GURUNET CORPORATION - JEFFREY S. CUTLER EMPLOYMENT AGREEMENT
GURUNET
CORPORATION - XXXXXXX X. XXXXXX
THIS
EMPLOYMENT AGREEMENT (the
“Agreement”) is
entered into as of March 15, 2005, by and between GuruNet Corporation, (the
“Company”) and
Xxxxxxx X. Xxxxxx (“Executive”).
WHEREAS,
Executive desires to become employed by the Company, and the Company desires to
employ Executive upon the terms and conditions hereinafter set
forth;
NOW,
THEREFORE, the
parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment. The
Company hereby agrees to employ Executive, and Executive hereby accepts such
employment and agrees to perform Executive's duties and responsibilities, in
accordance with the terms, conditions and provisions hereinafter set forth. This
Agreement shall be effective as of the date set forth above, and shall continue
until it is terminated in accordance with Section 3 hereof. Nothing in this
Agreement shall be construed as giving Executive any right to be retained in the
employ of the Company, and Executive specifically acknowledges that he shall be
an employee-at-will of the Company, and thus subject to discharge at any time by
the Company with or without Cause and without compensation of any nature except
as provided in this Section and in Section 2 below.
1.1. Duties
and Responsibilities.
Commencing March 15, 2005, (“Effective
Date”) Executive
shall serve as the Chief Revenue Officer of the Company reporting to the CEO of
the Company. Executive shall perform all duties and accept all responsibilities
incident to such position as may be reasonably assigned to him by the
CEO.
1.2. Extent
of Service.
Executive agrees to use Executive's best efforts to carry out Executive's duties
and responsibilities under Section 1.1 hereof and, consistent with the other
provisions of this Agreement, to devote substantially all of Executive's
business time, attention and energy thereto. The foregoing shall not be
construed as preventing Executive from making investments in other businesses or
enterprises, provided that Executive agrees not to become engaged in any other
business activity which, in the reasonable judgment of the Company’s Board of
Directors (“Board”), is
likely to interfere with Executive's ability to discharge Executive's duties and
responsibilities to the Company.
1.3. Base
Salary. For all
the services rendered by Executive hereunder, the Company shall pay Executive a
base salary ("Base
Salary"),
commencing on the Effective Date, at the annual rate of $225,000, payable in
installments at such times as the Company customarily pays its other senior
level executives.
1.4. Bonus. The
Executive shall be eligible to receive an annual bonus of 75% of Base Salary
based upon stated performance goals for the Executive. The annual bonus
percentage earned may be adjusted up or down based upon the achievement of
certain performance goals established by the Company. The performance goals will
be tied to company and individual performance and may include revenue, traffic
and usage targets as well as specific objectives tied to strategic partnerships
and initiatives. The CEO and Executive will establish the performance goals for
2005 in good faith, to be approved by the Company’s Board of Directors
Compensation Committee, within a reasonable time period not to exceed sixty (60)
days after the Effective Date of this Agreement.
1.5. Option. The
Company shall grant to Executive an option (the “Option") to
purchase 200,000 shares of common
stock of the Company at the market closing price of the stock on the Effective
Date, pursuant to the GuruNet Corporation 2004 Stock Option Plan (the “Plan”).
The terms of the Option shall be governed by the Stock Option Agreement attached
as Exhibit
A.
Further, the term of the Option shall be ten years from the date of grant. If
the Company terminates the Executive without Cause or the Executive resigns for
Good Reason, the vested portion of any outstanding options shall remain
exercisable for one (1) year from the effective date of the Executive’s
termination of employment. Executive shall be eligible to receive additional
equity awards on the same basis as other senior level executives.
1.6. Change
in Control. In the
event of a “Change of Control,” as defined below, 50% of any options granted to
the Executive that have not vested as of the effective date of the Change of
Control, shall immediately vest. If the Company terminates the Executive’s
employment without Cause or the Executive resigns for Good Reason at any time
during the twelve (12) months subsequent to the effective date of a Change of
Control then (i) 100% of any options granted to the Executive not vested will
immediately vest and (ii) the Company will pay or cause to be paid to the
Executive within 30 days of the Executive’s termination of employment a lump-sum
cash payment equal to the Executive’s annual Base Salary at the time of the
Change in Control.
