THE WAAT CORP.
THE
WAAT CORP.
May
16,
2006
Xx.
Xxx
Xxxxx
x/x
Xxx
XXXX Xxxx.
00000
Xxxxxxx Blvd, 3rd Floor
Xxxxxxx
Xxxx, Xxxxxxxxxx 00000
Dear
Ian:
The
purpose of this letter (the “Letter Agreement”) is to
acknowledge and set forth the terms and conditions of your employment with
The
WAAT Corp., a California corporation (the
“Company”).
1.
Duties
and Responsibilities. During
the Employment Term, you will serve as
the
Chief Executive Officer of the Company and will report to the Board of Directors
of
the
Company (the “Board”).You
will
have such duties and responsibilities that are commensurate with your position
and such other duties and responsibilities as are from time
to
time assigned to you by the Board (or a committee thereof). During the
Employment
Term, you will devote your full business time, energy and skill to the
performance
of your duties and responsibilities hereunder, provided the foregoing shall
not
prevent you from (i) serving on the board of directors of non-profit
organizations and, with the prior written approval of the Board, other
companies, (ii) participating in charitable,
civic, educational, professional, community or industry affairs and (iii)
managing your and your family's passive personal investments; provided such
activities in the aggregate do not interfere or conflict with your duties
hereunder or create a potential business conflict. The Company hereby
acknowledges that you are entitled to continue
serving as a member of the board of directors of MEVEE and Platco and you are
entitled
to retain any compensation received on account of such services.
2.
Employment
Term. The
term
of your employment under this Letter Agreement
(the “Employment Term”)
will
be
for a term commencing on the date first written
above (the “Effective Date”) and, unless terminated earlier as
provided in paragraph
6 hereof or extended by mutual consent of you and the Company on terms at least
as favorable as those in the final year of the Employment Term, ending on the
third anniversary
of the Effective Date.
3.
Base
Salary. During
the Employment Term, the Company will pay you a base salary at the annual rate
of $500,000 for the period commencing on the Effective Date
and
ending on the first anniversary of the Effective Date, $525,000 for the period
commencing
on the first anniversary of the Effective Date and ending on the second
anniversary
of the Effective Date and $551,250 for the period commencing on the second
anniversary
of the Effective Date and ending on the third anniversary of the Effective
Date,
in accordance with the usual payroll practices of the Company.
Mr.
Ian
Xxxxx
Xxxx
2
4.
Annual
Bonus. You
will
be eligible to receive an annual target cash bonus of up to 50% of Base Salary,
if earned, determined by the Board (the “Bonus”).
Such
bonus will
be
based upon the achievement of performance goals set by the Board (or a
committee
thereof) after good faith consultation with you, including, without limitation,
the operating results of the Company and your individual performance, as
determined by the
Board
in its sole discretion.
5.
Benefits
and Fringes.
(a) General. During
the Employment Term, you will be entitled to such benefits and fringes, if
any,
as are generally provided from time to time by the
Company to its senior executives at a level commensurate with your position,
subject
to the satisfaction of any eligibility requirements.
(b) Vacation. You
will
also be entitled to annual paid vacation in accordance
with the Company's vacation policies in effect from time to time, but
in
no
event less than four weeks per calendar year (as prorated for partial years),
which
vacation may be taken at such times as you elect with due regard to the
needs
of
the Company.
(c) Reimbursement
of Business and Entertainment Expenses; Travel.
Upon
presentation of appropriate documentation, you will be reimbursed in
accordance with the Company's expense reimbursement policy for all reasonable
and necessary business and entertainment expenses incurred in connection with
the performance of your duties and responsibilities hereunder. If
you
travel on business of the Company, you will be reimbursed for the cost of
airfare
(business class airfare on all flights scheduled to have a flight time of three
or more hours or, if sufficient business class service is not available for
such
flight,
first class airfare) and the reasonable cost of business class lodging
accommodations,
as well as for your reasonable and necessary out-of-pocket expenses
incurred in connection therewith, in accordance with the Company's policies.
(d) Automobile
Allowance. During
the Employment Term, you will receive
an automobile allowance in the amount of $1,000 per month covering all
expenses
of maintaining and operating an automobile (including, without limitation,
cost, repairs, maintenance, insurance and parking), provided that all
such
expenses are accounted for in accordance with the policies and procedures
established
by the Company. Alternatively, the Company may elect to provide you
with
a Company-owned or leased automobile at an expense of not more than $1,000
per
month (including expenses).
