THIS EMPLOYMENT AGREEMENT
(the “Agreement”)
entered into as of July 27, 2005, by and between GuruNet
Corporation, with offices at 237 West 35th Street, New York, New
York, 10001 (the “Company”) and Bruce D. Smith
(“Executive”), residing at 2654 Frances Street,
Bellmore, New York 11710.
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 2 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
Agreement.
1.1.
Duties and
Responsibilities . Commencing July 27, 2005
(the "Effective Date"), Executive shall
serve as the Vice President of Investor Relations and Strategic
Development of the Company, reporting to the CEO. Executive shall
perform all duties and accept all responsibilities incident to such
position as such tasks that 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 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 $175,000, payable in
installments at such times as the Company customarily pays its
other senior level executives.
1.4.
Bonus
. Executive shall be eligible to
receive an annual bonus derived from a percentage of his base
salary based upon stated performance goals for the Company and
Executive. The applicable percentage and performance goals will be
tied to Company and individual performance and will be determined
by the Company’s Compensation Committee, in consultation with
the CEO.
1.5.
Option . The Company shall grant to Executive an option
(the "Option") to purchase 75,000 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 Plan (the “Plan”). A form of Stock Option
Agreement, attached hereto as Exhibit A , shall govern the
terms and conditions of the Option.
1.6.
Change of Control
Event . In the
event of a “Change of Control,” as defined below, the
Board shall take the necessary steps to accelerate the vesting of
50% of the Option and any options granted to Executive subsequent
to this Agreement that have not vested as of the effective date of
the Change of Control. Furthermore and notwithstanding the notice
provision of Section 2.1, below, should Executive’s
employment be terminated without cause at any time during a period
of twelve (12) months subsequent to the effective date of a Change
of Control, Executive will be entitled to three (3) months written
notice and the Board shall take the necessary steps so that any
unvested options that were granted pursuant to this Agreement and
subsequent to the date of this Agreement shall vest immediately
upon the effective date of Executive’s termination. 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 senior level executives as a group or to its
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. 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.
Voluntary Termination By
Either Party .
Either party may terminate the Executive’s employment with
the Company without cause at any time upon three (3) months written
notice. The Company shall have the right, in its sole discretion,
to require Executive to continue working for the Company during the
notice period. If the Company terminates Executive without cause
pursuant to this Section 2.1, the Board shall take the necessary
steps so that the period during which Executive shall be permitted
to exercise his stock options, shall be extended to one (1) year
from the effective date of his termination.
2.2.
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 which (i) continues
for more than ninety (90) days and (ii) cannot be reasonably
accommodated (the "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.
(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.
2.3.
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. 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.
2.4.
Cause
. The Company may terminate
Executive's employment at any time for "Cause" upon immediate
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. For purposes
of this Section 2.4, the term "Cause" shall mean the occurrence of
any one or more of the following: (i) Any act of fraud or
dishonesty or gross negligence; (ii) Executive’s
willful