If upon a
Change of Control the market closing price of the Company’s common stock is less
than 120% of
the Company’s market closing price on the Effective Date, then (i) 200,000 of
the Executive’s options shall be forfeited, and (ii) the Executive shall receive
a stock award of 50,000 shares of Company’s common stock.
A Change
of Control shall mean (a) the consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of the
outstanding securities of each of the (i) continuing or surviving entity and
(ii) any direct or indirect parent corporation of such continuing or surviving
entity; or (b) the sale, transfer or other disposition of all or substantially
all of the Company’s assets. A Change of Control shall not be deemed to have
occurred as a consequence of a secondary offering.
1.7. Retirement
and Welfare Plans.
Executive shall be entitled to participate in all employee retirement and
welfare benefit plans and programs made available to the Company's employees
generally, as such retirement and welfare plans may be in effect from time to
time and subject to the eligibility requirements of such plans.
1.8. Reimbursement
of Expenses; Vacation.
Executive shall be provided with reimbursement of reasonable expenses related to
Executive's employment by the Company on a basis no less favorable than that
which may be authorized from time to time for senior level executives as a
group; shall be entitled to three (3) weeks of
paid vacation each year, adding one (1) day for each year from the date of
initial employment up to a total maximum of twenty-two (22) days annually, and
additional time off for sick leave and holidays in accordance with the Company's
vacation, holiday and other pay for time not worked policies. Expense
reimbursement includes but is not limited to travel and entertainment while on
Company business, all telephone and internet service (including both wireless
service and service at the Executive’s home), and all reasonable costs of
Executive associated with maintaining a home office. All such expenses will be
in accordance with Company’s policies and procedures, existing, at the time of
the expense. The Company shall maintain a standard Directors & Officers
Insurance policy that covers the Executive for any action during the term of his
employment and maintain or cause such policy to remain in effect to cover claims
that arise after Executive’s termination of employment which relate to activity
that occurred prior to Executive’s termination of employment with the Company.
2. Termination.
Executive's employment shall terminate upon the occurrence of any of the
following events:
2.1. Termination
Without Cause; Resignation for Good Reason.
(a) The
Company may remove Executive at any time without Cause (as defined in Section
2.7) from the position in which Executive is employed hereunder upon not less
than thirty (30) days' prior written notice to Executive; provided, however,
that, in the event that such notice is given, Executive shall be under no
obligation to render any additional services to the Company and shall be allowed
to seek other employment. In addition, Executive may initiate termination of
employment by resigning under this Section 2.1 for Good Reason (as defined in
Section 2.7). Executive shall give the Company not less than 30 days' prior
written notice of such resignation.
(b) Upon any
removal or resignation described in Section 2.1(a) above, Executive shall be
entitled to receive the following:
(i) Executive
shall receive a lump sum cash payment equal to six (6) months
of Executive's monthly Base Salary at the rate in effect immediately before
Executive's termination of employment. This lump-sum cash payment will increase
by one (1) month for each six (6) months that the Executive is employed by the
Company, up to twelve (12) months of Base Salary. Payment shall be made within
thirty (30) days after the effective date of the termination.
(ii) For a
period of six (6) months
following the date of termination, Executive shall continue to receive the
medical coverage in effect at the date of his termination (or generally
comparable coverage) for himself and, where applicable, his spouse and
dependents, as the same may be changed from time to time for employees
generally, as if Executive had continued in employment during such period; or,
as an alternative, the Company may elect to pay Executive cash in lieu of such
coverage in an amount equal to Executive's after-tax cost of continuing such
coverage, where such coverage may not be continued (or where such continuation
would adversely affect the tax status of the plan pursuant to which the coverage
is provided). This period of medical coverage will increase by one (1) month for
each six (6) months that the Executive is employed by the Company, up to twelve
(12) months. If the Company terminates the Executive’s employment without Cause
or the Executive resigns for Good Reason at any time during the twelve (12)
months subsequent to the effective date of a Change of Control then this period
of medical coverage will be for twelve (12) months. The COBRA health care
continuation coverage period under Section 4980B of the Internal Revenue Code of
1986, as amended, shall begin at the expiration of the foregoing twelve (12)
month benefit period.
(iii) Executive
shall receive any other amounts earned, accrued or owing but not yet paid under
Section 1 above and any benefits accrued or earned in accordance with the terms
of any applicable benefit plans and programs of the Company.
