Document:

Exhibit 10.14

 

EMPLOYMENT AGREEMENT

 

This AGREEMENT (this “Agreement”) is made and entered into as of the 11th day of September 2012 (the “Effective Date”), by and between ZaZa Energy Corporation, a Delaware corporation (the “Company”), and John E. Hearn, Jr. (“Employee”).

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, the Company desires to enter into this Agreement embodying the terms of Employee’s employment with the Company, and Employee desires to enter into this Agreement, subject to the terms and provisions of this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and Employee hereby agree as follows:

 

Section 1.               Definitions.

 

(a)           “Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary through the date of termination of Employee’s employment, (ii) any unpaid or unreimbursed expenses incurred in accordance with Section 7 below, (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms contained therein, and (iv) any allowance payable to Employee by the Company, in accordance with written Company policy.

 

(b)           “Base Salary” shall mean the salary provided for in Section 4(a) below or any increased salary granted to Employee pursuant to Section 4(a).

 

(c)           “Board” shall mean the Board of Directors of the Company.

 

(d)           “Cause” shall mean (i) Employee’s act(s) of gross negligence or willful misconduct in the course of his employment hereunder that is materially injurious to the Company or any other member of the Company Group, (ii) willful failure or refusal by Employee to perform in any material respect his duties or responsibilities, (iii) misappropriation by Employee of any assets or business opportunities of the Company or any other member of the Company Group, (iv) embezzlement or fraud committed by Employee, or at his direction, (v) Employee’s conviction of, or pleading “guilty” or “ no contest” to a felony under United States state or federal law that has, or could be reasonably expected to have, a material adverse impact on the performance of Employee’s duties to the Company or any other member of the Company Group or otherwise result in material injury to the reputation or business of the Company or any other member of the Company Group, (vi) any material violation of a written Company policy, including but not limited to those relating to sexual harassment or business conduct, and those otherwise set forth in the manuals or statements of written Company policy, or (vii) Employee’s material breach of Section 9 of this Agreement.

 

(e)           “Change of Control” shall mean an event or series of events by which: (i) a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (other than a “person” or “group” comprised solely of John Hearn, Gaston

 

 

Kearby, Todd Brooks, their respective heirs, and their respective affiliates, and their permitted transferees) becomes the beneficial owner of more than 50% of the Company’s outstanding common stock; (ii) consummation of any consolidation or merger of the Company or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any person, in each case pursuant to which the Company’s common stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the persons that beneficially owned, directly or indirectly, voting shares of the Company immediately prior to such transaction beneficially own, directly or indirectly, voting shares representing a majority of the total voting power of all outstanding classes of voting shares of the continuing or surviving person immediately after the transaction; or (iii) the Company’s stockholders approve and adopt a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

 

(f)            “Change of Control Severance Term” shall mean the twenty-four (24) month period following Employee’s termination pursuant to Section 8(g) below.

 

(g)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(h)           “Common Shares” shall mean shares of common stock of the Company.

 

(i)            “Company Group” shall mean the Company together with any direct or indirect subsidiaries of the Company.

 

(j)            “Compensation Committee” shall mean the Board or the committee of the Board designated to make compensation decisions relating to senior executive officers of the Company.

 

(k)           “Confidential Information” shall mean confidential or proprietary trade secrets, client lists, client identities and information, information regarding service providers, investment methodologies, marketing data or plans, sales plans, management organization information, operating policies or manuals, business plans or operations or techniques, financial records or data, or other financial, commercial, business, or technical information (i) relating to the Company or any other member of the Company Group or (ii) that the Company or any other member of the Company Group may receive belonging to suppliers, customers, or others who do business with the Company or any other member of the Company Group, but shall exclude any information that is in the public domain or hereafter enters the public domain, in each case without the breach by Employee of Section 9(a) below.

 

(l)            “Covered Compensation” shall mean compensation paid or payable to Employee pursuant to this Agreement as Base Salary, STI Award, LTI Award, and any allowances paid.

 

(m)          “Disability” shall mean any physical or mental disability or infirmity of the Employee that has prevented the performance of Employee’s duties for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any twelve (12) month period.  Any question as to the existence, extent, or potentiality of Employee’s Disability upon which Employee and the Company cannot agree shall be determined by a qualified,

 

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independent physician selected by the Company and approved by Employee (which approval shall not be unreasonably withheld).  The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

 

(n)           “Good Reason” shall mean, without Employee’s consent, (i) a diminution in Employee’s title, duties, or responsibilities, (ii) a reduction in the Covered Compensation, (iii) the failure of the Company to pay any compensation hereunder when due or to perform any other obligation of the Company hereunder, (iv) the relocation of Employee’s principal place of employment to a location more than 50 miles from its current location, or (v) failure of the Company to obtain a written agreement from any successor or assign of the Company to assume the obligations of the Company under this Agreement upon a Change of Control.

 

(o)           “January Representative Value” shall mean the average closing price of the Company’s common stock on the principal U.S. stock exchange on which the Company’s common stock is listed or traded during the last fifteen (15) trading days of January.

 

(p)           “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers Employee the release contemplated in Section 8(g) below, or in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.

 

(q)           “Severance Term” shall mean the twenty-four (24) month period following Employee’s termination upon an Expiration, by the Company without Cause (other than by reason of death or Disability), or by Employee for Good Reason.

 

Section 2.               Acceptance and Term of Employment.

 

The Company agrees to employ Employee, and Employee agrees to serve the Company, on the terms and conditions set forth herein.  The “Term of Employment” shall mean the period commencing on the Effective Date and, unless terminated sooner as provided in Section 8 hereof, continuing for a period of two (2) years from the Effective Date; provided, however, that the Term of Employment shall be extended automatically at the end of the initial two (2) year term for a two (2) year term and thereafter for successive two (2) year terms if neither the Company nor Employee has advised the other in writing in accordance with Section 17 at least ninety (90) days prior to the end of the then current term that such term will not be extended for an additional two (2) year term (an “Expiration”).

 

Section 3.               Position, Duties, and Responsibilities; Place of Performance.

 

(a)           During the Term of Employment, Employee shall be employed and serve as the Chief Operating Officer of the Company and shall have such duties and responsibilities as are commensurate with such title.  Employee shall report to the Board and shall carry out and perform all orders, directions and policies given to him by the Board consistent with his position and title.  Employee also agrees to serve as an officer and/or director of any member of the Company Group, in each case without additional compensation, except as provided herein or in a separate agreement between the parties.

 

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(b)           Employee shall devote his full business time, attention, skill, and best efforts to the performance of his duties under this Agreement and shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that (x) conflicts with the interests of the Company or any other member of the Company Group, (y) interferes with the proper and efficient performance of Employee’s duties for the Company, or (z) interferes with Employee’s exercise of judgment in the Company’s best interests.  Notwithstanding the foregoing, nothing herein shall preclude Employee from (i) serving, with the prior written consent of the Board, as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs; provided, however, that the activities set out in clauses (i), (ii), and (iii) shall be limited by Employee so as not to materially interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.

 

Section 4.               Compensation.  During the Term of Employment, Employee shall be entitled to the following compensation:

 

(a)           Base Salary.  Employee shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of not less than $500,000, with increases, if any, as may be approved in writing by the Compensation Committee.  The Base Salary may not be decreased unless such decrease is approved by Employee.

 

(b)           Short-Term Incentive Awards.

