EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT (the “ Agreement ”)
is made effective as of December 16, 2005 (the “ Effective
Date ”), by and between Who’s Your Daddy, Inc., a
Nevada corporation (the “ Company ”), and David
Mitchell Lolis (the “ Executive ”). The Company
and the Executive are hereinafter collectively referred to as the
“ Parties ,” and individually referred to as a
“ Party .”
RECITALS
A.
The Company desires assurance of the
association and services of the Executive in order to retain the
Executive’s experience, skills, abilities, background and
knowledge, and is willing to engage the Executive’s services
on the terms and conditions set forth in this Agreement.
B.
The Executive desires to be in the
employ of the Company, and is willing to accept such employment on
the terms and conditions set forth in this Agreement.
AGREEMENT
In
consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree as
follows:
1. EMPLOYMENT.
1.1 Term . The Company hereby employs the
Executive, and the Executive hereby accepts employment by the
Company, upon the terms and conditions set forth in this Agreement.
The term of this Agreement will begin on the Effective Date and
will continue until the third (3rd) anniversary of the
Effective Date, unless terminated earlier in accordance with
Section 3 and/or 4 below (the “ Term
”).
1.2 Title . The Executive will have the title of
Executive Vice President of the Company and will serve in such
other capacity or capacities as may be prescribed by the Company or
the Executive’s superiors. The Executive will report to the
Chief Executive Officer of the Company or such other person or
persons designated by the Policies established by the
Company’s Board of Directors (the
“Board”).
1.3 Duties . The Executive will do and perform all
services, acts or things reasonably consistent with his position,
in accordance with the bylaws of the Company and the Policies
established by the Board.
1.4 Policies and Practices . The employment
relationship between the Parties will be governed by the policies
and practices established by the Company and the Board. The
Executive will acknowledge in writing that he has read the
Company’s Employee Handbook, which will govern the terms and
conditions of his employment with the Company, along with this
Agreement. If the terms of this Agreement differ from or are in
conflict with the Company’s policies or practices or the
Company’s Employee Handbook, this Agreement will control.
The
Executive
also acknowledges that he has received a copy of the
Company’s Code of Conduct Manual and will follow its
guidelines for ethical business behavior.
2. COMPENSATION OF THE
EXECUTIVE.
2.1 Base Salary . The Company will pay the
Executive a base salary as set forth below (the “ Base
Salary ”), less payroll deductions and all required
withholdings, payable in regular periodic payments in accordance
with Company policy. Such Base Salary will be prorated for any
partial year of employment on the basis of a 365-day fiscal year at
the then-current rate. The Executive’s Base Salary may be
increased at the sole discretion of the Board.
2.1.1 December 16, 2005 until the Company receives
additional financing in excess of $4,000,000 or has cumulative
revenues of $4,000,000, $8,000 per month in cash.
2.1.2 When Gross Revenues from the DVD project
exceed $250,000, unless the provisions of 2.1.3 are met, $10,000
per month in cash.
2.1.3 Once the Company receives additional
financing in excess of $4,000,000 or has cumulative revenues of
$4,000,000, the Company shall pay Executive $12,000 per month in
cash
2.2 Warrants. The Company shall issue to Executive
warrants with piggyback registration rights, such warrants to be
eligible for cashless exercise, as follows:
2.2.1 One warrant for the purchase of 250,000
shares of Common Stock of the Company, exercisable for a period of
forty-eight months, commencing in month 12 and terminating at the
end of month 60, at an exercise price of $2.00 per share; these
warrants are conditional on the Executive still being employed by
the Company at the time of exercise;
2.2.2 One warrant for the purchase of an
additional 250,000 shares of Common Stock of the Company,
exercisable for a period of forty-eight months, commencing in month
12, and terminating at the end of month 60, at an exercise price of
one dollar and fifty cents ($2.50) per share; these warrants are
conditional on the Executive still being employed by the Company at
the time of exercise;
2.2.3 One warrant for the purchase of an
additional 250,000 shares of Common Stock of the Company,
exercisable for a period of forty-eight months, commencing in month
12, and terminating at the end of month 60, at an exercise price of
one dollar and fifty cents ($3.00) per share; these warrants are
conditional on the Executive still being employed by the Company at
the time of exercise;
2.2.4 One warrant for the purchase of an
additional 250,000 shares of Common Stock of the Company,
exercisable for a period of forty-eight months, commencing in month
12, and terminating at the end of month 60, at an exercise price of
two dollars ($3.50) per share; these warrants are conditional on
the Executive still being employed by the Company at the time of
exercise.
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2.3 Gross Revenue Payments The Executive will be
entitled to receive payments from the Company for the amount of one
percent (1.0%) of the annual gross revenue of the Company (each, a
“ Gross Revenue Payment ”). Gross revenue will
be calculated in accordance with generally accepted accounting
principles. The Company shall pay the Executive the Gross Revenue
Payments on an annual basis and shall be paid within fifteen (15)
days after the audited financial statements for the applicable
calendar year are issued. The Company shall pay the Gross Revenue
Payments in cash, provided that, if the Board of Directors makes a
good faith determination that there is insufficient cash to pay any
Gross Revenue Payment, the Company may pay any Gross Revenue
Payment in the Company’s Common Stock based on a price per
share equal to the average closing bid price based on the ten (10)
trading days prior to the date of the payment.