2.2. Voluntary
Termination.
Executive may voluntarily terminate his employment for any reason upon thirty
(30) days' prior written notice. In such event, after the effective date of such
termination, except as provided in Section 2.1 with respect to a resignation for
Good Reason, no further payments shall be due under this Agreement, except that
Executive shall be entitled to any benefits due in accordance with the terms of
any applicable benefit plans and programs of the Company.
2.3. Disability. The
Company may terminate Executive's employment if Executive has been unable to
perform the material duties of his employment due to a Disability. If the
Company terminates Executive's employment for Disability, Executive shall be
entitled to receive the following:
(a) The
Company shall pay to Executive any amounts earned, accrued or owing but not yet
paid under Section 1 above and a pro rata bonus for the year in which his
termination occurs, calculated as follows: The pro rated bonus shall be based on
the Executive's highest target percentage annual bonus for the year in which
Executive's Disability occurs, multiplied by a fraction, the numerator of which
is the number of days during which Executive was employed by the Company in the
year of his termination and the denominator of which is 365.
(b) Executive
shall receive any other benefits accrued or earned in accordance with the terms
of any applicable benefit plans and programs of the Company.
2.4. Death. If
Executive dies while employed by the Company, the Company shall pay to
Executive's executor, legal representative, administrator or designated
beneficiary, as applicable, (i) any amounts earned, accrued or owing but not yet
paid under Section 1 above and any benefits accrued or earned under the
Company's benefit plans and programs and (ii) a pro rated bonus for the year in
which Executive's death occurs, which bonus shall be calculated according to
Section 2.3(a) above. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Executive.
2.5. Cause. The
Company may terminate Executive's employment at any time for Cause upon written
notice to Executive, in which event all payments under this Agreement shall
cease, except for Base Salary to the extent already accrued. Executive shall be
entitled to any benefits accrued or earned before his termination in accordance
with the terms of any applicable benefit plans and programs of the Company.
2.6. Notice
of Termination. Any
termination of Executive's employment shall be communicated by a written notice
of termination to the other party hereto given in accordance with Section 9. The
notice of termination shall (i) indicate the specific termination provision in
this Agreement relied upon, (ii) briefly summarize the facts and circumstances
deemed to provide a basis for a termination of employment and the applicable
provision hereof, and (iii) specify the termination date in accordance with the
requirements of this Agreement.
2.7. Definitions.
(a) "Cause" shall
mean the occurrence of any one or more of the following: (i) Executive’s act of
fraud or dishonesty or willful misconduct which materially injures the Company;
(ii) Executive’s conviction by, or entry or a plea of guilty or nolo contendre
in, a court of competent jurisdiction for any crime which constitutes a felony
in the jurisdiction involved; (iii) gross negligence by the Executive in the
scope of Executive’s employment or the habitual neglect or gross failure by
Executive to adequately perform his duties hereunder or fulfill any other
contractual or fiduciary duty to the Company, provided,
however, that
Executive has failed to cure such habitual neglect or gross failure reasonably
promptly after being notified thereof by the Company; or (iv) a material breach
of Executive’s obligations pursuant to Section 3 below.
(b) "Good
Reason" shall
mean the occurrence of any of the following events or conditions, unless
Executive has expressly consented in writing thereto or unless the event is
remedied by the Company promptly after receipt of notice thereof given by
Executive: (i) a substantial reduction in Executive's Base Salary; (ii) the
demotion of the Executive prior to a Change of Control; (iii) the Company's
requiring Executive to be based at a location other than the New York City
metropolitan area; or (iv) any material breach of this Agreement by the Company.
3. Covenant
Not to Compete; Non-Disclosure; Intellectual Property
Rights.
3.1. Covenant
Not to Compete.
