EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the
“
Agreement ”),
dated as of June 5, 2008 (the “
Effective Date ”),
is by and between GoFish Corporation, a Nevada corporation (the
“
Company ”)
and Matt Freeman (“
Executive ”).
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I.
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POSITION AND RESPONSIBILITIES
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A.
Term. The
Company shall employ Executive from the Start Date (as defined
below) until Executive’s employment is terminated in
accordance with Sections III, IV or V below (the “
Term ”).
The Company and Executive shall mutually agree on a date on which
Executive will commence employment with the Company (the
“
Start Date ”)
as soon as practicable after the Effective Date.
B.
Position. Upon
the Start Date, the Company shall employ Executive to render
services to the Company in the position of Chief Executive Officer
of the Company. Executive shall perform such duties and
responsibilities as are normally related to the position in
accordance with the standards of the industry and any additional
duties, consistent with his position, now or hereafter reasonably
assigned to Executive by the Company’s Board of Directors
(the “
Board of Directors ”).
Executive shall report to the Board of Directors. Executive shall
abide by the reasonable rules, regulations, and practices as
adopted or modified from time to time by the Board of Directors.
Executive will also serve as a member of the Board of Directors
effective as of the Effective Date. Executive shall also serve as
an officer, director, or in such other executive capacity on behalf
of any of the Company’s affiliated entities as requested by
the Company without any additional compensation. Executive shall be
located in the Company’s office in New York and shall be
expected to travel, including spending up to fifty percent (50%) of
his time in the Company’s San Francisco and Los Angeles
offices, if necessary, and to be available for special calls and
teleconference meetings to meet the obligations of his
position.
C.
Other Activities .
By executing this Agreement, Executive agrees to serve in such
position and to devote his full time, attention, loyalty and
efforts to the performance of Executive’s duties. Executive
may, during the Term, serve as an advisor to or be on the board of
directors of other companies as long as those companies
are not competitors of Company. Competitors of the Company,
for this purpose, include but are not limited to, online vertical
advertising networks, brand advertising networks and companies that
target the online youth demographic based on an internet
advertising-based business model. Notwithstanding any provision of
this Section I(C), Executive shall be permitted to engage in
charitable and civic activities and manage his personal passive
investments;
provided that
such activities do not materially interfere with the performance of
his duties under this Agreement.
D.
No Conflict .
Executive represents and warrants that his execution of this
Agreement, his employment with the Company, and the performance of
his proposed duties under this Agreement shall not violate any
obligations he may have to any other employer, person or entity,
including any obligations with respect to proprietary or
confidential information of any other person or
entity.
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II.
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COMPENSATION AND BENEFITS
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A.
Base Salary .
In consideration of the services to be rendered under this
Agreement, the Company shall pay Executive a salary at the monthly
rate of thirty seven thousand five hundred dollars ($37,500), less
standard payroll deductions and tax withholdings (“
Base Salary ”),
beginning on the Start Date. Upon the completion of one or more
debt or equity financings totaling at least $8 million (a
“
Qualified Financing ”),
the Base Salary shall be increased to a monthly rate of fifty
thousand dollars ($50,000), less standard payroll deductions and
tax withholdings. At the one-year anniversary of the Start Date, if
the Company has completed a Qualified Financing, Executive shall
receive a bonus payment equal to $12,500 times the number of months
between the Start Date and the date of completion of a Qualified
Financing (prorated for any partial months), to be paid by the
Company 30 days following the one-year anniversary of the Start
Date. The Base Salary shall be paid in accordance with the
Company’s normal payroll procedures and practice.
Executive’s Base Salary will be reviewed annually in
accordance with the Company’s compensation review process and
may be adjusted (upward, but not downward) in the sole discretion
of the Company.
B.
Performance Bonus. Executive
shall be eligible to participate in an incentive compensation plan
to be established by the Board of Directors, under which Executive
shall be eligible to receive up to one hundred fifty thousand
dollars ($150,000) per year, contingent upon attainment of
performance targets to be mutually agreed upon by Executive and the
Board of Directors, as part of the Company’s annual operating
plan.
C.
Stock Options .
On the Effective Date, Executive shall be granted non-qualified
stock options to purchase a total of five million
(5,000,000)
shares
of Common Stock of the Company (each such option, an “
Option ”
and, collectively, the “
Options ”).
On the Effective Date, the Options reflect 8.35% of the outstanding
capital stock of the Company, on a fully-diluted basis. The
exercise price of the Stock Options shall be: (i) with respect to
fifty percent (50%) of the Options, the closing price on the
Effective Date, and (ii) with respect to the other fifty percent
(50%) of the Options, $0.80 per share, subject to adjustment to the
price per share of the Qualified Financing if the Qualified
Financing is an equity financing completed at a per share price
less than $0.80 per share, but, in no event, shall the adjusted
price per share be less than the closing price on the Effective
Date. The Options shall vest monthly over a three-year period,
beginning on the Start Date and subject to Executive’s
continuing employment with the Company. The terms and form of the
Options shall be set forth in a stock option agreement executed by
Executive and the Company, substantially in the same form attached
as
Exhibit A hereto.
