Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the closing date of
the Company's pending initial public offering (the "IPO"), between
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware limited liability corporation with offices at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ("Employee").
The Company desires to engage Employee to perform services for the Company,
any present or future parent, subsidiary, or affiliate of the Company, and
(subject to Section 10) any successor or assign of any of them (the
"Corporations") and Employee desires to perform such services, on the terms and
conditions hereinafter set forth.
1. TERM
The Company desires to engage Employee, and Employee agrees to serve, on
the terms and conditions of this Agreement for a period commencing on the date
hereof, and three years after the closing date of the Company's pending IPO, or
such shorter period as may be provided for herein. The period during which
Employee is employed hereunder is hereafter referred to as the "Employment
Period."
2. DUTIES AND SERVICES
During the Employment Period, Employee shall be employed in the business of
the Company and shall serve as the Chief Executive Officer and/or President and,
subject to the provision of Section 10 hereof, shall also perform services in a
responsible executive or managerial capacity for any of the other Corporations
when and as requested by the
Company. Employee agrees to his employment as described in this Section 2 and
agrees to devote all of his working time and efforts to the performance of his
duties under this Agreement, excepting disabilities, illness, and vacation time
as provided by Section 3 and 4, and the activities permitted by Section 6
hereof. In performing his duties hereunder, Employee shall be available for
reasonable travel as the needs of the business require.
3. COMPENSATION; HEALTH BENEFITS; OTHER BENEFITS; BONUSES
(a) As compensation for his services hereunder, the Company shall pay
Employee, during the Employment Period, a salary payable in equal installments
in accordance with the then prevailing practices of the Company, but in no event
less frequently than monthly, at the annual rate of $180,000 per year.
(b) Employee's salary rate shall be reviewed annually at the end of each
fiscal year by the Board of Directors. Upon such review, Employee's salary shall
be increased at least 10% and may be adjusted further upwards to such rate as
shall be considered appropriate and fixed by the Board of Directors, taking into
account economic conditions, competitive conditions within the industry, the
Company's performance and Employee's performance and salary, which increase
shall be effective no later than the following business day. Employee's salary
shall not be decreased during the Employment Period.
(c) Employee shall be entitled to participate in all group health and
insurance programs and all other fringe benefit or retirement plans or other
compensatory plans which the Company may hereafter, in its sole and absolute
discretion, elect to make available to its employees generally, provided
Employee meets the qualifications therefor,
but the Company shall not be required to establish any such program or plan or
otherwise to pay any such additional compensation, except as provided in this
Section 3.
(d) Employee shall receive a bonus of $40,000 if the Company achieves
revenues in excess of $6 million ("Bonus Threshold One") during fiscal year 1999
and an additional bonus of $40,000 if the Company achieves revenues in excess of
$8 million ("Bonus Threshold Two") during such fiscal year. Thereafter, Employee
shall receive such bonus as may be determined by the Board of Directors
throughout the Employment Period.
(e) No more than $2 million of barter revenue may be counted towards the
Bonus Thresholds.
(f) For fiscal year 1999, in the event (i) the Company achieves Bonus
Threshold One then Employee shall be granted a ten year fully-vested option to
purchase 50,000 shares of Common Stock, exercisable at the per share price in
the IPO; (ii) the Company achieves Bonus Threshold Two then Employee shall be
granted a second ten year fully-vested option to purchase 50,000 shares of
Common Stock, exercisable at the per share price in the IPO; and (iii) the
Company achieves revenues in excess of $12.5 million during Fiscal Year 1999,
then Employee shall be granted a third ten year fully-vested option to purchase
100,000 shares of Common Stock, exercisable at the per share price in the IPO.
These options shall be delivered to Executive no later than 90 days after the
close of the fiscal year.
(g) Employee shall be entitled to a paid vacation of four weeks per year.
(h) Employee shall be entitled to a $1,000 per month allowance for an
automobile and related expenses retroactive for all of Fiscal Year 1999.
(i) Company shall use its best efforts to obtain and, if obtained, shall
pay the premiums for one year on a $2,000,000 life insurance policy on the life
of Employee and Employee shall be entitled to designate the beneficiary of such
policy.
(j) The Company shall indemnify, on or before April 15, 2000, Employee for
any tax liability incurred as a result of the reorganization of the Company into
a C-Corporation.