Executive acknowledges that the nature of the Company's business is such that if
Executive were to become employed by, or substantially involved in, the business
of a competitor of the Company while employed by the Company and for six (6) (or
the number of months used to determine the payment in Section
2.1(b)(i)) months
following the termination of Executive's termination of employment by the
Company without Cause or the Executive’s resignation for Good Reason, it would
be very difficult for the Executive not to rely on or use the Company's trade
secrets and confidential information (the “Non-Compete Period”). Thus, to avoid
the inevitable disclosure of the Company's trade secrets and confidential
information, during the Non-Compete Period, Executive agrees not to directly or
indirectly engage in (whether as an employee, consultant, proprietor, partner,
director or otherwise), nor have any ownership interest in or participate in the
financing, operation, management or control of, any person, firm, corporation or
business that competes with the business the Company was pursuing or had
documented concrete plans to pursue at the time of the termination of the
Executive's employment as described above, or is a customer of the Company at
the time of the termination of the Executive's employment. In addition, during
the Non-Compete Period, Executive will not directly or indirectly: (a) solicit,
encourage, recruit or take any other action which is intended to induce any
other employee, independent contractor, customer or supplier of the Company or
any affiliated corporation to terminate his, her or its relationship with the
Company or any affiliated corporation; or (b) interfere in any manner with the
contractual or employment relationship between the Company or any affiliated
corporation and any employee, independent contractor, customer or supplier of
the Company or any affiliated corporation. The foregoing restrictions shall not
preclude Executive from purchasing, receiving or holding (directly or
indirectly) solely as a passive investment 5% or less of the outstanding stock,
other securities or other equity participation interests of any entity nor
engage in any activity described above if the Executive is terminated by the
Company for Cause, the Executive terminates his employment without Good Reason,
or the Company fails to make any payment required under Sections 1.6 or 2.1 of
this Agreement.
3.2. Non-Disclosure.
Executive acknowledges that during the course of his performance of services for
the Company, he will acquire technical knowledge with respect to the Company’s
business operations, including, by way of illustration, the Company’s existing
and contemplated products (current and future), trade secrets, methods, secrets,
formulas, data, patents, know how, models, compilations, business and financial
methods or practices, plans, pricing, marketing, merchandising and selling
techniques and information, customer lists, supplier lists, plans, price lists,
technical information, data and know-how (whether for its own use or for use by
Company clients) and including, without limitation, confidential information
relating to the Company’s policies and/or business strategy and business and
operations of the Company’s affiliates (all of such information herein
referenced to as the “Confidential
Information”);
provided, however that the term “Confidential Information” shall not include (a)
any information which is or becomes publicly available otherwise than through
breach of this Agreement or (b) any information which is or becomes known or
available to Executive on a non-confidential basis and not in contravention of
applicable law from a source which is entitled to disclose such information to
Executive. Executive agrees that he will not, while he is employed by the
Company, divulge to any person, directly or indirectly, except to the Company or
its officers, employees and agents or as reasonably required in connection with
his duties on behalf of the Company, or use, except on behalf of the Company,
any Confidential Information. Executive agrees that he will not, at any time
after his employment with the Company has ended, divulge to any person directly
or indirectly any Confidential Information nor use the Confidential Information
in any way detrimental to the Company. Executive further agrees that if his
relationship with the Company is terminated (for whatever reason) he shall not
take with him but will leave with the Company all records, papers and computer
software and data and any copies thereof relating to the Confidential
Information (or if such papers, records, computer software and data or copies
are not on the premises of the Company, Executive agrees to return such papers,
records and computer software and data immediately upon his termination). The
Employee acknowledges that all such papers, records, computer software and data
or copies thereof are and remain the property of the Company.
3.3.
Intellectual Property
Rights. Executive agrees that all
inventions, innovations, improvements, discoveries or developments relating to
the Company’s business or method of conducting business, including new
contributions, improvements and ideas, whether patentable or not (“Inventions”),
conceived or made by Executive, either solely or jointly with others, during
Executive’s employment with the Company which arise out of Executive’s
employment or exposure to Confidential Information shall belong to and be the
sole property of the Company. Executive assigns to the Company any rights
Executive may have or acquire in such Inventions and agrees to execute all
instruments and documents and to perform all actions which may be reasonably
requested by the Board to establish, confirm and vest in the Company such
ownership.
4.
Non-Exclusivity of Rights. Nothing in this
Agreement shall prevent or limit Executive's continuing or future participation
in or rights under any benefit, bonus, incentive or other plan or program
provided by the Company and for which Executive may qualify; provided, however,
that if Executive becomes entitled to and receives the payments provided for in
Section 2.1(b) of this Agreement, Executive hereby waives Executive's right to
receive payments under any severance plan or similar program applicable to all
employees of the Company.
