EMPLOYMENT AGREEMENT
Exhibit 10.2
This Employment Agreement (the “Agreement”) is entered into as of
February 1, 2008, (the “Effective Date”) between XxxxxXxxxx.xxx, Inc., a
Delaware corporation (the “Company”), and Xxxx Xxxxxxxxx (the “Employee”).
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. Position. During the term of this Agreement, Company will
employ Employee,
and Employee will serve Company in the position of President of
XxxxxXxxxx.xxx. In the event
that there is a spinout of XxxxxXxxxx.xxx such that it is no longer a
subsidiary of InfoUSA, Inc.
(the “Parent”), then Employee will have the title of President and
Chief Executive Officer of
XxxxxXxxxx.xxx. Employee will initially report to Xxx Xxxxx, the Chief
Executive Officer of the
Parent. Employee hereby represents and warrants to Company that
Employee is free to enter into
and fully perform this Agreement and the agreements referred to herein
without breach or
violation of any agreement or contract to which Employee is a party or
by which Employee is
bound.
2. Duties. The duties and services to be performed by Employee
under this
Agreement are collectively referred to herein as the “Services”.
Employee agrees that to the best
of his ability and experience he shall at all times conscientiously
perform all of the duties and
obligations assigned to him under the terms of this Agreement. Employee
will devote
substantially all his working time and efforts to the business and
affairs of the Company. At
Company’s option, it will be entitled to reasonable use of Employee’s
name in promotional,
advertising and other materials used in the ordinary course of its
business without additional
compensation unless prohibited by law. Employee’s duties will include
reasonable travel,
including but not limited to travel to offices of Company, its Parent,
subsidiaries and affiliates
and current and prospective customers as is reasonably necessary and
appropriate to the
performance of Employee’s duties hereunder. Employee will comply with
and be bound by
Company’s operating policies, procedures, and practices from time to
time in effect during
Employee’s employment.
3. Compensation and Benefits.
3.1 Salary. Employee’s starting salary will be $400,000 per
year. Employee’s salary shall be payable as earned at Company’s customary
payroll periods in accordance with Company’s customary payroll practices.
Employee’s salary shall be subject to review and adjustment in accordance
with Company’ customary practices concerning salary review for similarly
situated executive employees of Company or its subsidiaries.
3.2 Additional Benefits. Employee will be eligible to
participate in regular health insurance and other employee benefit plans
established by the Company or, in some cases, its Parent, for the Company’s
executive employees from time to time. The Company will pay for Employee’s
health insurance COBRA premiums for the period from Employee’s commencement
of employment with the Company until the first date that Employee is covered
under the Company’s health insurance plans.
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3.3 Annual Bonus. Employee will be eligible for an annual bonus
(commencing with calendar year 2008) that is equal to $400,000 multiplied by
a percentage that
is equal to two times the Annual Growth Rate (as defined below). For
purposes of this bonus,
“Annual Growth Rate” shall mean the percentage that is determined by
dividing the current
year’s Imputed Revenue by the prior year’s Imputed Revenue and subtracting
one (1). “Imputed
Revenue” for a given year shall mean, the revenue of the Company plus the
profit of the
Company (or less any loss of the Company) during that year (each as computed
in accordance
with generally accepted accounting principles under the assumption that the
Company’s Parent is
paid royalties of 10%, 20% and 30% on advertising, subscription, and “per
name” revenue of the
Company, respectively). For purposes of the calculation in 2008, 2007’s
Imputed Revenue shall
be equal to $45 million.
3.4 Additional Bonus. For so long as Employee remains employed
by the Company, at the end of each of the first twelve calendar quarters of
Employee’s employment, Employee will received an additional bonus of
$100,000 (until Employee has received a maximum of $1,200,000 of such
quarterly bonuses). The aggregate amount of such bonuses actually paid (the
“Additional Bonus Amounts”) will be added to the exercise price of your
option grant described below (thereby also reducing the Company’s purchase
price in the event of any exercise of the Put Option or Call Option
described in Section 3.6 below).
