Document:

Exhibit
10.6

 

January 4, 2010

 

Stacey Peterson

612
Porter Lane

Hermosa
Beach, CA 90254

 

Dear
Stacey:

 

We are pleased to offer you the position of
Senior Vice President and Chief Financial Officer with GameFly, Inc. (the “Company”).
This is subject to a timely submission of proof of eligibility to work in the
United States. Your anticipated start date is January 4, 2010.

 

Your annual base salary will be $250,000,
less applicable taxes and withholdings, and is payable every two weeks pursuant
to the Company’s regular payroll policy. You will be eligible for the Company’s
bonus plan for the fiscal year commencing April 1, 2009. Any bonus will be
pro-rated, based on the number of days you are employed by the Company during
the fiscal year.  The determinations of
the Company with respect your bonus will be final and binding. You will be
eligible for an annual review. The target amounts for the 2010 bonus plan are
contained in Exhibit B, but are not binding until approved by the Company’s
Board of Directors.  Each annual bonus
(if any) will be paid to you within two and a half months following the end of
the fiscal year in which the bonus is earned, provided that you remain in
employment with the Company until each payment date.

 

In the event that you experience an “involuntary
separation from service,” as defined in the Treasury Regulations under Internal
Revenue Code Section 409A, (i) by the Company’s termination of your
employment for any reason other than (A) Cause, as defined in Exhibit A,
(B) death or (C) Permanent Disability, as defined below or (ii) by
your resignation for Good Reason, as defined below (each of (i) or (ii) shall
be known as an “Involuntary Termination”), provided that you satisfy the
Conditions (as defined below) within the Deadline (as defined below), then the
Company will pay you severance pay at a rate equal to your base salary in
effect at the time of your Involuntary Termination for a period of eight (8) months.  Such severance pay will be paid in accordance
with the Company’s standard payroll procedures on the Company’s payroll dates
at the payroll rates in effect as of the Involuntary Termination date,
commencing with the first payroll date following the last day of the Deadline,
and will be subject to all applicable withholdings.

 

For
purposes of receiving the severance pay, the conditions set forth in this
paragraph will be considered “Good Reason” only if (i) you give the
Company written notice of one of the conditions described in this paragraph
within thirty (30) days after the condition comes into existence; (ii) the
Company fails to remedy the condition within thirty (30) days after receiving
your written notice; and (iii) after the Company’s failure to remedy the
condition within the previously described 30-day period, you resign from the
Company within ninety (90) days after one of the following conditions has come
into existence without your consent.  “Good
Reason” will mean:_(i) any material reduction in your base salary; or (ii) a
material reduction in your duties and responsibilities; or (iii) a
relocation of your place of employment to a place that increases your commute
by more than 50 miles.

 

“Permanent
Disability” will mean that you are unable to perform the essential functions of
your position, with or without reasonable accommodation, for a period of at
least 120 consecutive days because of a physical or mental impairment.

 

1

 

To
receive the severance pay described above, you must (i) have returned all
Company property in your possession and (ii) have executed a general
release of all claims that you may have against the Company or persons
affiliated with the Company (collectively, the “Conditions”).  The release must be in the form that is
reasonably acceptable to you and the Company. 
The Company will deliver the form to you within thirty (30) days after
your Involuntary Termination.  You must
satisfy the Conditions within sixty (60) calendar days following the
Involuntary Termination (the “Deadline”).

 

Notwithstanding anything stated herein to the
contrary, the
severance provided in connection with your Involuntary Termination is intended
to be exempt  from Internal Revenue Code (“Code”) Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii) and to the extent it is exempt pursuant
to such section it will in any event be paid no later than the
last day of your second taxable year following the taxable year in which your Involuntary Termination has occurred; provided that, to the extent that such
severance and any other payments paid to you in connection with your
Involuntary Termination does not qualify or otherwise exceeds the limit set
forth in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or any
similar limit promulgated by Treasury or the IRS, the portion of the severance
that does not qualify or otherwise exceeds such limit, as determined by the
Company in its sole discretion, shall be paid by no later than the fifteenth
(15th) day of the third (3rd) month following the end of your first tax year in
which your Involuntary Termination occurs, or, if later, the fifteenth (15th)
day of the third (3rd) month following the end of the Company’s first tax year
in which your Involuntary Termination occurs, as provided in Treasury
Regulation Section 1.409A-1(b)(4).

