EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of July 19, 2011 by and between Quepasa Corporation, a Nevada corporation (the “Company”), and Geoff Cook (“Employee”).

 

WHEREAS, the Company, through its Board of Directors (the “Board”), desires to retain the services of Employee, and Employee desires to be retained by the Company, on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.            EMPLOYMENT.  The Company hereby employs Employee, and Employee hereby accepts employment, as Chief Operating Officer of the Company and President, Consumer Internet Division upon the terms of and subject to this Agreement.  Employee shall also serve as a member of the Board of Directors of the Company and its subsidiary, Insider Guides, Inc. and a member of the Executive Committee of the Company.  During the Term (as defined below), upon the death, disability or resignation of a member of the Board who has been appointed by Insider Guides, Inc. pursuant Section 5.19 of the Merger Agreement among the Company, IG Acquisition Company and Insider Guides, Inc. (the “Merger Agreement”), Employee shall have the right to designate, on behalf of Insider Guides, Inc., a replacement for such director.

 

2.            TERM.  The term (the “Term”) of this Agreement shall commence on the effective date of the merger between Insider Guides, Inc., a Delaware corporation, and a subsidiary of the Company (the “Effective Date”), and shall continue until otherwise terminated in accordance with the terms of this Agreement.

 

3.            DUTIES.  As of the Effective Date and during the Term, Employee will serve as Chief Operating Officer of the Company and President, Consumer Internet Division and in such other capacities consistent with foregoing as decided from time to time by Chief Executive Officer of the Company.  Consumer Internet Division of the Company includes, but is not limited to, quepasa.com and myyearbook.com.  As President, Consumer Internet Division, Employee will have primary responsibility for hiring and terminating employment, and setting compensation of Consumer Internet Division personnel subject to approval of Chief Executive Officer of the Company, not to be unreasonably withheld.  Employee shall diligently perform his duties as Chief Operating Officer of the Company and President, Consumer Internet Division and shall devote the substantial portion of his business time and effort to his employment with the Company and such additional duties, consistent with the foregoing, hereunder. During the Term, Employee shall not, directly or indirectly, alone or as a member of a partnership, or as an officer, director, employee or agent of any other person, firm or business organization engage in any other business activities or pursuits requiring his personal service that materially conflict with his duties hereunder or the diligent performance of such duties.

 

 

 

a.             BASE SALARY. During the Term, Employee shall be paid a salary of $250,000 per year, payable in equal installments no less frequently than monthly (“Base Salary”). The Base Salary shall be reviewed at least annually by the Board of Directors or any Committee of the Board delegated the authority to review executive compensation.

 

b.            OPTION AND BONUS. In addition to Base Salary, Employee is awarded as of the Effective Date an option to purchase 450,000 shares, with a per-share exercise price equal to the per-share closing price of the Company’s common stock as quoted on the NYSE Amex Stock Exchange under the symbol “QPSA” as of the Effective Date, and subject to the conditions contained in a separate stock option agreement to be entered into between Employee and the Company no later than thirty (30) days after the Effective Date, and the Company’s 2006 Stock Incentive Plan (the “Stock Incentive Plan”). This option shall vest as provided in Schedule A hereto.  In addition, Employee shall participate in the management bonus program established by the Company (the “Management Bonus Program”) with an annual targeted bonus equal to no less than 85% of the average of the Company’s Chief Executive Officer and Chief Financial Officer of the Company's respective bonuses under the Management Bonus Program for the applicable year, to be paid in the equivalent value of fully-vested options to purchase shares of the Company’s common stock and/or shares of the Company’s common stock, provided that if and to the extent that the Chief Executive Officer's or Chief Financial Officer's bonuses are paid in cash, Employee's bonus shall also be paid in cash.

 

c.             INSURANCE. During the Term, Employee shall be entitled to participate in all health, life, disability and other insurance programs, if any, that the Company and its subsidiaries may offer to other key executive employees of the Company and its subsidiaries.

 

d.             PAID TIME OFF. Employee shall be entitled to six (6) weeks’ paid time off (in addition to holidays) in each calendar year during the Term; provided, that Employee may take only two (2) weeks’ paid time off within any calendar month. Except with respect to paid time off unused as the result of a request by the Company to postpone scheduled paid time off, any unused paid time off from one calendar year shall not carryover to any subsequent calendar year.