3.5 Stock Option. As soon as reasonably practical following
commencement of Employee’s employment with the Company, the Company and its
Parent shall hire an
independent third-party appraiser to determine the current fair market value
of the Company’s
Common Stock (assuming the grant of the option described in this Section).
Following such
determination of fair market value, Employee shall be granted under
Company’s 2008 Equity
Incentive Plan a stock option (the “Option”) to purchase a number of shares
of Common Stock
that represents 5% of the shares of the Company that will be outstanding or
subject to the Option
following such grant. The exercise price of the Option will be equal to the
fair market value as
determined by Company’s Board on the date of grant in reliance on the third
party appraisal plus
(on an aggregate basis) the Additional Bonus Amounts. Such Option shall
become exercisable
and vest over four years commencing on the first date of Employee’s
employment with the
Company, with no portion of the Option becoming exercisable or vesting
unless and
until
Employee remains employed by the Company on the third anniversary of
commencement of
employment, at which time 75% of the shares subject to such Option would
become exercisable
and vest (i.e. no longer be subject to forfeiture due to termination of
employment). The
remaining 25% of the shares subject to such Option will become exercisable
and vest if
Employee remains employed by the Company on the fourth anniversary of
commencement of
Employee’s employment. The terms of such Option will provide that (i) in the
event of a
Change of Control in which such Option is not assumed or substituted by the
acquiror or
otherwise continued on substantially similar terms (provided that in
connection with such
assumption or substitution the option may become an option for other
securities issued in the
transaction in exchange for shares of Common Stock of the Company) (an
“Option Terminating
Change of Control”), then all of the shares subject to such Option will
become vested and
exercisable immediately prior to the consummation of such a Change in
Control and the Put
Option and Call Option described in Section 3.6 below will be in effect, and
(ii) that if at the
time of any Involuntary Termination of Employee’s employment, Section 3.6
below and the Put
Option and Call Option described therein have terminated because the Parent
is no longer a
majority owner of the Company’s outstanding capital stock, then such Option
will provide for a
post-termination exercise period for up to the earlier of two (2) years from
termination or such
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time as a public market or other liquidity exists for the Option’s
underlying shares. Such Option and the shares subject to such Option will be
subject to the Put Option and Call Option described in Section 3.6 below.
3.6 Put/Call Option. As of the earliest of January 1, 2013, the
date on which Employee’s employment is terminated by the Company (unless
prior to the third anniversary of
commencement of Employee’s employment such that the Option is entirely
unvested), and an
Option Terminating Change of Control, and in each case solely in the event
that at such time the
Company remains a majority owned subsidiary of Parent and the Company’s
Common Stock is
not publicly traded on an exchange, then (i) the Company and its Parent
shall promptly thereafter
hire, at the Company’s expense, an independent third-party appraiser to
determine the current
fair market value of the Company’s Common Stock as of such date, (ii)
Employee will have a
put option to sell to the Company the Option and any shares for which such
Option has
previously been exercised (the “Put Option”), and (iii) the Company shall
have a call option to
purchase from Employee the Option and any shares for which such Option has
previously been
exercised (the “Call Option”). The purchase price for either the Put Option
or the Call Option
with respect to each previously exercised share under the Option will be
equal to the fair market
value of a share of the Company’s Common Stock as determined by the
independent third-party
appraiser in accordance with clause (i) above and, with respect to the
unexercised portion of the
Option, will be equal to (a) the number of vested and unexercised shares
then subject to such
Option, multiplied by (b) the fair market value of a share of the Company’s
Common Stock as
determined by the independent third-party appraiser in accordance with
clause (i) above less the
then effective per share exercise price of the Option. Either the Put Option
or the Call Option
may be exercised by providing written notice to the Company or the Employee,
as the case may
be, at any time during the three month period following the determination of
fair market value in
accordance with clause (i) above (which determination shall be promptly
communicated to the
Employee upon completion). Following any such exercise of the Put Option or
Call Option, the
Employee agrees to take all actions reasonably necessary to effect the
transfer of the Option and
any previously exercised shares to the Company against delivery of the
purchase price by the
Company to the Employee, each within ten (10) business days of the written
notice of such
exercise. The provisions of this Section 3.6 shall terminate in their
entirety at such time as either
the Company’s Common Stock is publicly traded on an exchange or the Parent
is no longer a
majority owner of the Company’s outstanding capital stock.