 

(i)            Employee shall be eligible for an annual cash short-term incentive award determined by the Compensation Committee in respect of each fiscal year (or partial fiscal year) during the Term of Employment (the “STI Award”) in accordance with this Section 4(b).  The target STI Award for each fiscal year shall be 100% of Base Salary (or such greater percentage of Base Salary as the Board or Compensation Committee shall determine, in its sole discretion) and, if earned, shall be paid by no later than March 15th of each year with respect to the preceding year.

 

(ii)           The criteria for achieving the STI Award shall be based upon the level of achievement of Company and individual performance objectives for such fiscal year, as determined by the Board or the Compensation Committee and agreed to by Employee.

 

(iii)          The STI Award for any partial fiscal year occurring during the Term of Employment shall be pro rated as and to the extent provided in Section 8.

 

(c)           Long-Term Incentive Awards.

 

(i)            Employee shall be eligible for a long-term incentive award determined by the Compensation Committee in respect of each fiscal year or partial fiscal year, as the case may be, during the Term of Employment in accordance with this Section 4(c) (the “LTI Award”).

 

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(ii)           The target LTI Award for each fiscal year shall be equal to 200% of Employee’s Base Salary.

 

(iii)          The criteria for achieving the LTI Award shall be based upon the level of achievement of Company and individual performance objectives for such fiscal year, as determined by the Board or the Compensation Committee and agreed to by Employee.

 

(iv)          The Compensation Committee shall determine the dollar value of the LTI Award earned by Employee (subject to the vesting requirements below) no later than March 15th of the fiscal year following the fiscal year to which the LTI Award is attributable.  The date on which the Compensation Committee makes this determination shall be the “Determination Date” for the LTI Award.

 

(v)           Within 15 days after the Determination Date, Employee shall elect the percentage of the LTI Award that will be payable in cash and the percentage of the LTI Award that will be payable in Common Shares (each subject to the vesting requirements below).  The number of Common Shares to be distributed (subject to the vesting requirements below) shall equal the dollar value of the LTI Award that Employee has elected to be payable in Common Shares divided by the most recent January Representative Value.  Under no circumstances may the portion of any LTI Award that is comprised of Common Shares exceed 250,000 Common Shares (gross).  The remainder of any such LTI Award must be comprised of cash.

 

(vi)          Each LTI Award shall vest in three equal installments on the first, second and third anniversaries of its Determination Date, provided that Employee remains employed with the Company through the applicable vesting date or except as stated herein.

 

(vii)         On the first payroll date following the vesting date of any portion of an LTI Award, the Company shall distribute to Employee (x) a cash payment equal to the portion of the LTI Award that Employee had elected to be payable in cash (as reduced for required tax withholding), and (y) the number of Common Shares payable under the LTI Award (as reduced for required tax withholding, based on the closing price of the Company’s common stock on the principal U.S. stock exchange on which the Company’s common stock is listed or traded on the day prior to distribution); provided, however, that any fractional Common Shares shall be payable in cash.

 

(viii)        Any Common Shares to be delivered to Employee shall be subject to such transfer policies as the Company may adopt that are applicable to officers, directors and other management personnel generally.

 

Section 5.               Employee Benefits.

 

(a)           General.  During the Term of Employment, Employee shall be entitled to participate in health insurance, retirement, and other benefits provided to other senior executives of the Company.

 

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(b)           Vacation and Time Off.  During each calendar year of the Term of Employment, Employee shall be eligible for thirty (30) days paid vacation, as well as sick pay and other paid and unpaid time off in accordance with the policies and practices of the Company.

 

(c)           Indemnification and D&O Coverage.  Employee shall be entitled to coverage by, and the benefits of, the Indemnity Agreement dated June 12, 2012 (the “Indemnity Agreement”) and the Company’s D&O insurance coverage (the “D&O Coverage”), consistent with the terms of the Indemnity Agreement and the D&O Coverage.  The Company shall ensure that Employee is at all times covered by the Indemnity Agreement and the D&O Coverage, or substantially similar coverage, during the Term of Employment and thereafter.

 

Section 6.               Key Man Insurance.

 

At any time during the Term of Employment, the Company shall have the right to insure the life of Employee for the sole benefit of the Company, in such amounts, and with such terms, as it may determine.  All premiums payable thereon shall be the obligation of the Company.  Employee shall have no interest in any such policy, but agrees to cooperate with the Company in procuring such insurance by submitting to physical examinations, supplying all information required by the insurance company, and executing all necessary documents, provided that no financial obligation is imposed on Employee by any such documents.

 

Section 7.               Reimbursement of Business Expenses.

 

Employee is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such reasonable business expenses, subject to documentation in accordance with written Company policy, as in effect from time to time.

 

Section 8.               Termination of Employment.

 

(a)           General.  The Term of Employment shall terminate upon the earliest to occur of (i) an Expiration, (ii) Employee’s death, (iii) a termination by reason of a Disability, (iv) a termination by the Company with or without Cause, and (v) a termination by Employee with or without Good Reason.  Notwithstanding anything herein to the contrary, the payment (or commencement of a series of payments) hereunder of any nonqualified deferred compensation (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as Employee has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such nonqualified deferred compensation (calculated as of the date of Employee’s termination of employment hereunder) shall be paid (or commence to be paid) to Employee on the schedule set forth in this Section 8 as if Employee had undergone such termination of employment (under the same circumstances) on the date of his ultimate “separation from service.”

 

(b)           Termination Due to Death or Disability.  Employee’s employment shall terminate automatically upon his death.  The Company may terminate Employee’s employment immediately upon the occurrence of a Disability, such termination to be effective upon Employee’s receipt of written notice of such termination.  In the event Employee’s employment

 

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is terminated due to his death or Disability, Employee or his estate or his beneficiaries, as the case may be, shall be entitled to:

 

(i)            The Accrued Obligations; and

 

(ii)           Any unpaid STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid within sixty (60) days from the date of such; and

 

(iii)          Any STI Award that would have been payable with respect to the year of termination in the absence of the Employee’s death or Disability, pro-rated for the period the Employee worked prior to his death or Disability, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)          The cash portion of any outstanding, unvested LTI Award that would have been payable had Employee’s employment with the Company continued through the applicable vesting date, which shall be paid concurrently with the payment described in clause (iii) above; and

 

(v)           Immediate vesting of any unvested Common Shares, including but not limited to any Common Shares that comprise any past LTI Award; and

 

(vi)          Continuation and/or payment of Employee’s and/or Employee’s dependents’ medical insurance premiums for a period of eighteen (18) months; and

 

(vii)         The rights to the same compensation and benefits as provided in Section 8(d) below, in lieu of clauses (i) through (vi), if the termination of Employee’s employment is by reason of death or Disability while the Employee is traveling on official Company business.

 

Following such termination of Employee’s employment by reason of death or Disability, except as set forth in this Section 8(b), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(c)           Termination by the Company for Cause.

 

(i)            The Company may terminate Employee’s employment at any time for Cause, effective upon Employee’s receipt of written notice of such termination; provided, however, that with respect to any Cause of termination relying on clause (i), (ii), (vi) or (vii) of the definition of Cause set forth in Section 1(d) hereof, to the extent such act or acts are curable, Employee shall be given not less than twenty (20) days’ written notice by the Board of the Company’s intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and such termination shall be effective at the expiration of such twenty (20) day notice period unless Employee

 

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has substantially cured such act or acts or failure or failures to act that give rise to Cause during such period.