 

e.             EXPENSE REIMBURSEMENT. Employee shall, upon submission of appropriate supporting documentation, be entitled to reimbursement of reasonable out-of-pocket expenses incurred in the performance of his duties hereunder in accordance with policies established by the Company. Such expenses shall include, without limitation, reasonable entertainment expenses, gasoline and toll expenses and cellular phone use charges, if such charges are directly related to the business of the Company.

 

5.             GROUNDS FOR TERMINATION.  The Board of Directors of the Company may terminate this Agreement for Cause. As used herein, “Cause” shall mean any of the following: (i) an act of willful misconduct or gross negligence by Employee in the performance of his material duties or obligations to the Company; provided, that if such act is capable of cure, Employee shall be given written notice and such act shall not be deemed a basis for Cause if cured within sixty (60) days after written notice is received by Employee specifying the alleged failure in reasonable detail (and during such sixty (60) day period, Employee shall continue to be employed by the Company at full pay); (ii) conviction of Employee of a felony involving moral turpitude; or (iii) a material act of dishonesty or breach of trust on the part of Employee resulting or intended to result directly or indirectly in personal gain or enrichment at the expense of the Company.

 

 

6.             TERMINATION BY EMPLOYEE.  Employee may terminate this Agreement for Good Reason. As used herein, “Good Reason” means:

 

a.             The Company materially breaches the provisions of this Agreement (except those set forth in Paragraph 4(a) of this Agreement) and Employee provides at least fifteen (15) days’ prior written notice to the Company of the existence of such breach and his intention to terminate this Agreement (no such termination shall be effective if such breach is cured during such period); or

 

b.             The Company fails to comply with the provisions of Paragraph 4(a) herein or to pay any amounts due under the Management Bonus Program pursuant to Paragraph 4(b) herein for an uninterrupted ten (10) day period;

 

c.             The Company requires Employee to work in a non-supervisory or non-management position;

 

d.             The Company decreases Employee’s compensation (Base Salary or percentage of bonus opportunity);

 

e.             The Company materially reduces Employee’s welfare benefits, including, without limitation, paid vacation, paid sick time, paid legal and float holidays, medical, dental and cancer insurance, hospital indemnity, Flexible Spending, Short- and Long-term Disability insurance, Basic Group Term Life/ AD&D insurance, Supplemental Life/AD&D insurance, Spouse Life/Spouse AD&D insurance, Dependent Life insurance, Vision Plan, 401(k) plan, Employee Assistance Program, or education reimbursement program (collectively, the “Benefits”); provided, however, that any change in the Benefits that is made by the Company and that applies to its employees generally shall not be considered “Good Reason”; or

 

f.              The Employee is required, without his prior written consent, to relocate his office more than seventy-five (75) miles from the office where Employee currently reports.

 

 

a.            TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. In the event Employee’s employment with the Company (including its subsidiaries) is terminated by the Company for Cause or by Employee without Good Reason, then, on or before Employee’s last day of employment with the Company, the provisions of this Paragraph 7(a) shall apply.

 

 

 

b.            TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event Employee’s employment with the Company (including its subsidiaries) is terminated by the Company for any reason other than for Cause, other than as a consequence of Employee’s death, Disability (as defined below) or normal retirement under the Company’s retirement plans and practices, or by Employee for Good Reason, the provisions of this Paragraph 7(b) shall apply. In addition to the amounts stated below, Employee shall be paid any other amounts by the Company which are due and payable to him but which remain unpaid as of the date of such termination.

 

(i)            Salary, Performance Award, and Bonus Payments. On or before Employee’s last day of employment with the Company, the Company shall pay in a lump sum to Employee, as compensation for services rendered to the Company, a cash amount equal to two (2) times the amount of Employee’s Base Salary and two times his target bonus amount under the Management Bonus Program as in effect immediately prior to his date of termination.  Notwithstanding the foregoing, if Employee is a “Specified Employee” of the Company for purposes of Code Section 409A at the time of a payment event set forth in Paragraph 7(b) and the Company determines in good faith no applicable exception to the requirements of Code Section 409A exists for the payment, then no payments pursuant to this Paragraph 7(b)(i) shall be made to Employee by the Company until the amount of time has passed that is necessary to avoid incurring excise taxes under Code Section 409A.  Should this provision result in a delay of payments to Employee, on the first day any such payments may be made without incurring a penalty pursuant to Code Section 409A (the “409A Payment Date”), the Company shall begin to make such payments as described in this Paragraph 7(b)(i), provided that any amounts that would have been payable earlier but for the application of this Paragraph 7(b)(i) shall be paid in lump-sum on the 409A Payment Date along with accrued interest at the prime rate of interest set forth in the Western Edition of the Wall Street Journal from the date that payments to Employee should have been made under this Agreement.  The balance of such severance payments shall be payable in accordance with regular payroll timing and the COBRA premiums shall be reimbursed monthly.  For purposes of this provision, the term Specified Employee shall have the meaning set forth in Code Section 409A(2)(B(i) or any successor provision and the treasury regulations and rulings issued thereunder.