3.7 Expenses. Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with
Company’s business, provided that such expenses are deductible to Company,
are in accordance with Company’s applicable policy and are properly
documented and accounted for in accordance with the requirements of the
Internal Revenue Service.
4. Proprietary Rights. Employee hereby agrees to execute a
Noncompetition, Noninterference and Confidentiality Agreement with Company
in the form attached hereto as Exhibit A.
5. Termination.
5.1 Events of Termination. Employee’s employment with Company
(or the designated subsidiary or affiliate) or a successor shall terminate
immediately upon any one of the following:
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(a) Company’s determination made in good faith that it is terminating
Employee for “cause” as defined under Section 5.2 below (“Termination for
Cause”); or
(b) the effective date of a written notice sent to Employee stating
that Company is terminating his employment, without cause, which notice can
be given by Company at any time after the Effective Date at Company’s sole
discretion, for any reason or for no reason (“Termination Without
Cause”);
(c) the effective date of of a written notice sent to Company from
Employee stating that Employee is electing to terminate his employment with
Company for Good Reason (as defined below) (“Resignation for Good
Reason”); or
(d) the effective date of a written notice sent to Company from
Employee stating that Employee is electing to terminate his employment with
Company for other than Good Reason (“Voluntary Termination”).
5.2 “Cause” Defined. For purposes of this Agreement, “cause”
for Employee’s termination will exist at any time after the happening of one
or more of the following events:
(a) Employee’s conviction of, or plea of “guilty” or “no contest” to, a
felony under the laws of the United States or any State thereof;
(b) Employee’s gross negligence or willful misconduct that causes
material harm to the Company;
(c) An unauthorized use or disclosure by the Employee of the Company’s
confidential information or trade secrets, which use or disclosure causes
material harm to the Company; or
(d) A failure by Employee to cooperate in good faith with a
governmental or internal investigation of Company or its directors, officers
or employees, if Company has requested the Employee’s cooperation.
5.3 “Good Reason” Defined. For purposes of this Agreement,
“Good Reason” for Employee’s resignation means the happening of one or more
of the following
events:
(a) Company changing Employee’s position from President of the Company
to a position that materially reduces Employee’s overall level of authority
or responsibility (provided that following a Change of Control, such overall
level of authority and responsibility is measured against the business of
the Company as of immediately prior to the Change of Control);
(b) a reduction in Employee’s base salary by more than ten percent
(10%);
(c) a material breach by Company of any agreement with Employee; or
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(d) the involuntary relocation of Employee’s principal workplace to
other than Utah or the San Francisco Bay Area in California; provided,
however, that a “Good Reason” for resignation shall not exist unless
Employee has provided written notice to Company of the circumstances
allegedly constituting a “Good Reason” and Company has failed to cure such
circumstances within thirty (30) days thereafter.
6. Effect of Termination.
6.1 Termination for Cause or Voluntary Termination. In the
event of any termination of Employee’s employment pursuant to Sections
5.1(a) or 5.1(d), Company shall pay Employee the compensation and benefits
otherwise payable to Employee under Section 3 through the date of
termination. Employee’s rights under Company’s benefit plans of general
application shall be determined under the provisions of those plans. All
other compensation from and after such Termination For Cause or Voluntary
Termination (including without limitation any bonus payment) shall cease
(except for those benefits that must be continued pursuant to applicable law
or by the terms of such benefit plans), and Employee shall not be entitled
to any severance pay or other payment or compensation whatsoever upon such
Termination For Cause or Voluntary Termination.