 

Notwithstanding the above, if any of the
severance pay provided in connection with your Involuntary Termination does
not qualify for any reason to be exempt  from Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or
Treasury Regulation Section 1.409A-1(b)(4) and you are deemed
by the Company at the time of your Involuntary Termination to be a “specified
employee,” as defined in Code Section 409A, each such severance payment
will not be made or commence until the date which is the first (1st) business
day of the seventh (7th) month after your Involuntary Termination and the
installments that otherwise would have been paid during the first six (6) months
after your Involuntary Termination will be paid in a lump sum on the first (1st)
business day of the seventh (7th) month after your Involuntary Termination,
with any remaining severance pay to be paid in accordance with the schedule set
forth above. Such deferral will only be effected to the extent required to
avoid adverse tax treatment to you, including (without limitation) the
additional twenty percent (20%) federal tax for which you would otherwise be
liable under Section 409A(a)(1)(B) of the Code in the absence of such
deferral.

 

The Company will recommend that the Board of
Directors grant you an option to purchase 180,000 shares of the Company’s
Common Stock (“Shares”).  These Shares will vest over four years at
the rate of 25% of the Shares on the one-year anniversary of your Start Date
and 2.0833% of the Shares on the monthly anniversary of your Start Date
thereafter.  Vesting will depend on your continued employment with the
Company.  The option will be an incentive stock option to the maximum
extent allowed by the tax code and will be subject to the terms of the Company’s
2002 Stock Plan and the stock option agreement between you and the
Company. The exercise price per share will be determined by the Company’s
Board of Directors on the date of grant. You will be eligible for accelerated
vesting in the following cases:

 

(i)                                    If there is a Change in
Control (as defined in Exhibit A), then 25% of the Shares shall
immediately vest on the closing date.

 

(ii)                                 In the event that you are
involuntarily terminated without Cause or resign voluntarily due to Good Reason
(as defined in Exhibit A) during your first year of employment,
then 15% of the Shares shall immediately vest on such termination date;
provided, however that this provision shall expire if there is a prior Change
in Control.

 

2

 

(iii)                              If there is an Initial
Public Offering during your first year of employment, then 15% of the Shares
shall vest sixty (60) days after the effective date and 10% of the Shares shall
vest on the one-year anniversary of your Start Date.

 

You will be eligible for standard medical
insurance benefits effective from your start date. Dental, vision and other
insurance programs are available and will become effective on the first day of
the month following your start date. 
Participation in the Company’s 401(k) savings plan is effective on
the first day of the month following your sixth month anniversary of
employment. You will be eligible for twenty (20) days of Paid Time Off,
pro-rated for the remainder of this calendar year.

 

Your employment with the Company will be on
an “at will” basis, meaning that either you or the Company may terminate your
employment at any time for any reason or no reason, with or without Cause,
without further obligation or liability. 
Any contrary representations which may have been made to you are
superseded by this offer. This is the full and complete agreement between you
and the Company. Although your job duties, title, compensation and benefits as
well as the Company’s personnel policies and procedures, may change from time
to time, the “at-will” nature of your employment may only be changed in an
express written agreement signed by you and the Company’s Chief Executive
Officer.

 

Your acceptance of this offer and
commencement of employment with the Company is contingent upon the execution,
and delivery to an officer of the Company, of the Company’s Confidential
Information and Invention Assignment Agreement attached as Exhibit C
(the “Confidentiality Agreement”), prior to or on your Start Date.  By signing this letter, you confirm with the
Company that you are under no contractual or other legal obligations that would
prohibit you from performing your duties with the Company.

 

We are all delighted to be able to extend you
this offer and look forward to working with you.  To indicate your acceptance of the Company’s
offer, please sign and date this letter in the space provided below and return
it to me, along with a signed and dated copy of the Confidentiality Agreement.
This letter and the Confidentiality Agreement set forth the terms of your
employment with the Company and supersede any prior representations or
agreements, whether written or oral.