 

 

c.            The provisions of this Paragraph 7 shall apply if Employee’s employment is terminated prior to or more than one (1) year after the occurrence of a Change of Control (as defined below). Upon the occurrence of any Change of Control, until the first anniversary of such Change of Control, the provisions of Paragraph 8 shall apply in place of this Paragraph 7; provided, however, that in the event that Employee’s employment is terminated by Employee after a Change of Control without Good Reason, then the provisions of Paragraph 8 shall not apply and the provisions of Paragraph 7(a) shall instead apply.

 

 

 

a.             SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: Following the occurrence of a Change of Control (other than as a consequence of his death or Disability (as defined below), Employee shall be entitled to receive from the Company, the following:

 

 

b.             NON-COMPETITION/NON-SOLICITATION PERIOD. In the event of a termination under the circumstances described in Paragraph 8(a), the provisions of Paragraphs 13 and 14 shall be without force and effect and shall not apply to Employee.

 

c.             GROSS-UP PAYMENT. In the event that any amount payable to Employee pursuant to this Agreement (collectively, the “Payments”) is determined to constitute a “parachute payment” (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), and that any Payments result in the imposition on Employee of an excise tax under Section 4999 of the Code or any successor statute or regulation (an “Excise Tax”), the Company shall pay to Employee an additional amount (a “Gross-Up Payment”) such that the net amount retained by Employee with respect to the Payments, after deduction of any Excise Tax on the Payments and any Federal, state and local income tax and Excise Tax on the Gross-Up Payment (and any interest and penalties thereon), but before deduction for any Federal, state or local income or employment tax withholding on such Payments, shall be equal to the amount of the Payments. The Gross-Up Payment shall be paid to Employee within five (5) days of a determination that such Excise Tax is due, but in no event later than the end of Employee’s taxable year following Employee’s taxable year in which such Excise Tax owed by Employee that is subject to Gross-Up Payment is remitted to the applicable taxing authority.

 

 

d.             CHANGE OF CONTROL.  For purposes of this Agreement, the term “Change of Control” means and includes each of the following:

 

9.            TERMINATION BY REASON OF DEATH.  If Employee shall die while employed by the Company, both prior to termination of employment and during the Term of this Agreement, except as otherwise provided herein, all of Employee’s rights under this Agreement shall terminate following the payment of such amounts of Base Salary that have accrued but remain unpaid, the payment of a pro rata portion of his target bonus amount under the Management Bonus Program through the month in which his death occurs, plus three (3) additional months of such salary and bonus payments. All benefits under Paragraphs 7(b)(ii), 7(b)(iv) and 7(b)(v) herein shall be extended to Employee’s estate as described in such Paragraphs. In addition, Employee’s eligible dependents shall receive continued benefit plan coverage under Paragraph 7(b)(iii) for three (3) months from the date of Employee’s death.

 

10.           TERMINATION BY DISABILITY.  Employee’s employment hereunder may be terminated by the Company for Disability. In such event, except as otherwise provided herein, all of Employee’s rights under this Agreement shall terminate with the payment of such amounts of Base Salary that have accrued but remain unpaid as of thirtieth (30th) day after such notice is given. All benefits under Paragraphs 7(b)(ii), 7(b)(iii), 7(b)(iv) and 7(b)(v) shall be extended to Employee as described in such Paragraphs. In addition, Paragraphs 13 and 14 shall continue to apply to Employee for a period of one(1) year from the date of such termination.