 

(ii)           In the event the Company terminates Employee’s employment for Cause, he shall be entitled only to the Accrued Obligations, and any previously awarded Common Shares which are not vested as of the date of termination shall be cancelled.  Following such termination of Employee’s employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(d)           Termination Upon an Expiration or by the Company without Cause.  The Company may terminate Employee’s employment at any time without Cause, effective upon Employee’s receipt of at least sixty (60) days written notice of such termination.  Upon an Expiration or in the event Employee’s employment is terminated by the Company without Cause (other than due to death or Disability), Employee shall be entitled to:

 

(i)            The Accrued Obligations; and

 

(ii)           Any unpaid STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iii)          The target STI Award for the year in which termination occurs, pro-rated for the period the Employee worked prior to such termination, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 21⁄2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)          The cash portion of any outstanding, unvested LTI Award that would have been payable had Employee’s employment with the Company continued through the applicable vesting date, which shall be paid concurrently with the payment described in clause (iii) above; and

 

(v)           Immediate vesting of any unvested Common Shares, including but not limited to any Common Shares that comprise any past LTI Award; and

 

(vi)          Continuation of payment of Base Salary and target STI Award during the Severance Term, payable in accordance with the Company’s regular payroll practices; and

 

(vii)         Continuation, during the Severance Term, of the health benefits provided to Employee and his covered dependants under the Company’s health plans, it being understood and agreed that the Company’s obligation to provide such continuation of benefits shall terminate prior to the expiration of the Severance Term in the event that Employee becomes eligible to receive any health benefits while employed by or providing service to, in any capacity, any other business or entity during the Severance

 

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Term; provided, however, that as a condition of the Company’s providing the continuation of health benefits described herein, the Company may require Employee to elect continuation coverage under COBRA.  Notwithstanding the forgoing, if such health benefits are provided to employees of the Company generally through a self-insured arrangement, and Employee qualifies as a “highly compensated individual” (within the meaning of Section 105(h) of the Code), (i) such continuation of benefits shall be provided on a fully taxable basis, based on 100% of the monthly premium cost of participation in the self-insured plan less any portion required to be paid by Employee pursuant to clause (A) above (the “Taxable Cost”), and, as such, Employee’s W-2 shall include the after-tax value of the Taxable Cost for each month during the applicable benefit continuation period, and (ii) on the last payroll date of each calendar month during which any health benefits are provided pursuant to this Section 8(d)(vii), Employee shall receive an additional payment, such that, after payment by the Employee of all federal, state, local and employment taxes imposed on Employee as a result of the inclusion of the portion of the Taxable Cost in income during such calendar month, Employee retains (or has had paid to the Internal Revenue Service on his behalf) an amount equal to such taxes as Employee is required to pay as a result of the inclusion of the Taxable Cost in income during such calendar month; and

 

(viii)        Reimbursement of Employee’s reasonable, documented outplacement expenses for up to 12 months, not to exceed $20,000 in the aggregate.

 

Following such termination of Employee’s employment by the Company without Cause, except as set forth in this Section 8(d), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(e)           Termination by Employee with Good Reason.  Employee may terminate his employment with Good Reason by providing the Company twenty (20) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason.  During such twenty (20) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, Employee’s termination will be effective upon the expiration of such cure period, and Employee shall be entitled to the same payments and benefits as provided in Section 8(d) above for a termination upon an Expiration and by the Company without Cause, subject to the same conditions on payment and benefits as described in Section 8(d) above.  Following such termination of Employee’s employment by Employee with Good Reason, except as set forth in this Section 8(e), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(f)            Termination by Employee without Good Reason.  Employee may terminate his employment without Good Reason by providing the Company sixty (60) days’ written notice of such termination.  In the event of a termination of employment by Employee under this Section 8(f), except as provided in Section 8(g), Employee shall be entitled only to the Accrued Obligations, and any previously awarded Common Shares which are not vested as of the date of termination shall be cancelled.  In the event of termination of Employee’s employment under this Section 8(f), the Company may, in its sole and absolute discretion, by written notice accelerate such date of termination without changing the characterization of such termination as a termination by Employee without Good Reason.  Following such termination of

 

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Employee’s employment by Employee without Good Reason, except as set forth in this Section 8(f) or Section 8(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(g)           Change of Control and Termination Following Change of Control.  Upon a Change of Control, the Company shall (i) pay to Employee, on the thirtieth (30th) day following the effective date of the Change of Control and payable in a lump sum, (x) an amount in the aggregate equal to three (3) times the most recent target STI Award, and (y) the cash portion of any outstanding, unvested LTI Award that would have been payable had Employee’s employment with the Company continued through the applicable vesting date, and (ii) immediately vest any unvested Common Shares, including but not limited to any Common Shares that comprise any past LTI Award.  If, during the one (1) year period following such Change of Control, Employee is terminated because of an Expiration or by the Company without Cause, or Employee terminates his employment with or without Good Reason, in lieu of the benefits payable pursuant to Sections 8(d) or 8(e) or 8(f) hereof, as applicable, and in addition to the benefits payable pursuant to the preceding sentence, Employee shall be entitled to:

 

(i)            The Accrued Obligations;

 

(ii)           A lump-sum cash payment equal to two (2) times Employee’s Base Salary, which amount shall be paid within thirty (30) days of the effective date of termination;

 

(iii)          Continuation, during the Change of Control Severance Term, of the health benefits provided to Employee and his covered dependants under the Company’s health plans, subject to the terms and conditions set forth in Section 8(d)(vii) above.

 

Following such termination of Employee’s employment following a Change of Control, except as set forth in this Section 8(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(h)           Release.  Notwithstanding any provision herein to the contrary, the Company may require that, prior to payment of any amount or provision of any benefit pursuant to subsection (d), (e), or pursuant to clauses (ii) and (iii) of subsection (g) of this Section 8, Employee shall have executed, on or prior to the Release Expiration Date, a customary general release in favor of the Company in such form as is reasonably required by the Company, and any waiting periods contained in such release shall have expired.  To the extent that the Company requires execution of such release, the Company shall deliver such release to Employee within ten (10) business days following the termination of Employee’s employment hereunder, and the Company’s failure to deliver such release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute such release.  Such release, if any, shall contain mutual releases whereby the Company also issues a release in favor of Employee.    Assuming a timely delivery of the release by the Company, if Employee fails to execute such release on or prior to the Release Expiration Date or timely revokes his acceptance of such release thereafter, Employee shall not be entitled to any payments or benefits pursuant to subsection (d), (e), or pursuant to clauses (ii) and (iii) of subsection (g) of this Section 8.  Notwithstanding anything herein to the contrary, in any case where the date of termination and

 

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the Release Expiration Date fall in two separate taxable years, any payments required to be made to Employee that are treated as deferred compensation for purposes of Section 409A of the Code shall be made in the later taxable year.

 

Section 9.               Restrictive Covenants.

 

(a)           Confidential Information.  At any time during and after the end of the Term of Employment, without the prior written consent of the Board, Employee shall not disclose to or use for the benefit of any third party any Confidential Information, except to the extent required by an order of a court having jurisdiction or under subpoena from an appropriate government agency, in which event, Employee shall use his best efforts to consult with the Board prior to responding to any such order or subpoena, and except as required in the performance of his duties hereunder.

 

(b)           Non-Competition.  The Company and Employee acknowledge that they have previously entered into a Non-Competition Agreement (the “Existing Non-Competition Agreement”) dated August 9, 2011, in connection with the acquisition by the Company of the limited liability interests in ZaZa Energy LLC, and that unless otherwise inconsistent with the terms of this Agreement, the Existing Non-Competition Agreement shall remain in full force and effect.

