EXHIBIT
10.5
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “
Agreement ”) is made, entered into and effective as of
October 27, 2006 (the “ Effective Date ”),
between GoFish Corporation (the “ Company ”),
and Michael Downing, an individual (the “ Executive
”).
WHEREAS, the Company and the Executive wish to
memorialize the terms and conditions of the Executive’s
employment by the Company in the positions of President and Chief
Executive Officer;
NOW, THEREFORE, in consideration of the
covenants and promises contained herein, the Company and the
Executive agree as follows:
1. Employment Period . The Company offers to employ the Executive,
and the Executive agrees to be employed by Company, in accordance
with the terms and subject to the conditions of this Agreement,
commencing on the Effective Date and terminating on the fourth
anniversary of the Effective Date (the “ Scheduled
Termination Date ”), unless terminated in accordance with
the provisions of Section 12 below, in which case the provisions of
Section 12 shall control; provided, however , that unless
either party provides the other party with written notice of his or
its intention not to renew this Agreement at least 90 days prior to
the expiration of the initial term or any renewal term of this
Agreement (as the case may be), this Agreement shall automatically
renew for additional one-year periods commencing on the day after
such expiration date. The Executive affirms that no obligation
exists between the Executive and any other entity which would
prevent or impede the Executive’s immediate and full
performance of every obligation of this Agreement.
2. Position and Duties . During the term of the Executive’s
employment hereunder, the Executive shall continue to serve in, and
assume duties and responsibilities consistent with, the positions
of President and Chief Executive Officer, unless and until
otherwise instructed by the Company. The Executive agrees to devote
to the Company substantially all of his working time, skill, energy
and best business efforts during the term of his employment with
the Company, and the Executive shall not engage in business
activities outside the scope of his employment with the Company if
such activities would detract from or interfere with his ability to
fulfill his responsibilities and duties under this Agreement or
require substantial amounts of his time or of his
services.
3. No Conflicts . The Executive covenants and agrees that for so
long as he is employed by the Company, he shall inform the Company
of each and every future business opportunity presented to the
Executive that arises within the scope of the Business of the
Company (as defined below) and would be feasible for the Company,
and that he will not, directly or indirectly, exploit any such
opportunity for his own account.
4. Hours of Work . The Executive’s normal days and hours of
work shall coincide with the Company’s regular business
hours. The nature of the Executive’s employment with the
Company requires flexibility in the days and hours that the
Executive must work, and may necessitate that the Executive work on
other or additional days and hours.
5. Location . The locus of the Executive’s employment
with the Company shall be the Company’s office located in San
Francisco, California and any other locus where the Company now or
hereafter has a business facility.
(a) Base Salary . During the term of this Agreement, the Company
shall pay, and the Executive agrees to accept, in consideration for
the Executive’s services hereunder, pro rata
bi-weekly payments of the annual salary of $175,000.00, less all
applicable taxes and other appropriate deductions.
The Compensation Committee (the
“Compensation Committee”) of the Company’s board
of Directors (the “Board”) shall also review the
Executive’s base salary annually and shall make a
recommendation to the Board as to whether such base salary should
be increased, which decision shall be within the Board’s sole
discretion.
(b) Bonus . During the term of this Agreement, the
Executive shall be entitled to receive a bonus, which may be paid
annually or semi-annually at the discretion of the Compensation
Committee (or by the independent members of the Board if there
exists no Compensation Committee), the aggregate of which bonus
shall not exceed 40% of his base salary, and the actual amount of
which bonus shall be determined according to achievement of
performance-related financial and operating targets established
annually for the Company and the Executive by the Compensation
Committee (or by the independent members of the Board if there
exists no Compensation Committee). As of the Effective Date, and
unless modified by the Compensation Committee (or by the
independent members of the Board if there exists no Compensation
Committee), the Executive shall be entitled to receive a
semi-annual bonus. The performance targets described above for each
fiscal year shall be adopted by the Compensation Committee promptly
after the end of the prior fiscal year, but in no event later than
March 31 st of the current fiscal year (except for
fiscal year 2006, the performance targets for which are annexed to
this Agreement as Exhibit A). Each bonus, or in the case of a
semi-annual bonus, one installment of the semi-annual bonus, shall
be paid by the Company to the Executive promptly after the first
meeting of the Board following the completion of the annual audit,
which meeting shall occur on or about April 15th of each
year.