 

 

For purposes of this Agreement, “Disability” means, as a result of Employee’s incapacity due to physical or mental illness:

 

a.              Employee shall have been absent from his duties as an officer of the Company on a substantially full-time basis for six (6) consecutive months; and

 

b.             Within thirty (30) days after the Company notifies Employee in writing that it intends to replace him, Employee shall not have returned to the performance of his duties as an officer of the Company on a full-time basis.

 

11.           RETIREMENT.  If during the Term or any extension thereof, the Company adopts a retirement plan with respect to executive officers of the Company, Employee shall have the right to participate in such policy and the provisions of such policy shall supersede the provisions of the preceding sentence.

 

12.           INDEMNIFICATION.  If litigation shall be brought, in the event of breach or to enforce or interpret any provision contained herein, the non-prevailing party shall indemnify the prevailing party for reasonable attorney’s fees (including those for negotiations, trial and appeals) and disbursements incurred by the prevailing party in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the prevailing party calculated at the generally prevailing NationsBank of Florida, N.A. base rate of interest charged to its commercial customers in effect from time to time from the date that payment(s) to him should have been made under this Agreement.

 

 

a.             At all times during the Term, and for such additional periods as may otherwise be set forth in this Agreement in reference to this Paragraph 13, Employee shall not, directly or indirectly, engage in any business, enterprise or employment, whether as owner, operator, shareholder, director, partner, creditor, consultant, agent or any capacity whatsoever that manufactures products designed to compete directly with products of the Company or markets such products anywhere in the world where the Company (i) is engaged in business or (ii) has evidenced an intention of engaging in business. Employee acknowledges that he has read the foregoing and agrees that the nature of the geographical restrictions is reasonable given the international nature of the Company’s business. In the event that these geographical or temporal restrictions are judicially determined to be unreasonable, the parties agree that these restrictions shall be judicially reformed to the maximum restrictions which are reasonable.

 

 

b.             Notwithstanding the provisions of the preceding Paragraph 13(a), Employee may accept employment with a company that would be deemed to be a competitor of the Company as described in the previous sentence (a “Competitor”), so long as (i) the Competitor has had annual revenues of at least $1 billion in each of the prior two (2) fiscal years, (ii) the Competitor’s revenues for products and maintenance in direct competition with the Company do not exceed 50% of its total revenues, and (iii) Employee’s responsibilities are solely for divisions or subsidiaries of the Competitor that do not compete with the Company.

 

14.           NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS.  At all times during the Term, or for such additional periods as may otherwise be set forth in this Agreement in reference to this Paragraph 14, Employee shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity, (i) attempt to employ, employ or enter into any contractual arrangement with any employee or former employee of the Company, its affiliates, subsidiaries or predecessors in interest, unless such employee or former employee has not been employed by the Company, its affiliates, subsidiaries or predecessors in interest during the twelve (12) months prior to Employee’s attempt to employ him, or (ii) call on or solicit any of the actual or targeted prospective customers of the Company or its affiliates, subsidiaries or predecessors in interest with respect to any matters related to or competitive with the business of the Company.

 

 

a.             NONDISCLOSURE. Employee acknowledges and agrees that the Confidential Information (as defined below) is a valuable, special and unique asset of the Company’s business. Accordingly, except in connection with the performance of his duties hereunder, Employee shall not at any time during or subsequent to the term of his employment hereunder disclose, directly or indirectly, to any person, firm, corporation, partnership, association or other entity any proprietary or confidential information relating to the Company or any information concerning the Company’s financial condition or prospects, the Company’s customers, the design, development, manufacture, marketing or sale of the Company’s products or the Company’s methods of operating its business (collectively, the “Confidential Information”). The Confidential Information shall not include information which, at the time of disclosure, is known or available to the general public by publication or otherwise through no act or failure to act on the part of Employee.

 

b.             RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee’s employment for any reason, or at any time at the request of the Company, Employee shall promptly return all Confidential Information in the possession or under the control of Employee to the Company and shall not retain any copies or other reproductions or extracts thereof. Employee shall at any time at the request of the Company destroy or have destroyed all memoranda, notes, reports, and documents, whether in “hard copy” form or as stored on magnetic or other media, and all copies and other reproductions and extracts thereof, prepared by Employee and shall provide the Company with a certificate that the foregoing materials have in fact been returned or destroyed.