 

(c)           Return of Documents.  In the event of the termination of Employee’s employment for any reason, Employee shall deliver to the Company all of (i) the property of the Company and (ii) the documents and data of any nature and in whatever medium of the Company, and he shall not take with him any such property, documents, or data, or any reproduction thereof, or any documents containing or pertaining to any Confidential Information.

 

(d)           Works for Hire.  Employee agrees that the Company shall own all right, title, and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, improvements, and trade secrets, whether or not patentable or registrable under copyright or similar laws, that Employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the Term of Employment, whether or not during regular working hours, provided they either (i) relate at the time of conception or development to the actual or demonstrably proposed business or research and development activities of the Company or any member of the Company Group; (ii) result from or relate to any work performed for the Company or any member of the Company Group; or (iii) are developed through the use of Confidential Information and/or Company resources or in consultation with any personnel of the Company or any other member of the Company Group (collectively referred to as “Developments”).  Employee hereby assigns to the Company all right, title, and interest in and to any and all of these Developments.  Employee agrees to assist the Company, at the Company’s expense, to further evidence, record, and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned.  Employee hereby irrevocably designates and appoints the Company and its agents as attorneys-in-fact to act for Employee and on his behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Employee.  In addition, and not in contravention of any of the foregoing, Employee

 

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acknowledges that all original works of authorship that are made by him (solely or jointly with others) within the scope of employment and that are protectable by copyright are “works made for hire,” as that term is defined in the United States Copyright Act (17 USC § 101).  To the extent allowed by law, this includes all rights of paternity, integrity, disclosure, and withdrawal, and any other rights that may be known or referred to as “moral rights.”  To the extent Employee retains any such moral rights under applicable law, Employee hereby waives such moral rights and consents to any action consistent with the terms of this Agreement with respect to such moral rights, in each case, to the full extent of such applicable law.  Employee will confirm any such waivers and consents from time to time as requested by the Company.

 

Section 10.             Representations and Warranties of Employee.

 

Employee represents and warrants to the Company that—

 

(a)           Employee is entering into this Agreement voluntarily and that his employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which he may be bound;

 

(b)           Employee has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer by which he is or may be bound; and

 

(c)           in connection with his employment with the Company, Employee will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer.

 

Section 11.             Withholding of Taxes.

 

The Company may withhold from any payments made under this Agreement all applicable taxes, including but not limited to income, employment, and social insurance taxes, as shall be required by applicable law.  Employee acknowledges and represents that the Company has not provided any tax advice to him in connection with this Agreement and that he has been advised by the Company to seek tax advice from his own tax advisors regarding this Agreement and payments that may be made to him pursuant to this Agreement, including specifically, the application of the provisions of Section 409A of the Code to such payments.

 

Section 12.             Additional Section 409A Provisions.

 

Notwithstanding any provision in this Agreement to the contrary—

 

(a)           Any payment otherwise required to be made hereunder to the Employee at any date as a result of the termination of Employee’s employment shall be delayed for such period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”).  On the first business day following the expiration of the Delay Period, Employee shall be paid, in a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule set forth herein.

 

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(b)           Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code.

 

(c)           To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Employee, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided,  that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.

 

Section 13.             Successors and Assigns; No Third-Party Beneficiaries.

 

(a)           The Company.  This Agreement shall inure to the benefit of the Company and its respective successors and assigns.  Neither this Agreement nor any of the rights, obligations, or interests arising hereunder may be assigned by the Company to any person or entity without Employee’s prior written consent; provided, however, that in the event of the merger or consolidation, or transfer or sale of all or substantially all of the assets, of the Company with or to any other individual 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, it being agreed that in such circumstances, the consent of Employee shall not be required in connection therewith.

 

(b)           Employee.  Employee’s rights and obligations under this Agreement shall not be transferable by Employee by assignment or otherwise, without the prior written consent of the Company; provided, however, that if Employee shall die, all amounts then payable to Employee hereunder shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee, or other designee, or if there be no such designee, to Employee’s estate.

 

(c)           No Third-Party Beneficiaries.  Except as otherwise set forth in Section 8(b) or Section 13(b) hereof, nothing expressed or referred to in this Agreement will be construed to give any person or entity other than the Company and Employee any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

 

Section 14.             Waiver and Amendments.

 

Any waiver, alteration, amendment, or modification of any of the terms of this Agreement shall be valid only if made in writing and signed by each of the parties hereto; provided, however, that any such waiver, alteration, amendment, or modification is consented to on the Company’s behalf by the Board.  No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or

 

13

 

transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

 

Section 15.             Severability.

 

If any covenants or such other provisions of this Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof.

 

Section 16.             Governing Law and Jurisdiction.

 

In the event of any dispute under this Agreement or relating or arising under the employment relationship (a “Dispute”), the parties agree first to engage in good faith negotiations to try to resolve the Dispute.  If the Dispute is not resolved through such negotiations, the parties agree to engage in mediation using the services of an agreed upon mediator.  If the parties fail to agree on a mediator, they shall proceed under the rules and administration of JAMS in Houston, Texas.  If the Dispute is not resolved through such mediation, the parties agree to submit the Dispute to binding arbitration.  Each party expressly waives any right, whether pursuant to any applicable federal, state, or local statute, to a jury trial and/or to have a court of law determine rights and award damages with respect to any such dispute.  The party invoking arbitration shall notify the other party in writing (the “Written Notice”). The parties shall exercise their best efforts, in good faith, to agree upon selection of a single arbitrator.  If the parties are unable to agree upon selection of a single arbitrator, they shall so notify the American Arbitration Association (“AAA”) or another agreed upon arbitration administrator and request that the arbitration provider work with the parties to select a single arbitrator.  The arbitration shall be (a) conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes, (b) held at a location in Houston, Texas, and (c) completed within six months (or within such other time as the parties may mutually agree) of the receipt of Written Notice by the party being notified.  The arbitrator shall have no authority to assess punitive or exemplary damages as to any dispute arising out of or concerning the provisions of this Agreement or otherwise arising out of the employment relationship, except as and unless such damages are expressly authorized by otherwise applicable and controlling statutes.  The arbitrator’s decision shall be final and binding and enforceable in any court of competent jurisdiction.  Each party shall bear its own costs, including attorneys’ fees, and share all costs of the arbitration equally, subject to the following:  (i) nothing provided herein shall interfere with either party’s right to seek or receive damages or costs as may be allowed by applicable statutory law (such as, but not necessarily limited to, reasonable attorneys’ fees and dispute resolution related costs and expenses, if allowed by applicable statutory law), and (ii) the arbitrator shall have the authority to award reasonable attorneys’ fees, costs, and expenses to the party that substantially prevails.

 

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Section 17.             Notices.

 

(a)           Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all notices and communications by Employee to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices and communications by the Company to Employee may be given to Employee personally or may be mailed to Employee at Employee’s last known address, as reflected in the Company’s records.

 

(b)           Any notice so addressed shall be deemed to be given (i) if delivered by hand, on the date of such delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.

 

Section 18.             Section Headings; Mutual Drafting.

 

(a)           The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision hereof.

 

(b)           The parties are sophisticated and have been represented (or have had the opportunity to be represented) by their separate attorneys throughout the transactions contemplated by this Agreement in connection with the negotiation and drafting of this Agreement and any agreements and instruments executed in connection herewith.  As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any document or instrument executed in connection herewith, and therefore waive their effects.