6.2 Termination Without Cause or Resignation for Good Reason.
In the
event of any termination of Employee’s employment pursuant to Section 5.1(b)
or Section 5.1(c),
(a) Company shall pay Employee the compensation and benefits
otherwise payable to Employee under Section 3 through the date of
termination,
(b) Company will pay Employee as a lump sum any remaining payments that
would have been made pursuant to Section 3.4 above ($1.2 million less all
“Additional Bonus Amounts” amounts previously paid),
(c) Employee’s rights under Company’s benefit plans of general
application after termination shall be determined under the provisions of
those plans, and
(d) for up to 12 months following such termination, Company shall
continue to pay (less applicable withholding taxes and payable on Company’s
normal payroll dates) Employee’s current base salary plus an amount for each
payroll period equal to Employee’s annual bonus in the preceding year
divided by the number of payroll periods in one year; provided that such
payments will cease upon the first date that Employee commences any other
full time employment. Solely for purposes of the foregoing, in the event of
a Termination Without Cause or Resignation for Good Reason during the first
year of your employment, the assumed prior year’s bonus will be $100,000
(25% of base salary).
6.3 Termination Without Cause or Resignation for Good Reason
Following a Change of Control. In the event of any termination of
Employee’s employment
pursuant to Section 5.1(b) or Section 5.1(c) in connection with or within
one year following a
Change of Control then, in addition to the applicable provisions of Section
6.2, all of the shares
subject to the Option will immediately become vested and exercisable. For
purpose of this
Agreement a “Change of Control’ means the occurrence of any of the following
events: (i) any
sale or exchange of the capital stock by the stockholders of the Company in
one transaction or
series of related transactions where more than 50% of the outstanding voting
power of the
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Company is acquired by a person or entity or group of related persons
or entities (other than
Parent and its affiliates); or (ii) any reorganization, consolidation
or merger of the Company
(other than with Parent or its affiliates) where the outstanding voting
securities of the Company
immediately before the transaction represent or are converted into less
than fifty percent 50% of
the outstanding voting power of the surviving entity (or its parent
corporation) immediately after
the transaction; or (iii) the consummation of any transaction or series
of related transactions that
results in the sale of all or substantially all of the assets of the
Company; or (iv) any “person” or
“group” (as defined in the Securities Exchange Act of 1934, as amended
(the “Exchange Act”))
other than Parent or its affiliates becoming the “beneficial owner” (as
defined in Rule 13d-3
under the Exchange Act) directly or indirectly of securities
representing more than fifty percent
(50%) of the voting power of the Company then outstanding; provided
that in no event shall any
of the following transactions constitute a “Change in Control”: (a) a
distribution of shares of the
Company’s capital stock to stockholders of the Parent, (b) a public
offering of shares of the
Company’s capital stock, or (c) a sale by Parent or the Company of
shares of the Company’s
capital stock to a venture capital, private equity or other primarily
financial investor, or (d) any
combination of the foregoing.
6.4 Release. As a condition of receiving any of the benefits
contained in Section 6.2(b), 6.2(d) or 6.3 above (the “Severance Benefits”),
Employee hereby acknowledges
that receipt of any such Severance Benefits shall be conditioned upon
Employee’s execution of a
general release in the form reasonably acceptable to the Company. Until such
release is executed
by Employee and delivered to the Company, Employee shall not receive any of
the Severance
Benefits.
6.5 Survival. Employee’s and Company’s obligations under
Sections 5 and 6 of this Agreement will survive the termination of
Employee’s employment with Company. Employee’s obligations under the
Noncompetition, Noninterference and Confidentiality Agreement shall survive
any termination of Employee’s employment.
6.6 Section 409A. To the extent that (i) one or more of the
payments or benefits received or to be received by Employee pursuant to this
Agreement would constitute deferred compensation subject to the requirements
of Section 409A of the Internal Revenue Code (“Code’, and (ii) Employee is a
“specified employee” within the meaning of Code Section 409A, then such
payment
or benefit or portion thereof will be delayed until the earliest date
following Employee’s “separation from service” within the meaning of Code
Section 409A on which Company can provide such payment or benefit to
Employee without Employee’s incurrence of any additional tax or interest
pursuant to Code Section 409A.
