Michael Rose 15207 Clydelle Avenue San Jose, CA 95124 Dear Michael:
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Dear
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This Letter Agreement (this
“Agreement”) is executed as of the date set forth above but shall only be
effective as of the earlier of the closing date of the proposed acquisition of
certain assets of Jumpstart Automotive Media, Inc. by the Company (as defined
below) or April 15, 2009, whichever occurs first (the “Effective Date”), by and
between You (“You”) and
Lateral Media, Inc., a
Delaware corporation (the “Company”), with reference to the
following:
1. Services. You
shall be hired by the Company as of the Effective Date as Executive Vice
President, Operations and shall be responsible for general operations of the
Company’s business in the areas of acquiring leads,
facilitating partnerships, assisting with technology and business process
design. You shall be responsible and accountable for performance of your
services to the Company’s Chief Executive Officer or such other executive as the
Company may direct from time to time. While employed by the Company,
You agree to devote your full time, productive energies and attention to serving
the Company in such position. Your duties may be changed from time to
time by the Company.
2. Compensation and
Stock Options. You will be paid an annual base compensation of
two hundred thousand dollars ($200,000) (the “Base
Salary”). Additionally, You shall be eligible to receive quarterly
commissions according to Schedule A attached hereto. Additionally, on
the Effective Date, the Company shall grant to You equity in the form of an
option to acquire that number of shares of common stock of the Company equal to
2.5% of the total shares of common stock outstanding on the Effective Date, at
an exercise price per share equal to the per share fair market value, as
determined in accordance with Section 409A of the Internal Revenue Code of 1986,
as amended, of the Company’s common stock as of the Effective Date (the
“Option”). Provided You are employed by the Company on each vesting
date, the Option shall vest in equal installments on each of the three (3)
anniversaries of the Effective Date and, except as otherwise provided in this
Agreement, subject to such other terms and conditions as set forth in the
Company’s standard form of option agreement. The Option shall be
exercisable for a period of ten years from the date of the grant. Any
equity granted shall be governed in all respects by the Company’s stock and
equity plans in effect on the Effective Date.
3. Benefits and
Reimbursement. While employed by the Company, You shall be
eligible to participate in all incentive, savings and retirement plans and
programs maintained or sponsored by the Company from time to time which are
applicable to other similarly situated employees of the Company, subject to the
terms and conditions thereof. In addition, such Company benefits may
include, and not be limited to, group medical, sick leave, vacations and
holidays to the extent applicable, generally, to other similarly situated
employees of the Company, as such other plans as may be adopted for all regular
employees of the Company. You will be reimbursed for all ordinary
business expenses, provided however You will be required to furnish the Company
appropriate receipts and documentation as may be required by state and federal
law. The Company will reimburse You for reasonable and necessary expenses of
maintaining a home office for the purposes of Section 5 below, in the amount of
up to $200 per month, and for reasonable cell phone service fees incurred for
Company business, provided that You submit the appropriate receipts and
documentation as may be required by state and federal law.
4. Term of
Employment and Severance. You will be employed by the Company
on an at-will basis, and your employment may be terminated by the Company or by
You at any time for any reason or for no reason. In the event of the
termination of your employment by the Company hereunder for any reason or for no
reason, the Company will pay to You an amount equal to the Base Salary for the
period commencing on the date of termination and ending on the six-month
anniversary of the date of termination. For each month of service to
the Company, beginning on the 13th month,
You shall be eligible to receive an additional month of severance, up to a
maximum of 12 months of severance. For the avoidance of doubt, the
Company shall be obligated to make any severance payments to You only in the
event that the Company terminates your employment, and the Company shall have no
obligation to make any severance payments to You in the event that You terminate
your employment.
5. Principal Place
of Business. Your principal place of business will be ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. You will be required to
participate in and attend meetings and business activities in the Company’s
primary location in Southern California as directed. The Company will reimburse
You for reasonable and necessary costs incurred in relation to this travel
expense as well as any other work related travel undertaken on the Company’s
behalf that is directly related to the furtherance of the Company’s business and
is approved by the Chief Executive Officer of the Company, provided that You
submit the appropriate receipts and documentation as may be required by state
and federal law.
6. Company Rules and
Regulations. As an employee of the Company, You agree to abide
by all Company policies, procedures, rules and regulations as set forth in the
Company’s Employee Handbook or as otherwise put forth by the Company from time
to time.