 

Section 19.             Entire Agreement.

 

This Agreement, together with any exhibits attached hereto, constitutes the entire understanding and agreement of the parties hereto regarding the employment of Employee.  This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings, and agreements between the parties relating to the subject matter of this Agreement.

 

Section 20.             Survival of Operative Sections.

 

Upon any termination of Employee’s employment, the provisions of Section 8 through 21 of this Agreement (together with any related definitions set forth in Section 1 hereof) shall survive to the extent necessary to give effect to the provisions thereof.

 

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Section 21.             Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.  The execution of this Agreement may be by actual or facsimile signature.

 

*              *              *
 [Signatures to appear on the following page.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

 

 

	
 
    	
ZAZA ENERGY   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: TRAVIS BURRIS
    
	
 
    	
Title: CHAIRMAN,   COMPENSATION COMMITTEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JOHN E. HEARN, JR.
    

 

 

Exhibit A-4

Sweet Home Exhibited Contracts

 

None.Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”), effective August 22, 2012, is entered into by and between Augme Technologies, Inc. (“Augme”), and it’s subsidiary Hipcricket, Inc. (“Hipcricket”), both Delaware corporations (together, the ‘Employer” or the “Companies”), and Tom DeLuca (the “Employee”).

 

WITNESSETH:

 

WHEREAS, Employer is engaged in the interactive media technology business and related businesses, including but not limited to Internet and mobile communications marketing and advertising services, hardware and software development and sales, and information technology (the “Technologies”); and conducts research, experimentation, development, and exploitation of related technologies and engages in other businesses; and

 

WHEREAS, Employer desires to employ Employee to serve as Chief Operating Officer of the Companies, and Employee desires to be employed by Employer in such capacity pursuant to the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the foregoing and the mutual promises and covenants herein contained, it is agreed as follows:

 

1.                                       EMPLOYMENT: DUTIES AND RESPONSIBILITIES

 

Starting on September 10, 2012, Employer shall employ Employee, and Employee will become employed, as Chief Operating Officer of the Companies.  Reporting at all times to, and subject to the direction and control of, the Chief Executive Officer of the Employer, Employee’s responsibilities shall include supervision of the overall operations of the Companies and engaging in public relations on behalf of the Companies, and such other duties as the Chief Executive Officer may prescribe from time to time. Employee’s job sites shall be in the New York, New York (approximately 15 to 18 days per month) and Kirkland, Washington (approximately 4 to 7 days per month) metropolitan areas, with the balance of time spent in other offices of Employer as needed.  Employee shall serve, by mutual consent, in such other positions and offices of the Employer and its affiliates, if selected, without any additional compensation.

 

Employee shall confer with the other officers of the Companies and, if asked, the Directors of the Companies, regarding ideas and proposals with respect to the overall direction and operation of the Company.

 

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2.                                       FULL TIME EMPLOYMENT

 

Employee shall be employed by Employer upon the terms and conditions contained herein, and agrees that during the term of this Agreement the Employee shall devote substantially all of his business time, attention, and energies to the business of the Employer. Employee, during the term of this Agreement, will not perform any services for any other business entity, whether such entity conducts a business which is competitive with the business of Employer or is engaged in any other business activity; provided, however, that nothing herein contained shall be construed as (a) preventing Employee from investing his personal assets in any business or businesses which do not compete directly or indirectly with the Employer, provided such investment or investments do not require any services on his part in the operation of the affairs of the entity in which such investment is made and in which his participation is solely that of an investor, (b) preventing Employee from purchasing securities in any corporation whose securities are regularly traded, if such purchases shall not result in his owning beneficially, at any time, more than 5%of the equity securities of any corporation engaged in a business which is competitive, directly or indirectly, to that of Employer, (c) preventing Employee from (i) engaging in charitable activities, (ii) serving on corporate, advisory, civil or charitable boards or committees of any entity that engages in a business that is not competitive with the business of Employer, or (iii) delivering lectures, or teaching at educational institutions, so long as such activities, individually or in aggregate, do not adversely affect the Employee’s performance of his duties hereunder, which determination shall be made at the discretion of the Chief Executive Officer, or (d) engaging in any other activities, if he receives the prior written approval of the Chief Executive Officer with respect to his engaging in such activities.

 

3.                                       RECORDS

 

In connection with his engagement hereunder, Employee shall accurately maintain and preserve all notes and records generated by Employer which relate to Employer and its business and shall make all such reports, written if required, as Employer may reasonably require.

 

4.                                       TERM

 

Employee’s employment hereunder shall be for two twelve-month periods (the “Initial Term”), to commence on September 10, 2012 and end twenty-four months from such date.  Thereafter, the Company may elect to extend employment to Employee for one or more additional twelve-month periods (the “Subsequent Term”), commencing twenty-four months from September 10, 2012.  A twelve-month period shall be deemed a Contract Year.  For all compensation and benefit purposes, other than those specifically addressed herein, the Employee shall be deemed to have been continually employed with the Employer from September 10, 2012.

 

5.                                       SALARY& BONUS

 

As full compensation (“Base Salary”) for the performance of his duties on behalf of Employer, Employee shall be compensated as follows:

 

2

 

(i)                                     Base Salary. Employer, (x) during the first-year of the term hereof, shall pay Employee a base salary at the rate of $350,000 per annum, payable semi-monthly; and (y) during the subsequent second-year of the term, Employer agrees to pay Employee a base salary at the rate of $402,500 per annum, payable semi-monthly.  If this Agreement is renewed for a subsequent term or terms, base salary shall be increased a) by a minimum of Fifteen-Percent (15%), (the “Minimum Increase”) over the base salary in effect on the renewal date; or b) as the Chief Executive Officer shall determine if in excess of the Minimum Increase.  Future salary increases will be subject to mutual agreement.

 

(ii)                                  Bonus. In addition to the above salary and stock options addressed in Section 6 hereof, Employee will be eligible to receive certain performance-based bonuses, (the “Bonus”), subject to the attainment of the performance targets, (the “Target(s)”) identified below as determined by the Employer.  Employee’s Bonus opportunities will be determined based upon the extent to which the Targets are achieved, as follows:

 

·                  at 85% achievement of the Target of: (a) $32 million in Hipcricket gross revenues received during the fiscal year ending February 28, 2013, Employee’s Bonus opportunity will be fifty-thousand dollars ($50,000.00), payable in the form of cash; and (b) $25 million in Hipcricket gross revenues received during the six-month (6) month period ending August 31, 2013, Employee’s Bonus opportunity will be an additional fifty-thousand dollars ($50,000.00), payable in the form of cash;

 

·                  at 100% achievement of the Target of: (a) $1 million of profitable cash flow in Hipcricket (defined as earnings before interest, taxes, depreciation and amortization, (“EBITDA”)) during the end of the first fiscal quarter (the “Positive Quarter”), Employee’s Bonus opportunity will be fifty-thousand dollars ($50,000.00), payable in the form of unregistered common shares in Augme Technologies, Inc. The share price shall be calculated on the average closing price for the last 10 trading days of the Positive Quarter;

 

·                  at 85% achievement of the Target of: (a) an amount of Hipcricket gross revenues received during the six months ending February 28, 2014 that is to be determined by the Hipcricket Board of Directors, Employee’s Bonus opportunity will be fifty-thousand dollars ($50,000.00), payable in the form of cash; and (b) an amount of Hipcricket gross revenues received during the six months ending August 31, 2014 that is to be determined by the Hipcricket Board of Directors, Employee’s Bonus opportunity will be an additional fifty-thousand dollars ($50,000.00), payable in the form of cash; and

 

·                  at 100% achievement of the Target of: (a) $3 million of profitable cash flow in Hipcricket (defined as earnings before interest, taxes, depreciation and amortization, (“EBITDA”)) during the fiscal quarter ending November 30, 2013, (the “Positive Quarter 2”), Employee’s Bonus opportunity will be fifty-thousand dollars ($50,000.00), payable in the form of unregistered common shares in Augme

 

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Technologies, Inc. The share price shall be calculated on the average closing price for the last 10 trading days of the Positive Quarter 2.