 

c.             BOOKS AND RECORDS. All books, records and accounts whether prepared by Employee or otherwise coming into Employee’s possession, shall be the exclusive property of the Company and shall be returned immediately to the Company upon termination of Employee’s employment hereunder or upon the Company’s request at any time.

 

16.           INJUNCTION/SPECIFIC PERFORMANCE SETOFF.  Employee acknowledges that a breach of any of the provisions of Paragraphs 13, 14 or 15 hereof would result in immediate and irreparable injury to the Company which cannot be adequately or reasonably compensated at law. Therefore, Employee agrees that the Company shall be entitled, if any such breach shall occur or be threatened or attempted, to a decree of specific performance and to a temporary and permanent injunction, without the posting of a bond, enjoining and restraining such breach by Employee or his agents, either directly or indirectly, and that such right to injunction shall be cumulative to whatever other remedies for actual damages to which the Company is entitled. Employee further agrees that the Company may set off against or recoup from any amounts due under this Agreement to the extent of any losses incurred by the Company as a result of any breach by Employee of the provisions of Paragraphs 13, 14 or 15 hereof.

 

 

17.           ENFORCEABILITY.   Any provision in this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

18.           SUCCESSORS.  This Agreement shall be binding upon Employee and inure to his and his estate’s benefit, and shall be binding upon and inure to the benefit of the Company and any permitted successor of the Company. Neither this Agreement nor any rights arising hereunder may be assigned or pledged by Employee or anyone claiming through Employee, or by the Company, except to any corporation which is the successor in interest to the Company by reason of a merger, consolidation or sale of substantially all of the assets of the Company. The foregoing sentence shall not be deemed to have any effect upon the rights of Employee upon a Change of Control.

 

19.           CONTROLLING LAW.  This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of Florida.  Venue for any dispute will be Palm Beach County.

 

20.           NOTICES.  Any notice required or permitted to be given hereunder shall be written and sent by registered or certified mail, telecommunicated or hand delivered at the address set forth herein or to any other address of which notice is given:

 

To the Company:

Quepasa Corporation

324 Datura Street Suite 114

West Palm Beach, FL 33401

Attention:  Michael Matte

 

To Employee:

Geoff Cook6 Harbourton Ridge Drive

Pennington, NJ 08534

 

21.           ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement between the parties hereto on the subject matter hereof and may not be modified without the written agreement of both parties hereto.

 

22.           WAIVER.  A waiver by any party of any of the terms and conditions hereof shall not be construed as a general waiver by such party.

 

23.           COUNTERPARTS.  This Agreement may be executed in counterparts, each of which shall be deemed an original and both of which together shall constitute a single agreement.

 

24.           INTERPRETATION.  In the event of a conflict between the provisions of this Agreement and any other agreement or document defining rights and duties of Employee or the Company upon Employee’s termination, the rights and duties set forth in this Agreement shall control.

 

 

25.           CERTAIN LIMITATIONS ON REMEDIES.  Paragraph 7(b) provides that certain payments and other benefits shall be received by Employee upon the termination of Employee by the Company other than for Cause and states that these same provisions shall apply if Employee terminates his employment for Good Reason. It is the intention of this Agreement that if the Company terminates Employee other than for Cause (and other than as a consequence of Employee’s death, Disability or normal retirement) or if Employee terminates his employment with Good Reason, then the payments and other benefits set forth in Paragraph 7(b) shall constitute the sole and exclusive remedies of Employee.

 

26.           SURVIVAL.  This Agreement shall terminate upon termination prior to the Effective Date of the Merger Agreement.  Notwithstanding the provisions of Paragraph 2, the provisions of Paragraphs 13, 14, and 15 shall survive the expiration or early termination of this Agreement at any time after the Effective Date.

 

27.           CERTAIN FEES.  The Company shall promptly reimburse Employee for reasonable legal fees and other expenses incurred by him in connection with the preparation and execution of this Agreement. In the event of any dispute under this Agreement as to which Employee is the prevailing party, the Company shall promptly reimburse Employee for reasonable legal fees and other expenses incurred by him in connection with such dispute.

 

 

IN WITNESS WHEREOF, this Employment Agreement has been executed by the parties as of the date first above written.

 

COMPANY:

Quepasa CORPORATION

By: /s/ John Abbott

Title: Chief Executive Officer

 

EMPLOYEE:

 

Geoff Cook