7. Miscellaneous.
7.1 Severability. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties
hereby waive such provision to the extent that it is found to be
invalid or unenforceable and to
the extent that to do so would not deprive one of the parties of the
substantial benefit of its
bargain. Such provision shall, to the extent allowable by law and the
preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable
and, as modified, shall be
enforced as any other provision hereof, all the other provisions
continuing in full force and
effect.
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7.2 Remedies. Company and Employee acknowledge that the service
to be provided by Employee is of a special, unique, unusual, extraordinary
and intellectual character, which gives it peculiar value the loss of which
cannot be reasonably or adequately compensated in damages in an action at
law. Accordingly, Employee hereby consents and agrees that for any breach or
violation by Employee of any of the provisions of this Agreement including,
without limitation, Section 4, a restraining order and/or injunction may be
issued against either of the parties, in addition to any other rights and
remedies the parties may have, at law or equity, including without
limitation the recovery of money damages.
7.3 No Waiver. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of
any provision hereof shall not be taken or held to be a waiver of any
preceding or succeeding breach of such provision or as a waiver of the
provision itself. No waiver of any kind shall be effective or binding,
unless it is in writing and is signed by the party against whom such waiver
is sought to be enforced.
7.4 Assignment. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by Employee at
any time. Company may
assign its rights, together with its obligations hereunder, to any
subsidiary, affiliate or successor
of Company, or in connection with any sale, transfer or other disposition of
all or substantially
all the business and assets of Company or any of their respective
subsidiaries or affiliates,
whether by sale of stock, sale of assets, merger, consolidation or
otherwise; provided, that any
such assignee assumes Company’s obligations hereunder. This Agreement shall
be binding
upon, and inure to the benefit of, the persons or entities who are
permitted, by the terms of this
Agreement, to be successors, assigns and personal representatives of the
respective parties
hereto.
7.5 Withholding. All sums payable to Employee
hereunder shall be reduced by all federal, state, local and other
withholding and similar taxes and payments required by applicable law to be
withheld by Company.
7.6 Entire Agreement. This Agreement (and the exhibit(s)
hereto) constitutes the entire and only agreement and understanding between
the parties relating to
employment of Employee with Company and this Agreement supersedes and
cancels any and all
previous contracts, arrangements or understandings with respect to
Employee’s employment;
except that the Noncompetition, Noninterference and Confidentiality
Agreement shall remain as
an independent contract and shall remain in full force and effect according
to its terms.
7.7 Amendment. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended only by an agreement in writing
executed by both parties hereto.
7.8 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent
by telecopier, sent by certified
first class mail, postage pre-paid, or sent by nationally recognized express
courier service. Such
notices and other communications shall be effective upon receipt if hand
delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (1) day
after dispatch if sent by
express courier, to the following addresses, or such other addresses as any
party shall notify the
other parties:
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| If to Company: | ||||||
| Telecopier: | ||||||
| Attention: | ||||||
| If to Employee: | ||||||
| Telecopier: | ||||||
| Attention: | ||||||
7.9 Binding Nature. This Agreement shall be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.
7.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall in no way affect the meaning or
interpretation of this Agreement. In this
Agreement, the singular includes the plural, the plural included the
singular, the masculine
gender includes both male and female referents, and the word “or” is used in the inclusive sense.
gender includes both male and female referents, and the word “or” is used in the inclusive sense.
7.11 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, taken together, constitute one and the same agreement.
7.12 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the
laws of the State of Nebraska, without giving effect to the principles of
conflict of laws.
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IN WITNESS WHEREOF, Company and Employee have executed this
Agreement as of the date first above written.
“COMPANY”
|
“EMPLOYEE” | |||||||||
FredVakili
|
Xxxx Xxxxxxxxx | |||||||||
By: /s/ Xxxx Xxxxxx
|
By: /s/ Xxxx Xxxxxxxxx | |||||||||
SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
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Attachment
Exhibit A: Noncompetition, Noninterference and Confidentiality
Agreement