 

Any cash payment made pursuant to the above Bonus arrangements will be made in accordance with the Company’s standard payroll practices and procedures following the conclusion of the applicable time period. Any decision or judgment regarding Employee’s right and/or entitlement to a Bonus under the above-referenced arrangements, including Employee’s satisfaction of Targets, will be made by the Company in the sole discretion of the Company’s Chief Executive Officer.

 

Notwithstanding anything else herein to the contrary,  Employee shall be eligible to receive a Bonus only if he remains employed by the Company through the end of the time period for which the bonus is calculated and is not discharged for “Just Cause,” as that phrase is defined in Section 15 below, prior to the date of payment.

 

(iii)                               Other Meritorious Adjustments. The Chief Executive Officer may, in its sole and absolute discretion, consider other meritorious adjustments in compensation, or a bonus, under appropriate circumstances, including the conception of valuable or unique inventions, processes, discoveries or improvements capable of profitable exploitation by the Company.

 

6.                                       EQUITY

 

(i)                                     Incentive Stock Options. Employee shall receive options during the Term of this Agreement as determined by the Employer’s Board of Directors from time to time, subject to subsections 6(ii) and (iii) below.

 

(ii)                                  Initial Stock Option Grant.  Upon commencement of employment by Employer, Employee shall be granted an aggregate of625,000 stock options from the Augme Technologies Inc. 2010 Incentive Stock Option Plan.  The options shall have an exercise price of $1.50 per share (which exercise price is not less than the closing price on the date of Board approval) and a five year term.  The options shall vest in accordance with the following schedule:

 

a.                                       125,000 of the stock options shall vest upon commencement of employment of Employee by Employer.

 

b.                                      500,000 of the stock options shall vest in equal monthly increments over a three-year period (1/36th per month) starting upon commencement of employment of Employee by Employer.

 

c.                                       Excluding any transaction with Acacia Resources, in the event of (A) a merger, acquisition or sale transaction by the Companies which causes a change of control of the Companies (the “Control Change”), any granted but unvested common stock, options to purchase common stock or similar securities held beneficially by you shall automatically become fully vested.  For purposes of this section, Control Change shall mean the occurrence of any of the following events:  (i) a majority of the outstanding voting stock of the Companies shall have been acquired or beneficially owned by any person or any two or more persons acting as a partnership, limited

 

4

 

partnership, syndicate or other group, entity or association acting in concert for the purpose of voting, acquiring, holding, or disposing of voting stock of the Companies; or (ii) a merger or a consolidation of the Companies with or into another corporation, other than (A) a merger or consolidation with a subsidiary of the Companies, or (B) a merger or consolidation in which the holders of voting stock of the Companies immediately prior to the merger as a class hold immediately after the merger at least a majority of all outstanding voting power of the surviving or resulting corporation or its parent; or (iii) a statutory exchange of shares of one or more classes or series of outstanding voting stock of the Companies for cash, securities, or other property, other than an exchange in which the holders of voting stock of the Companies immediately prior to the exchange as a class hold immediately after the exchange at least a majority of all outstanding voting power of the entity with which the Companies’ stock is being exchanged; or (iv) the sale or other disposition of all or substantially all of the assets of the Companies, in one transaction or a series of transactions, other than a sale or disposition in which the holders of voting stock of the Companies immediately prior to the sale or disposition as a class hold immediately after the exchange at least a majority of all outstanding voting power of the entity to which the assets of the Companies are being sold.  In the event of a transaction relating to a litigation settlement, exclusive licensing fee arrangement or sale of intellectual property wherein the Company receives cash proceeds, the remaining amount of granted but unvested stock options held by you shall be immediately vested according to the following terms:

 

	
Net Amount Received by Company
    	
 
    	
Percentage of Remaining Stock Options
   to be Vested
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Over $10,000,000 to $25,000,000
    	
 
    	
50
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
Over $25,000,000
    	
 
    	
100
    	
%
    

 

7.                                       BUSINESS EXPENSES

 

The Employer shall reimburse the Employee for all reasonable business expenses incurred by Employee in the performance of his duties hereunder including, but not limited to, travel on business, attending technical and business meetings, professional activities, and customer entertainment, such reimbursement to be made in accordance with regular Company policy and within a reasonable period following Employee’s presentation of the details of, and proof of, such expenses.

 

During the term of this Agreement, Employer shall provide to Employee, at its sole expense, a $3,500 per month expense allowance for an apartment to be located in New York, New York.  The Employer agrees to reimburse Employee for the cost of any broker fees locating such an apartment, if any.

 

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8.                                       FRINGE BENEFITS

 

(i)                                     During the term of this Agreement, Employer shall provide to Employee, at its sole expense, health insurance and other fringe benefits on the same terms and conditions as it shall afford other senior management employees.

 

(ii)                                  During the term of this Agreement, Employer shall provide paid vacation to Employee which accrues monthly from the date of commencement of Employment. The annual paid vacation earned for each contract year is: (i) three (3) weeks per contract year for the first three (3) contract years of full-time employment; (ii) four (4) weeks per contract year for more than three (3) and up to seven (7) contract years of full-time employment; and (iii) five (5)weeks per contract year for more than seven (7) contract years of full-time employment.

 

9.                                       SUBSIDIARIES

 

For the purposes of this Agreement all references to business products, services and sales of Employer shall include those of Employer’s affiliates.

 

10.                                 INVENTIONS

 

All systems, inventions, discoveries, apparatus, techniques, methods, know-how, formulae or improvements made, developed or conceived by Employee during Employee’s employment by Employer, whenever or wherever made, developed or conceived, and whether or not during business hours, which constitute an improvement, on those heretofore, now or at any time during Employee’s employment, developed, manufactured or used by Employer in connection with the manufacture, process or marketing of any product heretofore or now or hereafter developed or distributed by Employer, or any services to be performed by Employer or of any product which shall or could reasonably be manufactured or developed or marketed in the reasonable expansion of Employer’s business, shall be and continue to remain Employer’s exclusive property, without any added compensation or any reimbursement for expenses to Employee, and upon the conception of any and every such invention, process, discovery or improvement and without waiting to perfect or complete it, Employee promises and agrees that Employee will immediately disclose it to Employer and to no one else and thenceforth will treat it as the property and secret of Employer.

 

Employee will also execute any instruments requested from time to time by Employer to vest in it complete title and ownership to such invention, discovery or improvement and will, at the request of Employer, do such acts and execute such instruments as Employer may require, but at Employer’s expense to obtain Letters of Patent, trademarks or copyrights in the United States and foreign countries, for such invention, discovery or improvement and for the purpose of vesting title thereto in Employer, all without any reimbursement for expenses (except as provided in Section 7or otherwise) and without any additional compensation of any kind to Employee.