(e) Life
Insurance. Notwithstanding
the foregoing, during the Employment
Term, the Company will provide, subject to your insurability at standard
rates and your full cooperation in obtaining such coverage (including, without
limitation, taking any required physical examinations), life insurance on
your
life
equal to two times your annual base salary.
2
Mr.
Ian
Xxxxx
Xxxx
3
6.
Termination
of Employment. Your
employment and the Employment Term will
terminate on the first of the following to occur:
(a) Disability. Upon
written notice by the Company to you of termination
due to Disability, while you remain Disabled. For
purposes
of this Letter
Agreement, “Disability”
will
be
defined as your inability to perform your material
duties hereunder due to a physical or mental injury, infirmity or incapacity
for a continuous period of not less than 90 days (including weekends
and
holidays) or for 180 days (including weekends and holidays) in any 365-day
period.
(b) Death. Automatically
on the date of your death.
(c)
Cause. Immediately
upon written notice by the Company to you of
a
termination for Cause. For purposes of this Letter Agreement, “Cause”
will
mean:
(1) your
willful misconduct which, in the good faith judgment of
the
Board, has a material negative impact on
the
Company (either economically
or on its reputation);
(2)
your
indictment for, conviction of, or pleading of guilty or nolo
contendere to,
a
felony (or equivalent outside of the United States) or any
crime
involving fraud, dishonesty or moral turpitude;
(3) your
failure to attempt in good faith to perform your duties, which
failure is not remedied within 20 days of written notice from the Board
specifying the details thereof;
(4) your
failure to attempt in good faith to follow the legal direction
of the Board after written notice from the Board specifying the details
thereof; and
(5) any
other
material breach of this Letter Agreement by you that
is
not remedied within 20 days of written notice from the Board specifying
the details thereof.
Notwithstanding
the foregoing, you will not be deemed to have been terminated for Cause without
(i) advance written notice provided to you setting forth the Company's intention
to consider terminating you; (ii) an opportunity for you to be heard before
the
Board;
and (iii) a duly adopted resolution of the Board, after such opportunity,
stating that
your
actions constituted Cause. Cause will cease to exist for an event on the 90th
day
following its occurrence, unless the Company has given you written notice
thereof prior to such date.
3
Mr.
Ian
Xxxxx
Xxxx
4
(d) Without
Cause. Upon
30
days' prior written notice by the Company
to you of an involuntary termination without Cause, other than for death
or
Disability;
(e) Good
Reason. Upon
written notice by you to the Company of a termination
for Good Reason, unless such events are corrected in all material respects
by the Company within 20 days following your written notification to the
Company
for one of the reasons set forth below. “Good
Reason” will
mean, without
your express written consent, the occurrence of any of the following
events:
(1) material
diminutions in title, position, authority, duties or reporting
requirements, except temporarily while you are incapacitated;
(2) your
being required to relocate to a principal place of employment
more than 15 miles from your current location in Xxxxxxx Oaks,
California;
(3) any
other
material breach of this Letter Agreement, including, but not limited to, any
reduction of, or failure to pay, your Base Salary or any failure to timely
pay
or provide the benefits contemplated herein.
Good
Reason will cease to exist for an event on the 90th day following its
occurrence, unless
you have given the Company written notice thereof prior to such
date.
(f) Expiration
of Employment Term. Upon
the
end of the Employment
Term.
7.
Compensation
Upon Termination.
(a) Disability;
Death; Cause. If
your
employment terminates on account
of your Disability or your death or if the Company terminates you for
Cause,
the Company will pay or provide to you (i) any unpaid Base Salary through the
date of termination; (ii) other than if the Company terminates your employment
for Cause, any Bonus earned but unpaid with respect to the fiscal year ending
on
or preceding the date of termination; (iii) reimbursement for any unreimbursed
expenses incurred through the date of termination; (iv) any accrued but unused
vacation time in accordance with Company policy; and (v) all other payments,
benefits or fringe benefits to which you may be entitled under the terms of
any
applicable compensation arrangement or benefit, equity or fringe benefit
plan
or
program or grant or this Letter Agreement (collectively items (i) through
(v)
shall
be hereafter referred to as “Accrued
Benefits”)
4
Mr.