7. Expenses . During the term of this Agreement, the
Executive shall be entitled to payment or reimbursement of any
reasonable expenses paid or incurred by him in connection with and
related to the performance of his duties and responsibilities
hereunder for the Company. All requests by the Executive for
payment of reimbursement of such expenses shall be supported by
appropriate invoices, vouchers, receipts or such other supporting
documentation in such form and containing such information as the
Company may from time to time require, evidencing that the
Executive, in fact, incurred or paid said expenses.
8. Vacation . During the term of this Agreement, the
Executive shall be entitled to accrue, on a pro rata
basis, 20 vacation days, per year. The Executive shall be entitled
to carry over any accrued, unused vacation days from year to year
without limitation.
9. Lock-Up Agreement . The Executive shall enter into a Lock-Up
Agreement with the Company in the form attached hereto as Exhibit
B.
10. Stock Options . The Company hereby agrees that the Executive
shall be granted a non-qualified stock option on the terms and
conditions hereinafter stated:
(a) Grant of Options . On the Effective Date, the Company will grant
the Executive an option to purchase an aggregate of 500,000 shares
of the Company’s common voting stock (the “
Option ”) under the Company’s 2006 Stock Option
Plan (the “ Stock Option Plan ”). Such grant
shall be evidenced by an Option Agreement as contemplated by the
Stock Option Plan. In subsequent years the Executive shall be
eligible for such grants of Options and other permissible awards
(collectively with Options, “Awards”) under the Stock
Option Plan as the Compensation Committee or the Board shall
determine. The Executive agrees that he is receiving substantial
consideration, including a share in the goodwill of the Company, as
a result of the Grant of Options and Vesting provisions
herein.
(b) Option Price; Term . The per share exercise price of the Option
shall be $1.50, which represents the fair market value per share of
Company common voting stock on the Effective Date. The term of the
Option shall be ten years from the date of grant.
(c) Vesting and Exercise . One-third (1/3) of the Option shall be vested
and exercisable on the first anniversary of the grant of the
Option. Thereafter, an additional one-thirty sixth (1/36) of the
Option shall be vested and become exercisable on the last day of
each month, subject to the provisions of Section 10(d)
below.
(d) Termination of Service; Accelerated
Vesting .
(i) If the Executive’s employment is
terminated for Cause, as such term is defined below, all unvested
Awards shall immediately expire effective the date of termination
of employment. Vested Awards, to the extent unexercised, shall
expire 120 days after termination of the employment.
(ii) If the Executive’s employment is
terminated voluntarily by the Executive without Good Reason, as
such term is defined below, all unvested Awards shall immediately
expire effective the date of termination of employment. Vested
Awards, to the extent unexercised, shall expire 120 days after the
termination of employment.
(iii) If the Executive’s employment terminates
on account of death or Disability, as defined below, all unvested
Awards shall immediately expire effective the date of termination
of employment. Vested Awards, to the extent unexercised, shall
expire one year after the termination of employment.
(iv) If the Executive’s employment is
terminated (A) in connection with a Change of Control (or following
a Change of Control event), (B) by the Company without Cause or (C)
by the Executive for Good Reason, all unvested Awards shall
immediately vest and become exercisable effective the date of
termination of employment, and, to the extent unexercised, shall
expire one year after any such event.
(e) Payment . The full consideration for any shares
purchased by the Executive upon exercise of the Option shall be
paid in cash.
(a) During the term of this Agreement, the
Executive shall be eligible to participate in incentive, savings,
retirement (401(k)), and welfare benefit plans, including, without
limitation, health, medical, dental, vision, life (including
accidental death and dismemberment) and disability insurance plans
(collectively, “ Benefit Plans ”), in
substantially the same manner, including but not limited to
responsibility for the cost thereof, and at substantially the same
levels, as the Company makes such opportunities available to all of
the Company’s managerial or salaried executive
employees.
(b)
The Executive’s spouse and
dependent minor children will be covered under the Benefit Plans
providing health, medical, dental, and vision benefits, in
substantially the same manner, including but not limited to
responsibility for the cost thereof, and at substantially the same
levels, as the Company makes such opportunities available to the
spouses and dependent minor children to all of the Company’s
managerial or salaried executive employees.