2.4 Benefits . The Executive will, in accordance
with Company policy and the terms of the applicable plan documents,
be eligible to participate in benefits under any executive benefit
plan or arrangement which may be in effect from time to time and
made available to the Company’s executive or key management
employees. In the event Executive chooses to use an alternate
medical plan, the Company shall reimburse Executive for payments
under such benefit plan not to exceed the amount the Company would
have paid under its existing medical plan.
2.5 Sick Time / Personal Time Off . The Executive
will accrue three (3) weeks sick time / personal time off over each
one-year period in the Term. All other provisions provided for in
the Company’s Employee Handbook will apply.
2.6 Employment Taxes . All of the
Executive’s compensation will be subject to customary payroll
deductions and all required withholdings as are commonly required
to be collected or withheld by the Company.
2.7 Stock Plan . The Executive may also be granted
options to purchase the Company’s Common Stock or restricted
shares of the Company’s Common Stock (the
“Shares”) upon the achievement of certain performance
objectives as agreed to, in writing, between the Executive and the
Company.
3. TERMINATION.
3.1 Termination By the Company . The
Executive’s employment with the Company may be terminated
under the following conditions:
3.1.1 Termination for Death or Disability . The
Executive’s employment with the Company will terminate
effective upon the date of the Executive’s death or “
Complete Disability ” (as defined in Section 3.5.1
below).
3.1.2 Termination by the Company For Cause . The
Company may terminate the Executive’s employment under this
Agreement for “ Cause ” (as defined in Section
3.5.2 below) by delivery of written notice to the Executive
specifying the Cause or Causes relied upon for such termination.
Any notice of termination given pursuant to this Section 3.1.2 will
effect termination of employment as of the date specified in such
notice or, in the event no such date is specified, on the last day
of the month in which written notice is given.
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3.2 Termination By The Executive . Good
Reason . The Executive may terminate the Executive’s
employment under this Agreement for “ Good Reason
” (as defined below in Section 3.5.3 below) by delivery of
written notice to the Company specifying the “ Good
Reason ” relied upon by the Executive for such
termination, provided that such notice is delivered within three
(3) months following the occurrence of any event or events
constituting Good Reason and that the Executive has given the
Company a minimum of thirty (30) days written notice and an
opportunity to cure the event which constitutes “ Good
Reason .”
3.3 Termination by Mutual Agreement of the Parties
. The Executive’s employment pursuant to this Agreement may
be terminated at any time upon a mutual agreement. in writing, of
the Parties. Any such termination of employment will have the
consequences specified in such agreement.
3.4 Compensation Upon Termination .
3.4.1 Death or Complete Disability . If the
Executive’s employment is terminated by death or Complete
Disability, as provided in Section 3.1.1 above, the Company will
pay to the Executive and/or the Executive’s heir(s), less
standard deductions and withholdings, (i) the Executive’s
Base Salary through the end of the month of said death or
disability at the rate in effect at the time, (ii) accrued and
unused Sick Time / Personal Time Off earned through the end of the
month of said death or disability and (iii) the amount of Gross
Revenue Payment set forth in Section 2.3 earned through the end of
the month of said death or disability. In addition, all warrants
included in Section 2.2 shall be deemed earned and delivered to the
Executive and/or the Executive’s heirs. The Company will
thereafter have no further obligations to the Executive and/or the
Executive’s heirs under this Agreement.
3.4.2 With Cause . If the Executive’s
employment is terminated by the Company for Cause, as provided in
Section 3.1.12 above, the Company will pay to the Executive, less
standard deductions and withholdings, (i) the Executive’s
Base Salary through the date of termination at the rate in effect
at the time, (ii) accrued and unused Sick Time / Personal Time Off
earned through the date of termination and (iii) the amount of
Gross Revenue Payment set forth in Section 2.3 earned through the
date of termination. In addition, all warrants included in Section
2.2 shall be deemed earned and delivered to the Executive and/or
the Executive’s heirs. The Company will thereafter have no
further obligations to the Executive and/or the Executive’s
heirs under this Agreement.
3.4.3 Without Cause or With Good Reason . If
Executive’s employment is terminated by the Company without
Cause, or if the Executive terminates the Executive’s
employment with Good Reason, the Company will pay to the Executive,
less standard deductions and withholdings, (i) the
Executive’s Base Salary through the through the end of the
month of termination at the rate in effect at the time and (ii)
accrued and unused Sick Time / Personal Time Off earned through the
through the end of the month of termination, to be paid within
thirty (30) days of termination. In addition, upon the
Executive’s furnishing to the Company a fully executed waiver
and release of claims (generally in the form attached hereto as
Exhibit A ), the Executive will be entitled to (i) the
accelerated vesting of all Shares and warrants which are then
unvested, (ii) reimbursement of any premiums paid by the Executive
to continue group health coverage for himself and his dependents
pursuant to COBRA, for the greater of (A)
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the
remainder of the Term or (B) for a period of one (1) year after the
termination (the “Severance Period”) or until Executive
becomes eligible to participate in another employer’s group
health plan, whichever occurs first, (iii) the