Ian
Xxxxx
Xxxx
5
(b) Termination
Without Cause or For Good Reason. If
your
employment
by the Company is terminated by the Company without Cause or by you
for
Good Reason, the Company will pay or provide you with (x) any Accrued Benefits;
and (y) subject to your compliance with the obligations in paragraphs 8 and
9
hereof: (1) continued payment of your base salary (but not as an employee)
in
accordance with the usual payroll practices of the Company for the greater
of
(A) a period equal to the period between the date of termination and the end
of
the Employment Term or (B) a period equal to six months following such
termination (the
“Severance
Period”); (2)
at
the time bonuses are typically paid to employees,
a pro-rata portion of the Bonus for the fiscal year in which your termination
occurs based on actual results for the plan year (determined by multiplying
the amount of the Bonus which would be due for the full fiscal year by
a
fraction, the numerator of which is the number of days during the fiscal year
of
termination that you are employed by the Company and the denominator of which
is
365); (3) subject to (A) your timely election of continuation coverage
under
the
Consolidated Budget Omnibus Reconciliation Act of 1985, as amended (“COBRA”)
and (B) your continued copayment of premiums at the same level and
cost
to you as if you were an employee of the Company (excluding, for purposes of
calculating cost, an employee's ability to pay premiums with pre-tax
dollars),
to the extent permitted under applicable law and the terms of such plan,
continued
participation during the Severance Period in the Company's group health plan
which covers you as of the date of termination at the Company's expense
(other than the aforementioned premiums), provided that you are eligible
and
remain eligible for COBRA coverage; provided, however, that in the event that
you obtain other employment that offers substantially similar or improved
group
health benefits, such continuation of coverage by the Company under this
sub-paragraph shall immediately cease; and (4) immediate vesting and
exercisability of all outstanding stock options to purchase shares of the
Company's
common stock. Payments or benefits provided in this paragraph 7(b) shall
be
in lieu of any termination or severance payments or benefits for which
you
may
be eligible under any of the plans, policies or programs of the
Company.
(c) Expiration
of Employment Term. If
the
Employment Term ends at
the
third anniversary of the Effective Date and you do not continue as an
employee
beyond such time, the Company will pay or provide you with (x) any Accrued
Benefits; and (y) subject to your compliance with the obligations in paragraphs
8 and 9 hereof: (1) continued payment of your base salary (but not as
an
employee) in accordance with the usual payroll practices of the Company for
a
period
equal to six months following such termination; and (2) the benefits
provided
in paragraph 7(b)(3)
for
a
period of six months.
5
Mr.
Ian
Xxxxx
Xxxx
6
8.
Release;
No Set-Off; No Mitigation.
(a) Any
and
all amounts payable and benefits or additional rights provided
pursuant to this Letter Agreement beyond Accrued Benefits shall only
be
payable if you deliver to the Company and do not revoke a general release of
all
claims related to the Company, its affiliates, and their respective past,
present and future employees, officers, trustees, agents and representatives
occurring up to
the
release date in such form and substance as mutually agreed upon by you and
the
Company (such form shall also include a reciprocal general release by the
Company
and related parties of all claims against you and your related parties (other
than claims involving or arising from your criminal activity)), provided that
such release will not include a waiver of (a) your rights of indemnification
and
directors
and officers liability insurance coverage to which you were entitled
immediately
prior to the termination of your employment under the Company's By-laws, the
Company's Certificate of Incorporation, this Letter Agreement or otherwise,
(b) your rights under any tax-qualified pension plan maintained by the
Company
or claims for accrued, vested benefits under any other employee benefit
plan
or
under COBRA, (c) your rights as a stockholder of the Company and (d)
your
rights under this Letter Agreement. Any such release shall not have any
forfeiture
provision, claw back, penalty, restriction or limitation (a “Restrictive
Provision”)
that is based on criteria that is any more limiting than the provisions
contained
in this Letter Agreement and the Company shall not require you to agree to
any
such Restrictive Provision as a condition of receiving any payment, benefit
or grant. Any such Restrictive Provision violating the foregoing shall be
null
and
void.
(b) The
Company's obligation to make any payment provided for in this
Letter Agreement shall not be subject set-off, counterclaim or recoupment of
amounts
owed by you to the Company or its affiliates.
(c) In
no
event shall you be obliged to seek other employment or take any
other
action by way of mitigation of the amounts payable to you under any of the
provisions of this Letter Agreement, nor shall the amount of any payment
hereunder
be reduced by any compensation earned by you as a result of employment
by another employer (other than as provided in paragraph 7(b)(y)(3)).
9.
Restrictive
Covenants.