(c)
The Company shall purchase and
maintain traditional directors and officers liability insurance
coverage in the amount of at least $5,000,000 covering the
Company’s officers and directors, including the Executive, as
of the Effective Date.
(d)
Until such time as Executive
becomes covered by Company medical coverage, the Company shall pay
the cost of COBRA coverage provided by Executive’s prior
employer, to the same extent as such coverage was paid for by such
prior employer.
12. Termination of Employment
.
(a) Death . In the event that during the term of this
Agreement the Executive dies, this Agreement and the
Executive’s employment with the Company shall automatically
terminate and the Company shall have no further obligations or
liability to the Executive or his heirs, administrators or
executors with respect to compensation and benefits accruing
thereafter, except for the obligation to pay the Executor’s
heirs, administrators or executors any earned but unpaid base
salary, unpaid pro rata annual bonus and unused vacation
days accrued through the date of death, and vested but unexercised
Awards; provided , that nothing contained in this
paragraph shall be deemed to excuse any breach by the Company of
any provision of this Agreement. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
(b) “ Disability .” In the event
that, during the term of this Agreement the Executive shall be
prevented from performing his duties and responsibilities hereunder
to the full extent required by the Company by reason of Disability
(as defined below) this Agreement and the Executive’s
employment with the Company shall automatically terminate and the
Company shall have no further obligations or liability to the
Executive or his heirs, administrators or executors with respect to
compensation and benefits accruing thereafter, except for the
obligation to pay the Executive or his heirs, administrators or
executors any earned but unpaid base salary, unpaid pro
rata annual bonus and unused vacation days accrued through the
Executive’s last date of Employment with the Company, and
vested but unexercised Awards; provided , that nothing
contained in this paragraph shall be deemed to excuse any breach by
the Company of any provision of this Agreement including any
failure to maintain the long-term disability insurance coverage
required pursuant to Section 10(b)(iv). The Company shall deduct,
from all payments made hereunder, all applicable taxes, including
income tax, FICA and FUTA, and other appropriate deductions through
the last date of the Executive’s employment with the Company.
For purposes of this Agreement, “ Disability ”
shall mean a physical or mental disability that prevents the
performance by the Executive, with or without reasonable
accommodation, of his duties and responsibilities hereunder for a
period of not less than an aggregate of three months during any
twelve consecutive months.
(i) At any time during the term of this Agreement,
the Company may terminate this Agreement and the Executive’s
employment hereunder for “Cause.” For purposes of this
Agreement, “ Cause ” shall be defined as the
occurrence of: (A) gross neglect, malfeasance or gross
insubordination in performing the Executive’s duties under
this Agreement; (B) the Executive’s conviction for a felony,
excluding convictions associated with traffic violations; (C) an
egregious act of dishonesty (including without limitation theft or
embezzlement) or a malicious action by the Executive toward the
Company’s customers or employees; (D) a willful and material
violation of any provision of Sections 13 and 14 hereof; (E)
intentional reckless conduct that is materially detrimental to the
business or reputation of the Company; or (F) material failure,
other than by reason of Disability, to carry out reasonably
assigned duties or instructions consistent with the titles of
President and Chief Executive Officer (provided that material
failure to carry out reasonably assigned duties shall be deemed to
constitute Cause only after a finding by the Board of Directors, or
a duly constituted committee thereof, of material failure on the
part of the Executive and the failure to remedy such performance to
the Board’s or the committee’s satisfaction within 30
days after delivery of written notice to the Executive of such
finding).
(ii)
Upon termination of this Agreement
for Cause, the Company shall have no further obligations or
liability to the Executive or his heirs, administrators or
executors with respect to compensation and benefits thereafter,
except for the obligation to pay the Executive any earned but
unpaid base salary, unpaid pro rata annual bonus and
unused vacation days accrued through the Executive’s last day
of employment with the Company. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
(d)
Change of Control
. For purposes of this Agreement,
“ Change of Control ” means the occurrence of,
or the Company’s Board votes to approve: (A) any
consolidation or merger of the Company pursuant to which the
stockholders of the Company immediately before the transaction do
not retain immediately after the transaction, in substantially the
same proportions as their ownership of shares of t
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