D.
Anti-Dilution Protection .
The Company will provide Executive with anti-dilution protection at
8% of the outstanding capital stock of the Company (on a
fully-diluted basis) up to the first $10 million of additional
equity or convertible debt. Options made available to Executive as
part of this anti-dilution protection will be granted upon the
closing date of the additional capital financing and will be priced
at the then-current market price. Vesting will be in accordance
with the same vesting schedule as the original option grants
specified above such that on the grant date, a pro rata portion
(based on the percentage of the original option grant that has
vested as of the grant date) of the newly-issued options will be
fully-vested.
E.
Benefits. Executive
shall be eligible to participate in the benefits made generally
available by the Company to the Company’s similarly-situated
employees, in accordance with the benefit plans established by the
Company, and as may be amended from time to time in the
Company’s sole discretion. Until such time as Executive
becomes eligible for coverage by the Company’s medical plan,
the Company shall pay the cost of COBRA coverage provided by
Executive’s prior employer.
F.
Expenses. Executive
shall be reimbursed for all reasonable business-related travel and
other expenses incurred by Executive. Executive shall be entitled
to incur expenses for accommodations and travel at the same
standard as the President or Executive Chairman of the
Company.
G.
Vacation .
During the term of this Agreement, Executive shall be entitled to
accrue, on a
pro rata basis,
twenty (20) paid time off days per year in accordance with the
Company’s standard PTO policy.
H.
Indemnity Agreement. The
Company and Executive shall enter into an Indemnity Agreement with
the Company in substantially the form attached hereto as
Exhibit B (the
“
Indemnity Agreement ”).
I.
Restrictions on Trading. During
any 30 calendar day period within six months of the Start Date,
Executive shall not sell any shares of the Company’s stock
that would exceed five percent (5%) of the aggregate volume of the
Company’s stock that was sold in the preceding 25 trading
days. After such six month period, Executive agrees to abide by the
trading policy approved by the Board for all of the Company’s
senior officers. Upon termination of the Agreement, Executive may
freely dispose of ten percent (10%) of his shares. With respect to
the other ninety percent (90%) of his shares, Executive shall not
sell any shares of the Company’s stock during any 30 calendar
day period that would exceed twenty-five percent (25%) of the
aggregate volume of the Company’s stock that was sold in the
preceding 25 trading days.
J.
Stock Ownership Guidelines .
During the Term, Executive will comply with the reasonable
corporate officer stock ownership guidelines (consistent with
similarly-situated companies) approved by the Board of Directors,
as may be amended from time to time, and provided in writing to
Executive.
K.
Legal Fees. The
Company shall reimburse Executive up to thirty thousand dollars
($30,000) for legal fees incurred in the negotiation of this
Agreement.
L.
Registration of Shares. The
Company shall use reasonable commercial efforts to cause the shares
of Company common stock to be issued upon the exercise of the
Options to be registered with the Securities Exchange Commission on
Form S-8 within six months of the Start Date, but in no event shall
such filing be completed later than nine months from the Start
Date.
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III.
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AT-WILL EMPLOYMENT; TERMINATION BY COMPANY
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A.
At-Will Termination by Company .
Executive’s employment with the Company shall be
“at-will” at all times. The Company may terminate
Executive’s employment with the Company at any time, without
any advance notice, for any reason or no reason at all,
notwithstanding anything to the contrary contained in or arising
from any statements, policies or practices of the Company relating
to the employment, discipline or termination of its employees. Upon
and after such termination, all obligations of the Company under
this Agreement shall cease, except as otherwise provided
herein.
B.
Severance .