(a) Non-Competition. During
the Employment Term, you will not, directly or indirectly, without the prior
written consent of the Company, enter into Competition
with the Company or any of its affiliates (the “Employer”).
“Competition”
means
participating, directly or indirectly, as an individual proprietor,
partner, stockholder, officer, employee, director, joint venturer, investor,
lender, consultant or in any capacity whatsoever in a business in the field
of
business that the Employer is engaged in as of the date of your termination
of
employment
with the Company or is actively planning to engage in as of the date
of
your
termination of employment with the Company.
6
Mr.
Ian
Xxxxx
Xxxx
7
(b) Confidentiality. During
the Employment Term and thereafter, you
will
hold in a fiduciary capacity for the benefit of the Employer all secret or
confidential
information, knowledge or data relating to the Employer, and their respective
businesses, which will have been obtained by you during your employment
by the Company and which will not be or become public knowledge (other
than by acts by you or your representatives in violation of this Letter
Agreement).
You will not, except as may be required to perform your duties hereunder
or as may otherwise be required by law or legal process, without limitation
in
time or until such information will have become public or known in the
Employer's industry (other than by acts by you or your representatives in
violation of this Letter Agreement), communicate or divulge to others or use,
whether
directly or indirectly, any such information, knowledge or data regarding the
Employer, and their respective businesses.
(c) Non-Solicitation
of Customers. During
the Employment Term and for the twelve-month period following your termination
of employment for any
reason (the “Restricted Period”), you will not, directly or
indirectly, influence
or attempt to influence customers or suppliers of the Employer to divert
their
business to any competitor of the Employer.
(d) Non-Solicitation
of Employees. You
recognize that you possess and
will
possess confidential information about other employees of the Employer relating
to their education, experience, skills, abilities, compensation and benefits,
and
inter-personal relationships with customers of the Employer. You
recognize that
the
information you possess and will possess about these other employees is not
generally known, is of substantial value to the Employer in developing its
business and in securing and retaining customers, and has been and will be
acquired by you because of your business position with the Employer.
You
agree
that,
during the Restricted Period, you will not, directly or indirectly, solicit
or
recruit
any employee of the Employer for the purpose of being employed by you
or
by any
competitor of the Employer on whose behalf you are acting as an agent,
representative or employee and that you will not convey any such confidential
information
or trade secrets about other employees of the Employer to any other person.
7
Mr.
Ian
Xxxxx
Xxxx
8
(e) Non-Disparagement. You
shall
not, or induce others to, Disparage
the Employer or any of their past and present officers, directors, employees
or products. “Disparage”
shall
mean making comments or statements to
the
press, the Employer's employees or any individual or entity with whom the
Employer
has a business relationship which would adversely affect in any manner: (i)
the
conduct of the business of the Employer (including, without limitation, any
products or business plans or prospects); or (ii) the business reputation of
the
Employer, or any of their products, or their past or present officers,
directors or employees.
(f) Cooperation. Upon
the
receipt of notice from the Company (including outside counsel), you agree that
during the Employment Term and thereafter, you will respond and provide
information with regard to matters in which you have knowledge as a result
of
your employment with the Company, and will provide reasonable assistance to
the
Employer and its representatives in defense
of any claims that may be made against the Employer, and will assist the
Employer in the prosecution of any claims that may be made by the Employer,
to
the extent that such claims may relate to the period of your employment with
the
Company
(or any predecessor). You agree to promptly inform the Company if you
become aware of any lawsuits involving such claims that may be filed or
threatened
against the Employer. You also agree to promptly inform the Company
(to the extent you are legally permitted to do so) if you are asked to assist
in
any investigation of the Employer (or their actions), regardless of whether
a
lawsuit or other proceeding has then been filed against the Employer with
respect to such investigation, and will not do so unless legally
required.
(g) Injunctive
Relief. It
is
further expressly agreed that the Employer will or would suffer irreparable
injury if you were to violate the provisions of this paragraph 9 and that the
Employer would by reason of such violation be entitled to
injunctive relief in a court of appropriate jurisdiction and you further consent
and
stipulate to the entry of such injunctive relief in such court prohibiting
you
from
violating the provisions of this paragraph 9.
(h) Survival
of Provisions. The
obligations contained in this paragraph
9 will survive the termination of your employment with the Company and
will
be fully enforceable thereafter. If it is determined by a court of competent
jurisdiction in any state that any restriction in this paragraph 9 is
excessive
in duration or scope or extends for too long a period of time or over too
great
a
range of activities or in too broad a geographic area or is unreasonable or
unenforceable
under the laws of that state, it is the intention of the parties that
such
restriction may be modified or amended by the court to render it enforceable
to
the maximum extent permitted by the law of that state or
jurisdiction.