 

Sincerely,

 

 

	
  /s/
  David Hodess

  	
   

  
	
  David
  Hodess/CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed
  and Accepted by:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Stacey Peterson

  	
   

  
	
  Stacey
  Peterson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  1/4/10

  	
   

  
	
  Date

  	
   

  

 

3

 

Exhibit A

 

Definitions

 

“Cause”
shall mean: (i) your willful failure substantially to perform your duties
and responsibilities to the Company or deliberate violation of a Company
Policy; (ii) your commission of any act of fraud, embezzlement, dishonesty
or any other willful misconduct that has caused or is reasonably expected to
result in material injury to the Company; (iii) unauthorized use or
disclosure by you of any proprietary information or trade secrets of the
Company or any other party to whom you owe the obligation of nondisclosure as a
result of your relationship with the Company; or (iv) your willful breach
of any of your obligations under any written agreement or covenant with the Company.

 

“Change
of Control” shall mean a sale of all or substantially all of the Company’s
assets, or any merger or consolidation of the Company with or into another
corporation other than a merger or consolidation in which the holders of more
than 50% of the shares of capital stock of the Company outstanding immediately
prior to such transaction continue to hold (either by the voting securities
outstanding or by their being converted into voting securities of the surviving
entity) more than 50% of the total voting power represented by the voting
securities of the Company, or such surviving entity, outstanding immediately
after such transaction.

 

“Good
Reason” for you resignation shall exist if you resign in writing within 60
days after the occurrence of any of the following without your written consent:
(i) any material reduction in your cash compensation; or (ii) a
material reduction in your duties and responsibilities; or (iii) relocation
of your place of employment to a place that is more than 50 miles from the
previous Company location.

 

4

 

Exhibit B

 

Bonus Targets

 

Not binding without Board Approval

 

·                  Cash Bonus

 

·                  15% (min)

·                  30% (target)

·                  50% (max)

 

·                  LTI Comp (options issued annually):

 

·                  20,000 (min)

·                  40,000 (target)

·                  60,000 (max)

 

5Exhibit 10.7

 

July 29, 2002

 

Michael Gimlett

Address TBD

 

Dear Mike:

 

Please note that this
Offer Letter supersedes the Offer Letter dated July 14, 2002 previously
sent to you.

 

On
behalf of Gamefly, Inc. (the “Company”), I am pleased to offer you
the position of Director, Merchandising at the
Company.  We look forward to your future
success in this position.

 

The
terms of your new position with the Company are as set forth below:

 

1.                                       Position.

 

a.  You will become the Director,
Merchandising of the Company, working out of the Company’s headquarters office in Santa Monica, California.

 

b.  You agree to the best of your ability and
experience that you will at all times loyally and conscientiously perform all
of the duties and obligations required of and from you pursuant to the express
and implicit terms hereof, and to the reasonable satisfaction of the Company.
During the term of your employment, you further agree that you will devote all
of your business time and attention to the business of the Company, the Company
will be entitled to all of the benefits and profits arising from or incident to
all such work services and advice, you will not render commercial or
professional services of any nature to any person or organization, whether or
not for compensation, without the prior written consent of the Company’s Board
of Directors, and you will not directly or indirectly engage or participate in
any business that is competitive in any manner with the business of the
Company.  Nothing in this letter
agreement will prevent you from accepting speaking or presentation engagements
in exchange for honoraria or from serving on boards of charitable
organizations, or from owning no more than one percent (1%) of the outstanding
equity securities of a corporation whose stock is listed on a national stock
exchange.

 

2.                                       Start Date.  Subject to
fulfillment of any conditions imposed by this letter agreement, you will
commence this new position with the Company on August 1, 2002.

 

3.                                       Proof of Right to Work. 
For
purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States.  Such documentation
must be provided to us within three (3) business days of your date of
hire, or our employment relationship with you may be terminated.