Except in situations where the employment of Executive is
terminated For Cause, By Death or By Disability (as defined in
Section IV below), in the event that the Company terminates the
employment of Executive at any time (1) Executive will be eligible
to receive (a) all compensation, unreimbursed expenses and accrued
and unused vacation days to which Executive is entitled through the
date of termination, (b) the then-current Base Salary of Executive
payable in the form of a salary continuation in accordance with the
Company’s payroll procedures and practice for a period of
twelve (12) months after such termination (the “
Severance Period ”),
(c) any annual bonus earned under Section II(B) for a fiscal year
prior to the date of termination that remains unpaid as of the
termination date, payable on the date such bonus otherwise would be
paid, and (d) a pro rated portion (pro rated up to the last day of
the month of termination) of any annual bonus payable to Executive
under Section II(B) hereof, payable on the date such bonus
otherwise would be paid, (2) the Options awarded to Executive will
continue to vest in accordance with the vesting schedule set forth
in Section II(C) above for the Severance Period
and,
to the extent unexercised, shall expire two (2) years after such
termination, and (3) Executive will be entitled to continued
coverage, at the Company’s expense, under all benefit plans
in which Executive was participating as of the termination date
until the earlier of (x) the end of the Severance Period or (y) the
date on which Executive is eligible to receive comparable coverage
and benefits under the same type of plan of a subsequent
employer;
provided that
in the event any such benefit plans do not permit coverage of
Executive following employment termination, the Company shall
provide the economic equivalent of the benefits provided under the
plan in which he is unable to participate. In the event that
Executive is employed by a subsequent employer before the end of
the Severance Period, then the amount payable under subsection (b)
above shall be shortened to six (6) months or the length of time
between the effective date of such termination and the date upon
which Executive begins such subsequent employment, whichever is
longer; provided however that if Executive’s salary at such
subsequent employer is lower than the Base Salary, then Executive
shall be entitled to receive the difference between the Base Salary
and Executive’s salary with such subsequent employer until
the end of the twelve month period. Executive’s eligibility
for severance is conditioned on Executive having first signed a
standard release and covenant not to sue agreement provided by the
Company. Executive shall not be entitled to any severance payments
if Executive’s employment is terminated For Cause, By Death
or By Disability (as defined in Section IV below). Except as set
forth in this Section V(B), upon such termination of employment,
all unvested Options not subject to continuing vesting for the
Severance Period shall immediately expire effective as of the date
of such termination. If Company voluntarily provides more favorable
severance benefits to any other Company employee or officer, or if
Company has in effect, 60 days after the Effective Date, agreements
with employees or officers containing more favorable severance
terms than those contained in this Agreement, then Executive will
be entitled to receive those more-favorable severance
terms.
C.
“Change of Control.” In
the event of a Change of Control, any unvested Options would become
fully vested immediately prior to the occurrence of the Change of
Control. For purposes of this Agreement, “
Change of Control ”
shall mean the occurrence of one transaction or a series of related
transactions involving (i) a transfer of securities of the Company
or any consolidation or merger of the Company with or into any
other person or entity, or any other corporate reorganization or
similar transaction or series of related transactions (including
the acquisition of capital stock of the Company), in which the
stockholders of the Company immediately prior to such transaction,
own, directly or indirectly, capital stock representing directly,
or indirectly, less than fifty percent (50%) of the equity
(measured by economic value or voting power) of the Company or
other surviving entity immediately after such transaction or (ii) a
sale, lease or other disposition of all or substantially all of the
assets of the Company. Notwithstanding the foregoing, a
“Change in Control” shall not include a merger or
tender offer conducted within twelve months of the Effective Date
solely for the purpose of a take-private transaction in connection
with the equity financing (and not a sale) of the Company where the
total transaction amount is less than $50 million, provided that,
after such transaction, the shares into which the Options are
convertible into are shares in the same entity and of the same
class as the other officers and directors of the
Company.
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IV.
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OTHER TERMINATIONS BY COMPANY
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A.
Termination for Cause .
For purposes of this Agreement, “For Cause” shall mean:
(i) Executive is convicted of a felony or a crime involving
material dishonesty; (ii) Executive willfully engages in conduct
that is in bad faith and materially injurious to the Company,
including but not limited to, misappropriation of trade secrets,
fraud or embezzlement; (iii) Executive commits a material breach of
this Agreement, which breach is not cured within twenty days after
written notice to Executive from the Board; (iv) Executive
willfully refuses to implement or follow a lawful policy or
directive of the Board consistent with Executive’s duties and
title, which breach is not cured within twenty days after written
notice to Executive from the Board, or (v) demonstrates a pattern
of failing to perform job duties diligently and professionally and
fails to cure such breach within sixty days after written notice to
Executive from the Board. The Company may terminate
Executive’s employment For Cause at any time, without any
advance notice. With respect to clauses (iii) and (iv) above,
grounds For Cause will only exist after a finding by the Board of
such material breach or failure and the failure by Executive to
remedy such performance to the Board’s satisfaction within
such 20-day period. With respect to clause (v) above, grounds For
Cause will only exist after a finding by the Board of such material
breach or failure and the failure by Executive to remedy such
performance to the Board’s satisfaction within such 60-day
period. The Company shall pay to Executive all compensation,
unreimbursed expenses and accrued and unused vacation days to which
Executive is entitled up through the date of termination, subject
to any other rights or remedies of the Company under law; and
thereafter all obligations of the Company under this Agreement
shall cease. Upon such termination of employment, the unvested
Options awarded to Executive shall immediately expire effective as
of the date of such termination and (ii) the vested Options awarded
to Executive, to the extent unexercised, shall expire one hundred
twenty (120) days after such termination.
B.
By Death .
Executive’s employment shall terminate automatically upon
Executive’s death. The Company shall pay to Executive’s
beneficiaries or estate, as appropriate, (a) all compensation,
unreimbursed expenses and accrued and unused vacation days to which
Executive is entitled through the date of termination, (b)
any