8
Mr.
Ian
Xxxxx
Xxxx
9
10.
Representations. You
represent and warrant that your execution and delivery of
this
Letter Agreement and your performing the contemplated services does not and
will
not
conflict with or result in any breach or default under any agreement, contract
or arrangement
which you are a party to or violate any other legal restriction. You
further represent
and warrant that you have been advised by the Company to consult independent
legal counsel of your choice before signing this Letter Agreement.
11.
Assignment. Notwithstanding
anything else herein, this Letter Agreement is personal
to you and neither the Letter Agreement nor any rights hereunder may be
assigned
by you. The Company may assign the Letter Agreement to an affiliate or to any
acquiror
of all or substantially all of the assets of the Company. This
Letter Agreement will inure to the benefit of and be binding upon the personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, legatees and permitted assignees
of the parties.
12.
Arbitration. You
agree
that all disputes and controversies arising under or in connection
with this Letter Agreement, other than seeking injunctive or other equitable
relief
under paragraph 9(g),
will
be
settled by arbitration conducted before one (1) arbitrator
mutually agreed to by the Company and you, sitting in Los Angeles, California
or
such
other location agreed to by you and the Company, in accordance with the
National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association then in effect; provided, however, that if the Company and you
are
unable to agree
on
a single arbitrator within 30 days of the demand by another party for
arbitration, an
arbitrator will be designated by the Los Angeles Office of the American
Arbitration Association. The determination of the arbitrator will be final
and
binding on you and the Employer.
Judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction. Each party will bear their own expenses of such
arbitration.
13.
Indemnification. The
Company hereby agrees to indemnify you and hold you
harmless to the extent provided under the by-laws of the Company against and
in
respect
to any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses
(including reasonable attorney's fees), losses, and damages resulting from
the
your
good
faith performance of his duties and obligations with the Company. This
obligation
shall survive the termination of your employment with the Company.
14.
Liability
Insurance. The
Company shall cover you under directors and officers liability insurance both
during and, while potential liability exists, after the Employment
Term in the same amount and to the same extent as the Company covers its
other
officers and directors.
15.
Withholding
Taxes. The
Company may withhold from any and all amounts payable
to you such federal, state and local taxes as may be required to be withheld
pursuant to any applicable laws or regulations.
9
Mr.
Ian
Xxxxx
Xxxx
10
16.
Governing
Law. This
Letter Agreement will be governed by, and construed under
and
in accordance with, the internal laws of the State of California, without
reference to rules relating to conflicts of laws.
17.
Entire
Agreement; Amendments. This
Letter Agreement and the agreements referenced herein contain the entire
agreement of the parties relating to the subject matter hereof, and supercede
in
their entirety any and all prior agreements, understandings
or representations relating to the subject matter hereof. No amendments,
alterations
or modifications of this Letter Agreement will be valid unless made in writing
and
signed by the parties hereto.
18.
Notice. Any notice or other
communication required or permitted to be given under this Agreement (a
“Notice”) shall be in writing and delivered in person, by
facsimile transmission (with a Notice contemporaneously given by another method
specified in this paragraph 18), by overnight courier service or by postage
prepaid mail with a return receipt requested, at the following locations (or
to
such other address as either party may have furnished to the other in writing
by
like Notice. All such Notices shall only be duly given and effective upon
receipt (or refusal of receipt).
If
to
you:
At
the
address (or to the facsimile number) shown
on
the
records of the Company
If
to the
Company:
The
WAAT
Corp.
00000
Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
General Counsel
We
hope
that you find the foregoing terms and conditions acceptable. You may
indicate
your agreement with the terms and conditions set forth in this Letter Agreement
by signing the enclosed duplicate original of this Letter Agreement and
returning it to me.
10
Mr.
Ian
Xxxxx
Xxxx
11
We
look
forward to your continued employment with the Company.
|
Very
truly yours,
|
||
| THE WAAT CORP. | ||
| |
|
|
| By: | /s/ Tal Xxxx XxXxxxx | |
|
Name:
Tal Xxxx XxXxxxx
|
||
|
Title:
Director of Content/Partner
|
||
|
Accepted and
Agreed:
|
|||
| /s/ Xxx Xxxxx | |||
|
|
11