4. EXPENSES
Employee shall be entitled to reimbursement for reasonable travel and
other out-of-pocket expenses necessarily incurred in the performance of his
duties hereunder, in accordance with the then regular procedures of the Company.
5. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE
Employee represents and warrants the Company that Employee is under no
contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
other rights of the Company hereunder.
6. NON-COMPETITION
In view of the unique and valuable services it is expected Employee will
render to the Company, Employee's knowledge of the customers, trade secrets, and
other proprietary information relating to the business of the Company and its
customers and suppliers and similar knowledge regarding the Company it is
expected Employee will
obtain, and in consideration of the compensation to be received hereunder,
Employee agrees that he will not during the period he is employed by the Company
under this Agreement or otherwise participate in (hereinafter defined in this
Section 6) any other business or organization, whether or not such business or
organization now is or shall then be competing with or of a nature similar to
the business of the Company, and (b) for one (1) year after he ceases to be
employed by the Company under this Agreement or otherwise, he will not compete
with or be engaged in the same business as or participate in, any other business
or organization which during such one (1) year period competes with or is
engaged in the same business as the Company, with respect to the sale of
clothing or fashion accessories through the Internet of the World Wide Web;
provided, however, that the provisions of this Section 6 will not be deemed
breached merely because Employee (i) ownership of or engaging up to 10% of his
business time in any activity relating to Boston Preparatory Company, a company
engaged in marketing clothing or (ii) owns not more than 5% of the outstanding
common stock of a corporation, if, at the time of its acquisition by Employee,
such stock is listed on a national securities exchange, is reported on NASDAQ,
or is regularly traded in the over-the-counter market by a member of a national
securities exchange. The term "participate in" shall mean: "directly or
indirectly, for his own benefit or for, with or through any other person, firm,
or corporation, own, manage, operate, control, loan money to or participate in
the ownership, management, operation, or control of or be connected as a
director, officer, employee, partner, consultant, agent, independent contractor
or otherwise with, or acquiesce in the use of his name. Employee will not
directly or indirectly employ any
person who was an employee of the Company within a period of three (3) months
after such person leaves the employ of the Company. Since a breach of the
provisions of this Section 6 could not adequately be compensated by money
damages, the Company shall be entitled, in addition to any other right and
remedy available to it, to an injunction restraining such breach or a threatened
breach, and in either case no bond or other security shall be required in
connection herewith. Employee agrees that the provisions of this Section 6 are
necessary and reasonable to protect the Company in the conduct of its business.
If any restriction contained in this Section 6 shall be deemed to be invalid,
illegal or unenforceable by reason of the extent, duration or geographical scope
thereof, or otherwise, then the court making such termination shall have the
right to reduce such extent, duration, geographical scope or other provisions
hereof, and in its reduced form such restriction shall then be enforceable in
the manner contemplated hereby. This provision shall not be enforceable in the
event the Company has materially breached any of its obligations to Employee
pursuant to this Agreement or if it terminates Employee without cause. In the
event the Company attempts to seek judicial protection to enforce its rights
pursuant to this provision and fails to be granted the relief sought for any
reason, then the Company shall be obligated to reimburse Employee his costs,
including reasonable attorney fees, in defending himself against any such
action.
7. CONFIDENTIAL INFORMATION
All confidential information which Employee may now possess, may obtain
during or after the Employment Period, or may create prior to the end of the
period he is employed by the Company under this Agreement or otherwise relating
to the business of
the Company or of any customer or supplier of the Company shall not be
published, disclosed, or made accessible by him to any other person, firm, or
corporation either during or after the termination of his employment or used by
him except during the Employment Period in the business and for the benefit of
the Company, in each case without prior written permission of the Company.
Employee shall return all physical evidence of such confidential information to
the Company prior to or at the termination of his employment. As used in this
Section 7, "confidential information" shall mean any information except that
information which (i) is known publicly; (ii) is in the public domain or
hereafter enters the public domain without the fault of Employee; (iii) is known
to Employee prior to his receipt of such information from the Company, as
evidenced by written records of Employee or (iv) is hereafter disclosed to
Employee by a third party not under an obligation of confidence to the Company.
Employees obligations under this Section 7 shall survive for 12 months after
termination unless such termination was by the Company, in which case, such
obligation shall not survive such termination.