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7. Arbitration. In
the event of any dispute or controversy arising out of, or relating to, this
Agreement, the parties hereto agree to submit such dispute or controversy to
binding arbitration pursuant to either the JAMS Streamlined (for claims under
$250,000.00) or the JAMS Comprehensive (for claims over $250,000.00) Arbitration
Rules and Procedures, except as modified herein, including the Optional Appeal
Procedure. A sole neutral arbitrator shall be selected from the list
(the “List”) of arbitrators supplied by J.A.M.S. (“JAMS”) or any successor
entity, or if it no longer exists, from a List supplied by the ADR Services,
Inc. (“ADR”) following written request by any party hereto. Such
arbitrators shall be a former or retired judge or justice of any California
state or federal court with experience in complex litigation matters involving
commercial transactions. If the parties hereto after notification of
the other party (ies) to such dispute cannot agree upon an arbitrator within
thirty (30) days following receipt of the List by all parties to such
arbitration, then either party may request, in writing, that JAMS or ADR, as
appropriate, appoint an arbitrator within ten (10) days following receipt of
such request (the “Arbitrator”). The arbitration shall take place in
Los Angeles, California, at a place and time mutually agreeable to the parties
or if no such agreement is reached within ten (10) days following notice from
the Arbitrator, at a place and time determined by the
Arbitrator. Such arbitration shall be conducted in accordance with
the Streamlined Arbitration Rules and Procedures of JAMS then in
effect, and Section 1280 et seq. of the California Code of Civil
Procedure, or if applicable, the Commercial Arbitration Rules of ADR then in
effect. The parties hereto agree that all actions or proceedings
arising in connection with this Agreement shall be arbitrated exclusively in Los
Angeles, California. The aforementioned choice of venue is intended
by the parties to be mandatory and not permissive in nature, thereby precluding
the possibility of litigation between the parties with respect to or arising out
of this Agreement in any jurisdiction other than that specified in this
Section. Each party hereby waives any right it may have to assert the
doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this Section, and stipulates that the
Arbitrator shall have in
personam jurisdiction and venue over each of them for the purpose of
litigating any dispute, controversy, or proceeding arising out of or related to
this Agreement. Each party hereby authorizes and accepts service of
process sufficient for personal jurisdiction in any action against it as
contemplated by this Section by registered or certified mail, return receipt
requested, postage prepaid, to its address for the giving of notices as set
forth in this Agreement. The decision of the Arbitrator shall be
final and binding on all the parties to the arbitration, shall be non-appealable
and may be enforced by a court of competent jurisdiction. The
prevailing party shall be entitled to recover from the non-prevailing party
reasonable attorney’s fees, as well as its costs and expenses. The
Arbitrator may grant any remedy appropriate including, without limitation,
injunctive relief or specific performance. Prior to the appointment
of the Arbitrator, any party may seek a temporary restraining order or a
preliminary injunction from the Los Angeles Superior Court which shall be
effective until a final decision is rendered by the Arbitrator.
The
claims covered by this agreement to arbitrate include, but are not limited to
claims for breach of contract, covenant of good faith and fair dealing, wage
claims, wrongful termination in violation of public policy, retaliatory or
constructive discharge, wrongful demotion, discrimination, harassment, or
retaliation prohibited by law, tort, claims, claims for violation of public
policy, or any other claim of a violation of a legally protected right afforded
by State or Federal law, including, but not limited to, the California Fair
Employment and Housing Act, title VII of the Civil Rights Act, the Age
Discrimination in Employment Act, the Americans and Disabilities Act and the
California Labor Code.
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This
agreement to arbitrate excludes claims for normal workers' compensation benefits
and unemployment insurance benefits. You and the Company agree that
neither shall initiate nor file any lawsuit or administrative action (other than
a charge with the National Labor Relation Board, the Equal Employment
Opportunity Commission, or the Department of Fair Employment and Housing) in any
way related to any claim covered by this agreement to
arbitrate.
8. Confidentiality
and Non-Solicitation.
(a) You
acknowledge that as a consequence of your employment with the Company, You will
be furnished or have access to Confidential Information (as defined
below). related to the business of the Company and that the Company
may provide you with unique and specialized training. You also
acknowledge that such Confidential Information and such training have been
developed and will be developed by the Company through the expenditure by the
Company of substantial time, effort and money and that all such Confidential
Information and training could be used by you to compete with the
Company. You also acknowledge that if you become employed or
affiliated with any competitor of the Company in violation of your obligations
in this Agreement, it is inevitable that you would disclose the Confidential
Information to such competitor and would use such Confidential Information,
knowingly or unknowingly, on behalf of such competitor. Further,
while you are employed hereunder, you will be introduced to customers and others
with important relationships to the Company. You acknowledge that any
and all “goodwill” created through such introductions belongs exclusively to the
Company, including, without limitation, any goodwill created as a result of
direct or indirect contacts or relationships between yourself and any customers
of the Company. For purposes of this Agreement, “Confidential
Information” means confidential and proprietary information of the Company,
whether in written, oral, electronic or other form, including but not limited
to, information and facts concerning business plans, customers, future
customers, suppliers, licensors, licensees, partners, investors, affiliates or
others, training methods and materials, financial information, sales prospects,
client lists, inventions, or any other scientific, technical or trade secrets of
the Company or of any third party provided to you or the Company under a
condition of confidentiality, provided that Confidential Information will not
include information that is in the public domain other than through any fault or
act by you.