5. Survivorship. The
respective rights and obligations of the parties under this Agreement shall
survive any termination of Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.
6. Mitigation.
Executive shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or otherwise and
there shall be no offset against amounts due Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that
Executive may obtain.
7. Arbitration;
Expenses. In the
event of any dispute under the provisions of this Agreement, other than a
dispute in which the primary relief sought is an equitable remedy such as an
injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in New York in accordance with the National Rules
for the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before a panel of three (3) arbitrators, two (2) of
whom shall be selected by the Company and Executive, respectively, and the third
of whom shall be selected by the other two (2) arbitrators. Any award entered by
the arbitrators shall be final, binding and non-appealable and judgment may be
entered thereon by either party in accordance with applicable law in any court
of competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrators shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
Executive prevails on any material issue which is the subject of such
arbitration or lawsuit, the Company shall be responsible for all of the fees of
the American Arbitration Association and the arbitrators and any expenses
relating to the conduct of the arbitration (including the Company's and
Executive's reasonable attorneys' fees and expenses). Otherwise, each party
shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall share
the fees of the American Arbitration Association.
8. Notices. All
notices and other communications required or permitted under this Agreement or
necessary or convenient in connection herewith shall be in writing and shall be
deemed to have been given when hand delivered or mailed by registered or
certified mail, as follows (provided that notice of change of address shall be
deemed given only when received):
If to the
Company, to:
GuruNet
Corporation
Jerusalem
Technology Park, Xxxx. 00
Xxxxxxxxx
00000
Xxxxxx
Attn:
Xxxxxx Xxxxxxxxxxx, Chairman & Chief Executive Officer
If to
Executive, to:
Xxxxxxx
X. Xxxxxx
000
Xxxxxx Xxxx
Xxxxx
Xxxxxx, XX 00000
or to
such other names or addresses as the Company or Executive, as the case may be,
shall designate by notice to each other person entitled to receive notices in
the manner specified in this Section.
9. Contents
of Agreement; Amendment and Assignment.
(a) This
Agreement sets forth the entire understanding between the parties hereto with
respect to the subject matter hereof and cannot be changed, modified, extended
or terminated except upon written amendment approved by the Board and executed
on its behalf by a duly authorized officer of the Company and by Executive.
(b) All of
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of Executive under this
Agreement are of a personal nature and shall not be assignable or delegatable in
whole or in part by Executive. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
within 15 days of such succession, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
10. Severability. If any
provision of this Agreement or application thereof to anyone or under any
circumstances is adjudicated to be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction. If any
provision is held void, invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.
11. Remedies
Cumulative; No Waiver. No
remedy conferred upon a party by this Agreement is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to any other remedy given under this Agreement or now or
hereafter existing at law or in equity. No delay or omission by a party in
exercising any right, remedy or power under this Agreement or existing at law or
in equity shall be construed as a waiver thereof, and any such right, remedy or
power may be exercised by such party from time to time and as often as may be
deemed expedient or necessary by such party in its sole discretion.
12. Beneficiaries/References.
Executive shall be entitled, to the extent permitted under any applicable law,
to select and change a beneficiary or beneficiaries to receive any compensation
or benefit payable under this Agreement following Executive's death by giving
the Company written notice thereof. In the event of Executive's death or a
judicial determination of Executive's incompetence, reference in this Agreement
to Executive shall be deemed, where appropriate, to refer to Executive's
beneficiary, estate or other legal representative.
13. Miscellaneous. All
section headings used in this Agreement are for convenience only. This Agreement
may be executed in counterparts, each of which is an original. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
14. Withholding. All
payments under this Agreement shall be made subject to applicable tax
withholding, and the Company shall withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Except as
specifically provided otherwise in this Agreement, Executive shall bear all
expense of, and be solely responsible for, all federal, state and local taxes
due with respect to any payment received under this Agreement.
15. Governing
Law. This
Agreement shall be governed by and interpreted under the laws of the State of
New York without giving effect to any conflict of laws provisions.
IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed
this Agreement as of the date first above written.
| GuruNet Corporation | |||
| By: _________________________ | |||
| Name: Xxxxxx X. Xxxxxxxxxxx | |||
| Title: Chief Executive Officer | |||
| Executive | |||
| _________________________ | |||
|
Xxxxxxx
X. Xxxxxx |