 

Any assignment of Inventions required by this Agreement does not apply to an Invention for which no equipment, supplies, facility, intellectual property or trade secret information of Employer was used and which was developed entirely on the Employee’s own time, unless (a) the Invention relates (i) to the

 

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business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development or (b) the Invention results from any work performed by Employee for Employer.

 

11.                                 CONFIDENTIAL INFORMATION and TRADE SECRETS

 

(i)                                     All Confidential Information shall be the sole property of Employer.  Employee will not, during the period of his employment and for a period ending two years after termination of his employment for any reason, disclose to any person or entity or use or otherwise exploit for Employee’s own benefit or for the benefit of any other person or entity any Confidential Information which is disclosed to Employee or which becomes known to Employee in the course of his employment with Employer without the prior written consent of the Chief Executive Officer of Employer except as may be necessary and appropriate in the ordinary course of performing his duties to Employer during the period of his employment with Employer. For purposes of this Section 11(i), “Confidential Information” shall mean any data or information belonging to Employer, other than Trade Secrets, that is of value to Employer and is not generally known to competitors of Employer or to the public, and is maintained confidential by Employer, including but not limited to non-public information about Employer’s clients, executives, key contractors and other contractors and information with respect to its products, designs, services, strategies, pricing, processes, procedures, research, development, inventions, improvements, purchasing, accounting, engineering and marketing (including any discussions or negotiations with any third parties).  Notwithstanding the foregoing, no information will be deemed to be Confidential Information unless such information is treated by Employer as confidential and shall not include any data or information of Employer that has been voluntarily disclosed to the public by Employer (except where such public disclosure has been made without the authorization of Employer), or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.

 

(ii)                                  All Trade Secrets shall be the sole property of Employer. Employee agrees that during his employment with Employer and after its termination, Employee will keep in confidence and trust and will not use or disclose any Trade Secret or anything relating to any Trade Secret, or deliver any Trade Secret, to any person or entity outside Employer without the prior written consent of the Chief Executive Officer.  For purposes of this Section 11(ii), “Trade Secrets” shall mean any scientific, technical and non-technical data, information, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plan, product plan or list of actual or potential customers or vendors and suppliers of Employer or any portion or part thereof, whether or not copyrightable or patentable, that is of value to Employer and is not generally known to competitors of Employer or to the public, and whose confidentiality is maintained, including unpatented and un-copyrighted information relating to Employer’s products, information concerning proposed new products or services, market feasibility studies, proposed or existing marketing techniques or plans and customer consumption data, usage or load data, and any other information that constitutes a trade secret, as such term as defined under New York law, in each case to the extent that Employer, as the context requires, derives economic value, actual or potential, from such information not being generally known to, and not being readily ascertainable

 

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by proper means by, other persons or entities who can obtain economic value from its disclosure or use.

 

12.                                 NON-SOLICITATION OF EMPLOYEES

 

During the term of Employee’s employment and for one year thereafter, Employee will not, directly or indirectly, cause or attempt to cause any employee of Employer to cease working for Employer.  However, this obligation shall not affect any responsibility Employee may have as an employee of Employer with respect to the bona fide hiring and firing of Employer’s personnel.

 

13.                                 NON-SOLICITATION OF CUSTOMERS AND PROSPECTIVE CUSTOMERS

 

Employee will not, during the period of his employment and for a period ending one year after the termination of his employment for any reason, directly or indirectly, solicit the business of any customer for the purpose of, or with the intention of, selling or providing to such customer any product or service in competition with any product or service sold or provided by Employer during the 12 months immediately preceding the termination of Employee’s employment with Employer.

 

14.                                 NON-COMPETITION

 

Employee agrees that during his employment with Employer, Employee will not engage in any employment, business, or activity that is in any way competitive with the business or proposed business of Employer, and Employee will not assist any other person or organization in competing with Employer or in preparing to engage in competition with the business or proposed business of Employer. The provisions of this paragraph shall apply both during normal working hours and at all other times including, without limitation, nights, weekends and vacation time, while Employee is employed with Employer.

 

15.                                 TERMINATION

 

Employee’s employment with Employer may be terminated as follows:

 

(a)                                  Termination Without Just Cause.

 

(i)                                     Employer, in its sole discretion, may terminate Employee’s employment hereunder for any reason without Just Cause (as defined below), at any time, by giving written notice to Employee of such intent at least 30 days in advance of the effective date of termination; provided, during all that 30 day notice period, Employer, in its sole discretion, may modify, reduce or eliminate Employee’s duties hereunder.

 

(ii)                                  If Employer terminates Employee’s employment hereunder without Just Cause, Employer shall continue to pay to Employee his then-current base salary, in accordance with customary payroll practices, plus accrued but unpaid vacation time, accrued but unpaid benefits (as described in Section 8(i) above) and reimbursement of all unpaid business expenses (in each case, as of the date of termination) (collectively the “Continued Benefits”) for a period of the greater of: (a)

 

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six months; or (b) the remainder of the Initial Term, if written notice of intent to terminate is given within the Initial Term, or the remainder of the Subsequent Term, if written notice of intent to terminate is given within the Subsequent Term (the “Continuation Period”).  Employee shall be entitled to continued participation in all medical and disability plans, to the extent such plans are provided by Employer, on the same terms and conditions as if his employment had not terminated until the expiration of the Continuation Period.  Further, Employee shall be entitled to exercise any granted but unvested stock option rights and stock purchase rights granted to him and outstanding at the effective date of the termination of this Agreement.

 

(b)                                 Termination With Just Cause.

 

(i)                                     Employer may immediately terminate Employee’s employment hereunder for Just Cause (as defined below) at any time upon delivery of written notice to Employee.

 

(ii)                                  For purposes of this Agreement, the phrase “Just Cause” means: (A) Employee’s material fraud, gross malfeasance, gross negligence, or willful misconduct done in bad faith, with respect to Employer’s business affairs; (B) Employee’s refusal or repeated failure to follow Employer’s established reasonable and lawful policies; (C) Employee’s material breach of this Agreement; or (D) Employee’s conviction of a felony or crime involving moral turpitude.

 

(iii)                               If Employee’s employment hereunder is terminated by Employer for Just Cause, Employer will be required to pay to Employee only that portion of his Base Salary, accrued but unused vacation pay, and to the extent required under the terms of any benefit plan or this Agreement, the vested portion of any benefit under such plan, all as earned through the date of termination, including, without limitation, the right to exercise any vested stock option rights and stock purchase rights granted to him and outstanding at the effective date of the termination of this Agreement.

 

(c)                                  For Good Reason.

 

(i)                                     Employee may terminate employment hereunder For Good Reason (as defined below), at any time after commencement of employment, by giving written notice to Employer of such intent at least 30 days in advance of the effective date of termination.

 

(ii)                                  For purposes of this Agreement, the phrase “For Good Reason” means (A) any material reduction in Employee’s title or compensation; (B) Employer’s decision that Employee’s principal location for work be outside of the New York, New York or Kirkland, Washington metropolitan areas; (C) Employer’s material breach of this Agreement; or (D) Employer’s refusal to follow lawful policies and practices that are material to Employee’s position or job responsibilities.

 

(iii)                               If Employee terminates employment hereunder For Good Reason, Employer shall continue to pay to Employee the Continued Benefits for the Continuation Period.  Employee shall be entitled to continued participation in all medical and disability plans, to the extent such plans are provided by Employer, at the same benefit level at which he was participating on the date of termination of the Employee’s employment until the expiration of the Continuation Period.

 

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Further, Employee shall be entitled to exercise any unvested stock option rights and stock purchase rights granted to him and outstanding at the effective date of the termination of this Agreement.