(b) You
will at all times, both during the period while you are employed hereunder and
after the termination of this Agreement and the termination of your employment
hereunder for any reason or for no reason, maintain in confidence and will not,
without the prior written consent of the Company, use, except as required in the
course of performance of your duties for the Company or by court order, disclose
or give to others any Confidential Information. In the event you are
questioned by anyone not employed by the Company or by an employee of or a
consultant to the Company not authorized to receive Confidential Information, in
regard to any Confidential Information, or concerning any fact or circumstance
relating thereto, you will promptly notify the Company. Upon the
termination of your employment hereunder for any reason or for no reason, or if
the Company otherwise requests, you will return to the Company all tangible
Confidential Information and copies thereof (regardless how such Confidential
Information or copies are maintained). The terms of this Section 8(b)
are in addition to, and not in lieu of, any statutory or other contractual or
legal obligation that you may have relating to the protection of the Company’s
Confidential Information. The terms of this Section 8(b) will survive
indefinitely any termination of this Agreement and/or any termination of your
employment hereunder for any reason or for no reason.
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(c) You
further recognize that the Company’s willingness to enter into this Agreement is
based in part on your agreement to the provisions of this
Section 8. Subject to the further provisions of this Agreement,
You will not:
(i) during
your employment with the Company, engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, whether paid or unpaid, in any business;
(ii) during
your employment with the Company and for the one year period immediately
following the termination of such employment for any reason, call upon any
person who is, at such time, or within the six-month period prior to such time,
was, an employee of the Company or its subsidiaries for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company
or its subsidiaries;
(iii) during
your employment with the Company and for the one year period immediately
following the termination of such employment for any reason, call upon any
prospective business acquisition candidate, on your own behalf or on behalf of
any competitor of the Company, which candidate was, to your knowledge after due
inquiry, either called upon by the Company or its subsidiaries or for which the
Company or its subsidiaries made an acquisition analysis, for the purpose of
acquiring such candidate; and/or
(iv) during
your employment with the Company and for the one year period immediately
following the termination of such employment for any reason, induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Company or its subsidiaries to cease doing business with the Company or its
subsidiaries, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation on the one hand, and the
Company or any of its subsidiaries, on the other hand.
(d) The
covenants in this Section 8 are severable and separate, and the unenforceability
of any specific covenant shall not affect the provisions of any other
covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent that the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) All
of the covenants in this Section 8 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of You against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants. It is specifically agreed that the period of two
years (subject to the further provisions of this Agreement) following
termination of employment stated at the beginning of this Section 8, during
which the agreements and covenants of You made in this Section 8 shall be
effective, shall be computed by excluding from such computation any time during
which You are in violation of any provision of this Section 8.
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(f) Notwithstanding
anything in this Section 8 to the contrary, this Section 8 shall not
prohibit You from engaging in activities, directly or indirectly, related to
owning, developing or operating any other business activity not competitive with
the Business.
9.
Ownership of
Ideas, Copyrights and Patents.
(a) All
ideas, discoveries, creations, manuscripts and properties, innovations,
improvements, knowhow, inventions, designs, developments, apparatus, techniques,
methods, and formulae (collectively, the “Inventions”) which may be used in the
current or planned business of the Company or which in any way relates to such
business, whether patentable, copyrightable or not, which You may conceive,
reduce to practice or develop while You are employed hereunder (and, if based on
or related to any Confidential Information, within two years after termination
of such employment for any reason or for no reason), alone or in conjunction
with another or others, whether during or out of regular business hours, whether
or not on the Company’s premises or with the use of its equipment, and whether
at the request or upon the suggestion of the Company or otherwise, will be the
sole and exclusive property of the Company, and that You will not publish any of
the Inventions without the prior written consent of the
Company. Without limiting the foregoing, you also acknowledge that
all original works of authorship which are made by you (solely or jointly with
others) within the scope of your employment or which relate to the business of
the Company and which are protectable by copyright are “works made for hire”
pursuant to the United States Copyright Act (17 U.S.C. Section
101). You hereby assign to the Company all of your right, title and
interest in and to all of the foregoing. You further represent that,
to the best of your knowledge and belief, none of the Inventions will violate or
infringe upon any right, patent, copyright, trademark or right of privacy, or
constitute libel or slander against or violate any other rights of any person,
firm or corporation, and that You will use your best efforts to prevent any such
violation.
