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Exhibit 10.6
EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made as of this 15th day of June, 2005, by and between Local Matters, Inc. ("Employer"), and Ernest J. Sampias ("Executive"). WHEREAS, the Employer wishes to employ Executive and to assure itself of the services of Executive on the terms set forth herein; WHEREAS, Executive wishes to be so employed under the terms set forth herein; NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby agree to the following terms and conditions of Executive's Employment: 1. EMPLOYMENT.
1.1 General. Employer will employ Executive in the capacity of Chief Financial Officer of Employer at the compensation rate and with the benefits set forth in Section 2 hereof. Executive hereby accepts such employment subject to the terms and conditions contained herein. In such capacity, Executive shall faithfully perform and carry out such duties and responsibilities as may be assigned to him from time to time by the Chief Executive Officer ("CEO") and are reasonably consistent with Executive's title and this Agreement. Executive shall report to the CEO and shall commence employment on a part-time basis no later than June 20, 2005, and on a full-time basis no later than July 25, 2005. During the period of part-time employment, Executive shall be paid on a salary-only basis for all full days spent working for Employer, at the rate of salary specified in section 2.1. Employer acknowledges that it intends to promote Executive into the position of Chief Operating Officer on terms at least as favorable to Executive as are set forth herein, the scope and job description of which position will be mutually agreed to by Executive with the Board of Directors and CEO, on or before January 1, 2007. Any such promotion shall be at the discretion of the Board of Directors, and Employer makes no representations regarding such promotion; Executive's sole recourse in the event of the failure to make such promotion shall be as set forth in Section 3.2.6 hereof. 1.2 Time Devoted to Position. Executive shall devote substantially all of his business time, attention and skills to the business and affairs of Employer, provided, however, that Employer consents to Executive continuing to serve on the board of directors and as chairman of the Audit Committee of Xyratex, Ltd., during and after Executive's employment with Employer. 1.3 Location of Employment. Executive's principal place of employment during his employment with Employer shall be Denver, Colorado. 2. COMPENSATION AND BENEFITS.
Employer shall pay to Executive, and Executive shall accept, as full compensation for services rendered and to be rendered by him to Employer, including, without limitation, all services that may be rendered by him to all subsidiaries, entities or organizations, existing or hereafter formed, organized or acquired by Employer, directly or indirectly (all such existing subsidiaries and all such hereafter formed, organized or acquired corporations, entities or organizations being hereinafter individually referred to as a "Subsidiary" and collectively referred to as the "Subsidiaries"), and all services that may be rendered by
him as a member of the Board or any committee thereof, if any, the salary, benefits, and other amounts as stated in this Section 2: 2.1 Salary. Executive shall be paid a base salary at the annual rate of $275,000 (the "Base Salary"). The Base Salary shall be payable in accordance with the regular payroll practices of Employer applicable to senior executives, less such deductions as shall be required to be withheld by applicable law and regulation.
2.2 Bonuses. Executive will be eligible for an annual bonus of up to 75% of Executive's annual Base Salary, less such deductions as shall be required to be withheld by applicable law and regulation, if Executive achieves the performance targets established by the Board ("Targets"). The Board shall determine Executive's Targets for the remainder of 2005 and communicate those Targets to Executive in writing no later than August 15, 2005. For subsequent calendar years, the Board shall determine Executive's Targets and communicate those Targets to Executive in writing no later than December 15 of the preceding calendar year. For calendar year 2005 only, Employer will pay Executive a guaranteed bonus payment of no less than 30% of Executive's annual Base Salary. With the exception of the guaranteed amount set forth above, the Board shall determine the extent to which Executive has achieved the Targets upon which Executive's bonus is based, and the amount of bonus to be paid to Executive, if any. Executive's bonus will be paid in accordance with Employer's business practices for the payment of bonuses which currently provides for annual payment of bonuses; provided, however, that any such bonus will be paid no later than two and one half months after the end of the year for which the bonus relates. 2.2.1 Signing Bonus. Upon commencement of Executive's employment, Employer shall pay Executive a one time lump sum bonus of $75,000 less such deductions as shall be required to be withheld by applicable law and regulation. Said signing bonus shall be paid on the first regularly scheduled payroll date following the commencement of Executive's full-time employment. 2.3 Stock Options. Subject to approval by the Board, which shall be recommended by Employer, Employer shall grant Executive an option to purchase two hundred fifty thousand (250,000) shares of Employer's common stock at an exercise price equal to the fair market value of the stock as of the grant date of grant, which shall be on or before July 25, 2005, unless the Board determines not to grant the option (collectively the "Option"). The shares subject to the Option shall vest pursuant to a three-year vesting schedule, which shall provide one thirty-sixth (1/36th) of the shares subject to the Option shall vest for each month of continuous full-time service following the grant date, provided, however, that in the event that Employer completes an IPO, Employer shall accelerate the vesting of 25% of the number of shares originally subject to the Option which are not already vested, with the remainder of the nonvested shares continuing to vest thereafter in equal monthly increments for each month of continuing full-time service remaining in the original 36 month term. In the event that the strike price is higher than $1.65 per share at the time of grant of the Option, Employer will recommend that the Board increase the number of shares subject to the Option to an amount which, when multiplied by the difference between $8.00 and the strike price, equals $1,587,500. All other terms, conditions and limitations of the Option will be set forth in the Employer's 2004 Equity Incentive Plan, as amended ("Plan") and in the stock option grant notices and stock option agreements approved by the Board. 2.4 Executive Benefits. 2.4.1 Expenses. Employer shall promptly reimburse Executive for expenses that he reasonably incurs in connection with the performance of his duties (including business travel and entertainment expenses) hereunder, all in accordance with Employer's policy with respect thereto as in effect from time to time.
2.4.2 Employer Plans. Executive may participate in such employee benefit and welfare plans and programs as Employer may from time to time offer or provide generally to executive officers of Employer or its Subsidiaries, including, without limitation, participation in any life insurance, health and accident, medical plans and programs and profit sharing and retirement plans, all in accordance with the terms and conditions of such plans and programs. 2.4.3 Vacation. Executive shall be entitled to four (4) weeks of paid vacation per calendar year, pro rated for any partial year. Such paid vacation shall accrue quarterly, or one week of paid vacation for each three (3) months that Executive shall be employed hereunder. Executive may 2
accumulate or carry over up to two (2) weeks of unused, accrued vacation time ("Accu