discretion to award the Discretionary
bonus base on 20% of the Threshold bonus.

 

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Long Term Incentive:

 

Commencing with the fiscal year ending March 31, 2019, and continuing for each
fiscal year thereafter while the Executive is employed as the CEO of the
Company, the Compensation Committee of the Board will grant to the Executive,
when the Company makes Company-wide annual equity grants for such fiscal year
(such date, the “Grant Date”), time-vesting and performance-vesting Restricted
Stock Units pursuant to the Amended and Restated 2011 Equity Incentive Plan of
Mandalay Digital Group, Inc. (the “Plan”) in amounts determined below, subject,
for the avoidance of doubt, to any applicable annual limit set forth in Section
9.5 of the Plan. Capitalized terms used in these provisions pertaining to the
Long Term Incentive, and not otherwise defined in the Agreement, shall have the
meanings set forth in the Plan.

 

Time-Vesting Restricted Stock Units

 

The time-vesting Restricted Stock Units (RSUs) shall be for a number of Shares
of Company common stock having aggregate Fair Market Value on the Grant Date as
determined by the Compensation Committee in its discretion. Such RSUs will vest
on the following schedule, provided that the Executive continues to be employed
by the Company through each vesting date:

 

  On the first anniversary of the Grant Date 1/3 of the Shares         On the
monthly anniversary of the Grant Date each     month after the first anniversary
of the Grant Date an additional 1/36   through the third anniversary of the
Grant Date of the Shares

 

 

Any RSUs that have not vested prior to the termination of the Executive’s
employment with the Company shall terminate immediately upon the Executive’s
termination of employment and thereafter shall be of no further force or effect.

 

On each vesting date, the number of Shares with respect to which the RSU then
vests immediately shall be issued to the Executive. The Company is authorized to
withhold applicable taxes upon issuance of such Shares pursuant to Section 21 of
the Agreement.

 

Performance-Vesting Restricted Stock Units

 

The performance-vesting Performance Stock Units (PSUs) shall be for a number of
Shares of Company common stock having aggregate Fair Market Value on the Grant
Date as determined by the Compensation Committee in its discretion. Such PSUs
will be earned and vest on the third anniversary of the Grant Date, provided
that the Executive continues to be employed by the Company through such date,
with the number of Shares then earned and vested determined as described below.

 

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On or before the Grant Date of the PSUs, the Board shall establish, after
consultation with the Executive, Threshold, Target and Stretch Target Revenue
and EBITDA goals for the three fiscal year period beginning with the fiscal year
immediately following the fiscal year for which the Long Term Incentive grant is
being made, which goals shall be provided in the writing to the Executive (“LTI
Financial Goals”). Vesting of PSUs granted for each fiscal year will be based
fifty percent (50%) upon level of satisfaction of the 3-year Revenue goal and
fifty percent (50%) upon level of satisfaction of the 3-year EBITDA goal. If an
extraordinary event occurs during the three fiscal year period, such as a merger
or recapitalization of the Company, the Board may, in its reasonable discretion,
revise the LTI Financial Goals after discussion with the Executive to preserve
the original incentive structure and degree of achievement as existed prior to
such change. LTI Financial Goals may be stated as achievement of a given level
of revenue and EBITDA for each year of the three-year period, or of a given
aggregate level of revenue and EBITDA over the three-year period. Level of
vesting of PSUs with respect to Revenue and EBITDA goals will be in accordance
with the following schedule, with straight line interpolation for achievement
between Threshold and Target performance and between Target and Stretch Target
performance:

 

PSU Vesting Threshold

Target

Stretch Target

3 Year Revenue Target (50% of 3-year vest PSU grant) 50% of Revenue goal portion
of PSUs 100% of Revenue goal portion of PSUs 200% of Revenue goal portion of
PSUs 3 Year EBITDA Target (50% of 3-year vest PSU grant) 50% of EBITDA goal
portion of PSUs 100% of EBITDA goal portion of PSUs 200% of EBITDA goal portion
of PSUs

 

Achievement of LTI Financial Goals shall be determined promptly after the
Company’s annual financial statements for the last fiscal year for the
applicable period have been publicly issued and certified by the Company’s
auditors. Any interpretative issues in reconciling EBITDA goals to audited
numbers shall (a) be resolved as much as possible based on the Company’s
publicly filed reconciliations of the same and (b) as to any other questions
shall be determined in the reasonable discretion of the Compensation Committee
after good faith discussion with Executive.

 

No PSUs shall vest with respect to any LTI Financial Goal that is not met at the
Threshold level of above. Vesting shall not exceed 200% of PSUs for performance
above the Stretch Target level.

 

Except as set forth in Section 7(b)(v) of the Agreement, if the Executive’s
employment with the Company terminates prior to the third anniversary of the
Grant Date, the PSUs shall not vest and shall terminate immediately upon the
Executive’s termination of employment and thereafter shall be of no further
force or effect.

 

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On the vesting date (including on the last day of the Release Period for any
PSUs vesting under Section 7(b)(v) of the Agreement), the number of Shares with
respect to which the PSU then vests immediately shall be issued to the
Executive. The Company is authorized to withhold applicable taxes upon issuance
of such Shares pursuant to Section 21 of the Agreement.

 

Notwithstanding anything herein to the contrary, in addition to the clawback
rights contained elsewhere in this Agreement or applicable under the law, the
Compensation Committee shall be entitled to exercise negative discretion to
nullify any grant of PSUs and to cancel any Shares issued with respect thereto
up until the date that is two (2) years after the vesting date thereof if the
Compensation Committee determines in good faith that the Company’s financial
statements for any period whose performance was measured as part of the PSUs
are, or must be, restated in any manner adverse to the Company or the attainment
of any Threshold, Target or Stretch Target goal, or if the Executive committed
any of the acts specified in Section 6(a)(i) or 6(a)(ii) of this Agreement.
Executive shall not sell or otherwise dispose of any Shares issued pursuant to
PSUs until the period applicable to such Shares for exercising negative
discretion has lapsed.”

 

12.       Miscellaneous.

 

a. Except as amended and/or restated hereby, all other provisions of the
Employment Agreement shall remain unchanged and are in full and force and effect
in accordance with their terms and conditions.

 

b. In the event of a conflict between this Amendment and the Employment
Agreement, this Amendment shall govern.

 

c. The Employment Agreement and this Amendment may only be amended further by a
written agreement executed by the parties hereto and approved by the Board of
Directors of the Employer or a committee of the Board of Directors.

 

d. This Amendment may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to
be an original but all such counterparts shall together constitute one and the
same instrument.

 

e. The Employment Agreement, as amended by this Amendment, represents the entire
agreement between the parties with respect to the subject matter hereof.

 

[Next page is signature page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first above written.

 

   DIGITAL TURBINE, INC.       By: /s/ Jeff Karish     Name: Jeff Karish    
Title: Director, Chairman,      Compensation Committee         WILLIAM STONE    
    /s/ Bill Stone   William Stone

 

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