(b) The
undersigned recognizes that this Agreement does not require assignment of any
Invention which qualifies fully for protection under Section 2870 of the
California Labor Code (hereinafter “Section 2870”), which provides as
follows:
(i) Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(A) Relate
at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrate anticipated research or
development of the employer; or
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(B) Result
from any work performed by the employee for the employer.
(ii) To
the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (i), the provision is against the public policy of
this state and is unenforceable.
(b) Cooperation. At
any time during your employment hereunder or after the termination of your
employment hereunder for any reason or for no reason, You will cooperate fully
with the Company’s and its attorneys and agents in the preparation and filing of
all papers and other documents as may be required to perfect the Company’s
rights in and to any of such Inventions, including, but not limited to, joining
in any proceeding to obtain letters patent, copyrights, trademarks or other
legal rights with respect to any such Inventions in the United States and in any
and all other countries, provided that the Company will bear the expense of such
proceedings, and that any patent or other legal right so issued to You
personally will be assigned by You to the Company without charge by
You.
(c) Licensing and Use of
Inventions. With respect to any Inventions, and work of any
similar nature (from any source), whenever created, which You have not prepared
or originated in the performance of your employment, but which You provide to
the Company or incorporate in any Company product or system, You hereby grant to
the Company a royalty-free, fully paid-up, non-exclusive, perpetual and
irrevocable license throughout the world to use, modify, create derivative works
from, disclose, publish, translate, reproduce, deliver, perform, dispose of, and
to authorize others so to do, all such Inventions. You will not
include in any Inventions You deliver to the Company or use on its behalf,
without the prior written approval of the Company, any material which is or will
be patented, copyrighted or trademarked by You or others unless You provide the
Company with the written permission of the holder of any patent, copyright or
trademark owner for the Company to use such material in a manner consistent with
then-current Company policy.
10. Representations
and Warranties.
(a) You
hereby represent and warrant to the Company that You are not a party to or bound
by any employment agreement, noncompetition agreement or confidentiality
agreement with any other person or entity.
(b) You
hereby represent and warrant to the Company that upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding
obligation of You, enforceable in accordance with its terms.
(c) You
hereby represent and warrant to the Company that (i) the execution, delivery and
performance of this Agreement by You do not and shall not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which You are a party or by which You are bound and (ii)
You are not, to the best of your knowledge and belief, involved in any situation
that might create, or appear to create, a conflict of interest with loyalty to
or duties for the Company.
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11. Return of Company
Records. All
records, designs, patents, business plans, financial statements, manuals,
memoranda, lists and other property delivered to or compiled by You by or on
behalf of the Company or its representatives, vendors or customers which pertain
to the Business shall be and remain the property of the Company, as the case may
be, and be subject at all times to the Company’s discretion and
control. Likewise, all correspondence, reports, records, vehicle
sales records, advertising materials and other similar data pertaining to the
Business or the activities or future plans of the Company which is collected by
You shall be delivered promptly to the Company without request by it upon
termination of your employment for any reason and You shall not retain any
copies of the same.
12. Entire
Agreement. As of the Effective Date, this Agreement
constitutes the final, complete and exclusive agreement between You and the
Company with respect to the subject matter hereof and replaces and supersedes
any and all other agreements, offers or promises, whether oral or written, made
to You by the Company or any representative or agent thereof, including, but not
limited to, that certain Consulting Agreement, between You and the Company,
dated as of the date hereof.
13. Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement, but such invalid, illegal or unenforceable provision will be
reformed, construed and enforced so as to render it valid, legal, and
enforceable consistent with the intent of the parties insofar as
possible.
14. Acknowledgment. You
hereby acknowledge that You have read and understand this
Agreement.
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The
Company:
A
Delaware Corporation
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By:
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/s/
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Its
Chief Executive Officer
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Agreed
and Accepted
The
Employee:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Schedule
A
You will be eligible to receive
compensation, paid quarterly, based on the generation and placement of
automotive leads, according to the following monthly schedule:
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0
to 30,000 leads:
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$.15
cents per lead
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30,001
to 50,000 leads:
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$.0
cents per lead
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50,001
to 100,000 leads:
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$.12
cents per lead
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Over
100,001 leads:
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$.0
cents per lead
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By way of example, if during a monthly
period 65,000 leads are generated and placed, then you will be eligible to
receive the following compensation:
0 to
30,000 leads: $4,500 (30,000 X $.15)
30,001 to
50,000 leads: $0
50,001 to
65,000 leads: $1,799.88 (14,999 X $.12)
Total:
$4,500 + $1,799.88 = $6,299.88
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