 

 

4.                                       Compensation.

 

a.                                       Base Salary.  You will be
paid a monthly salary of $5,000.00, which is equivalent to $60,000 on an
annualized basis.  Upon the closing of
the Company’s second round of financing, you will be paid a monthly salary of
$8,333.33, which is the equivalent of $100,000 on an annualized basis.  Your salary will be payable in two equal
payments per month pursuant to the Company’s regular payroll policy.

 

b.                                      Annual Review.  Your base salary
will be reviewed at the end of each calendar year  as
part of the Company’s normal salary review process.

 

c.                                       Moving Allowance. 
The Company will also pay a moving allowance applicable to any moving
expenses you incur in relocating to the Los Angeles area.  This allowance has a maximum limit of $5000
and is payable immediately upon you submission of receipts showing that you
have paid the moving company.  You will
vest with respect to any paid moving allowance in 12 equal monthly installments
for each of the 12 months during which you continue to be employed by the
Company following the payment of the moving allowance.  If the Company terminates your employment
with cause prior to the end of this 12 month period, or if you end your
employment with the Company, you will be obligated to refund to the Company the
unvested portion of any paid moving allowance.

 

5.                                       Stock Options.

 

a.                                       Initial Grant.  In connection
with the commencement of your employment, the Company will recommend that the
Board of Directors grant you an option to purchase 117,500 shares of the
Company’s Common Stock (“Shares”) with an exercise price equal to the
fair market value on the date of the grant. 
These option shares will vest at the rate of one fourth (1/4th) of the total shares on the one year anniversary of
your Start Date and 1/48th of
the total shares on the monthly anniversary of your Start Date thereafter.  Vesting will, of course, depend on your
continued employment with the Company. 
The option will be an incentive stock option to the maximum extent
allowed by the tax code and will be subject to the terms of the Company’s 2002
Stock Plan and the stock option agreement between you and the Company

 

b.                                      Subsequent Option Grants.  Subject to the
discretion of the Company’s Board of Directors, you may be eligible to receive
additional grants of stock options or purchase rights from time to time in the
future, on such terms and subject to such conditions as the Board of Directors
shall determine as of the date of any such grant.

 

6.                                       Benefits.

 

a.                                       Insurance Benefits.  The Company
will provide you with standard medical insurance benefits effective the later
of your Start Date or the date on which the Company puts a medical insurance
plan in place.  We anticipate offering
dental and vision coverage at some date in the future.

 

b.                                      Vacation.  You will be
entitled to two weeks paid vacation per year, pro-rated for the remainder of
this calendar year.

 

 

7.                                       Confidential Information
and Invention Assignment Agreement.  Your acceptance of this offer and commencement
of employment with the Company is contingent upon the execution, and delivery
to an officer of the Company, of the Company’s Confidential Information and
Invention Assignment Agreement attached as Exhibit A (the “Confidentiality
Agreement”), prior to or on your Start Date.

 

8.                                       Confidentiality of Terms.  You agree to
follow the Company’s strict policy that employees must not disclose, either
directly or indirectly, any information, including any of the terms of this
agreement, regarding salary, bonuses, or stock purchase or option allocations
to any person, including other employees of the Company; provided, however,
that you may discuss such terms with members of your immediate family and any
legal, tax or accounting specialists who provide you with individual legal, tax
or accounting advice.

 

9.                                       At-Will Employment.  Your
employment with the Company will be on an “at will” basis, meaning that either
you or the Company may terminate your employment at any time for any reason or
no reason, without further obligation or liability.

 

We are
all delighted to be able to extend you this offer and look forward to working
with you.  To indicate your acceptance of
the Company’s offer, please sign and date this letter in the space provided
below and return it to me, along with a signed and dated copy of the
Confidentiality Agreement. This letter, together with the Confidentiality
Agreement, set forth the terms of your employment with the Company and
supersede any prior representations or agreements, whether written or
oral.  This letter may not be modified or
amended except by a written agreement, signed by the Company and by you.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  GAMEFLY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Sean Spector

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Sean Spector

  
	
   

  	
  Printed Name

  
	
   

  	
   

  
	
   

  	
  VP

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGREED AND ACCEPTED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mike Gimlett

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Mike Gimlett

  
	
   

  	
  Printed Name

  
	
   

  	
   

  
	
   

  	
  Address:

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