 

(d)                                 Without Good Reason.

 

(i)                                     Employee may terminate employment hereunder without Good Reason, at any time after commencement of employment, by giving written notice to Employer of such intent at least 30 days in advance of the effective date of termination.

 

(ii)                                  If Employee terminates employment hereunder without Good Reason, Employer will be required to pay to Employee only that portion of his Base Salary, accrued but unused vacation pay, and to the extent required under the terms of any benefit plan or this Agreement, the vested portion of any benefit under such plan, all as earned through the date of termination, including, without limitation, the right to exercise any vested stock option rights and stock purchase rights granted to him and outstanding at the effective date of the termination of this Agreement.

 

(e)                                  Disability and Death.

 

Employee’s employment hereunder will be terminated immediately upon his Disability (as defined below) or his death.  If Employee’s employment is terminated due to such disability or death, Employer will be required to pay to Employee or Employee’s estate, as the case may be, unrelated to any amounts that Employee may receive pursuant to Employer’s short-term and long-term disability plans or life insurance plans (as applicable), only his base salary and accrued but unpaid vacation pay, earned through the date of termination, and to the extent required under the terms of any benefit plan or this Agreement, the vested portion of any benefit under such plan.  Employee or Employee’s estate, as the case may be, will not by operation of this provision forfeit any rights in which Employee is vested at the time of Employee’s disability or death, including, without limitation, the right to exercise any vested stock option rights and stock purchase rights granted to him and outstanding at the effective date of the termination of this Agreement.

 

The term “Disability” means Employee’s inability, due to physical or mental ill health, to perform the essential functions of his job, with or without a reasonable accommodation, for a period in excess of 120 consecutive days or in excess of 180 days in any consecutive 12 month period. In the event of any dispute under this paragraph, Employee shall submit to a physical and/or psychological examination by a licensed physician mutually satisfactory to Employer and Employee, the cost of such examination to be paid by Employer, and the determination of such physician shall be determinative.

 

16.                                 INJUNCTION

 

(i)                                     Should Employee at any time reveal, or threaten to reveal, any Confidential Information or Trade Secret of Employer, or during any restricted period engage, or threaten to engage, in any business in competition with that of Employer, or perform, or threaten to perform, any services for anyone engaged in such competitive business, or in any way violate, or threaten to

 

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violate, any of the provisions of this Agreement, including without limitation Sections 12, 13 and 14 hereof, Employer shall be entitled to an injunction restraining Employee from doing, or continuing to do, or performing any such acts; and Employee hereby consents to the issuance of such an injunction without any requirement that Employer post a bond.

 

(ii)                                  In the event that a proceeding is brought in equity to enforce the provisions of this Paragraph, Employee shall not argue as a defense that there is an adequate remedy at law, nor shall Employer be prevented from seeking any other remedies which may be available.

 

(iii)                               The existence of any claim or cause of action by Employer against Employee, or by Employee against Employer, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of the foregoing restrictive covenants but shall be litigated separately.

 

17.                                 ARBITRATION

 

(i)                                     In the event that there shall be a dispute (a “Dispute”) among the parties arising out of or relating to this Agreement, or the breach thereof, the parties agree that such dispute shall be resolved by final and binding arbitration before a single arbitrator in the metropolitan area in which the Employee was primarily performing services at the time the Dispute arose, administered by the American Arbitration Association (the “AAA”), in accordance with AAA’s Employment ADR Rules.  The arbitrator’s decision shall be final and binding upon the parties, and may be entered and enforced in any court of competent jurisdiction by either of the parties.  The arbitrator shall have the power to grant temporary, preliminary and permanent relief, including without limitation, injunctive relief and specific performance.

 

(ii)                                  The Companies will pay the direct costs and expenses of the arbitration, including arbitration and arbitrator fees.  Except as otherwise provided by statute, Employee and the Companies are responsible for their respective attorneys’ fees incurred in connection with enforcing this Agreement.  Employee and the Companies agree that, to the extent permitted by law, the arbitrator may, in his or her discretion, award reasonable attorneys’ fees to the prevailing party.

 

18.                                 SECTION 409A COMPLIANCE

 

(i)                                     This Agreement is intended to comply with the requirements of Section 409A of the Code and regulations promulgated thereunder (“Section 409A”).  To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that no payments due under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code.  For purposes of Section 409A, each payment made under this Agreement shall be treated as a separate payment.  In no event may Employee, directly or indirectly, designate the calendar year of payment.  Notwithstanding anything contained herein to the contrary, Employee shall not be considered to have terminated employment with Employer for purposes of Section 15 hereof unless he would be considered to have incurred a

 

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“termination of employment” from Employer within the meaning of Treasury Regulation §1.409A-1(h)(1)(ii).

 

(ii)                                  Notwithstanding the foregoing, if necessary to comply with the restriction in Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”) concerning payments to “specified employees,” any payment on account of Employee’s separation from service that would otherwise be due hereunder within six months after such separation shall nonetheless be delayed until the first business day of the seventh month following Employee’s date of termination and the first such payment shall include the cumulative amount of any payments that would have been paid prior to such date if not for such restriction, together with interest on such cumulative amount during the period of such restriction at a rate, per annum, equal to the applicable federal short-term rate (compounded monthly) in effect under Section 1274(d) of the Code on the date of termination.  For purposes of Section 15 hereof, Employee shall be a “specified employee” for the 12-month period beginning on the first day of the fourth month following each “Identification Date” if he is a “key employee” (as defined in Section 416(i) of the Code without regard to Section 416(i)(5) thereof) of Employer at any time during the 12-month period ending on the “Identification Date.”  For purposes of the foregoing, the Identification Date shall be December 31.”

 

(iii)                               All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.

 

19.                                 MISCELLANEOUS

 

If any provision of this Agreement shall be declared, by a court of competent jurisdiction, to be invalid, illegal or incapable of being enforced in whole or in part, the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provision shall be deemed dependent upon any covenant or provision so expressed herein.

 

The parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein. The provisions of this Agreement may not be amended, supplemented, waived, or changed orally, but only in writing and signed by the party against whom enforcement of any such amendment, supplement, waiver, or modification is sought and making specific reference to this Agreement.

 

The rights, benefits, duties and obligations under this Agreement shall inure to, and be binding upon, the Employer, its successors and assigns, and upon the Employee and his legal representatives, heirs and legatees. This Agreement constitutes a personal service agreement, and the

 

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performance of the Employee’s obligations hereunder may not be transferred or assigned by the Employee.

 

The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect. No waiver of any term or condition of this Agreement, on the part of either party, shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.

 

Notwithstanding any other provision hereof to the contrary, this Agreement shall not be construed to establish any right to employment after the conclusion of the Subsequent Term.

 

This Agreement shall be construed and governed by the laws of the State of New York.

 

 

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IN WITNESS WHEREOF, this employment agreement is dated as of the 22nd day of August 2012.

 

 

	
 
    	
 
    	
On   Behalf of Employer:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
AUGME TECHNOLOGIES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/Paul R. Arena
    
	
 
    	
 
    	
 
    	
Paul   R. Arena, Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/Tom   DeLuca
    
	
 
    	
 
    	
 
    	
Tom   DeLuca, Employee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
HIPCRICKET, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/Paul R. Arena
    
	
 
    	
 
    	
 
    	
Paul   R. Arena, Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/Tom   DeLuca
    
	
 
    	
 
    	
 
    	
Tom   DeLuca, Employee
    

 

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