8. LIFE INSURANCE
In addition to the provisions in Section 3 of this Agreement, if requested
by the Company, Employee shall submit to such physical examinations and
otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable the Company, at its expense and for its own
benefit, to obtain life insurance on the life of Employee. Employee has no
reason to believe that his life is not insurable with a reputable insurance
company at rates now prevailing in the City of New York for healthy men of his
age.
9. TERMINATION
Notwithstanding anything contained herein, if on or after the date hereof
and prior to the end of the Employment Period, following unanimous a vote of the
Board of Directors of the Company (excluding Employee) authorizing termination
of Employee AND
(a) either:
(i) Employee shall be convicted of a crime of moral turpitude or a
felony;
(ii) Employee shall be found by a count of competent jurisdiction to
have violated his fiduciary duty to the Company; or
(iii) Employee shall breach any material term of this Agreement and
fail to correct such breach within thirty (30) days after
notice by the Company to Employee of his commission of the
same, then, in each such case, the Company shall have the right
to give notice of termination of Employee's services hereunder
as of a date (not earlier than thirty (30) days from such
notice) to be specified in such notice and this Agreement shall
terminate on the date so specified; or
(b) Employee shall die, then this Agreement shall terminate on the date of
Employee's death, whereupon Employee or his estate, as the case may be, shall be
entitled to receive his compensation at the rate then provided pursuant to
Section 3(a) for the balance of the Employment Period.
(c) Employee shall experience any disability, illness or other incapacity
which prevents Employee from performing services for 60 consecutive days or 120
days within any 360 day period as contemplated herein, the obligation of the
Company to pay compensation to Employee shall be reduced to the extent of any
amount received by Employee pursuant to any disability insurance policy
maintained and paid for by the Company.
10. MERGER, CHANGE IN CONTROL, ETC.
(a) In the event of a future disposition of (or including) the properties
and business of the Company, substantially as an entirety, by merger,
consolidation, sale of assets or otherwise, then the Company shall assign this
Agreement and all of its rights and obligations hereunder to the acquiring or
surviving entity; provided that such entity shall assume in writing all of the
obligations of the Company hereunder; and provided, further, that the Company
(in the event and so long as it remains in existence) shall remain liable for
the performance of its obligations hereunder in the event of a breach by the
acquiring entity of this Agreement. Nothing herein shall affect Employee's
rights under (b) below.
(b) In the event of a Change of Control (defined below); at any time within
one year of a Change in Control, Employee shall have the right by written notice
to elect to receive compensation of three times his compensation, including
bonuses earned, during the previous 12 months prior to such Change of Control
AND the compensation provided in Section 3 of this Agreement for the balance of
the Employment Period (the "Termination Payment"). The Termination Payment,
shall be payable to Employee in quarterly payments for two years following the
date of any such election by Employee.
A change in control of the Company shall occur in the event of (i) a
stockholder approved merger or acquisition of the Company in which 50% or more
of the surviving company's outstanding voting stock is held by stockholders
other than the former stockholders of the Company; (ii) the acquisition of 25%
or more of the Company's outstanding voting stock pursuant to a tender or
exchange offer which the Company's Board of Directors does not recommend the
stockholders of the Company's accept; (iii) a sale of substantially all of the
assets of the Company; or (iv) a change in the composition of the Board of
Directors of the Company (the last uncontested election of board members ceasing
to comprise a majority of the Board by reason of a contested election
constituting such change (a "Change in Control").
11. OFFSET; NO DUTY TO MITIGATE.
In the event that an amount becomes payable to Employee pursuant to
Sections 9 or 10 above, such amount shall be reduced by any outstanding amounts
owed by Employee to Company, but shall not be reduced by the amount of any
compensation of services earned by Employee from any source, whether paid
currently or deferred, "Employee" shall have no obligation to mitigate any
amounts to be paid to Employee pursuant to Section 9 or 10 above.
12. SURVIVAL
The covenants, agreements, representations and warranties contained in or
made pursuant to this Agreement shall survive Employee's termination of
employment as provided herein.
13. ENTIRE AGREEMENT: MODIFICATION
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements between
them concerning such subject matter and may be modified only by a written
instrument duly executed by each party.
14. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 13). Notice to the estate of
Employee shall be sufficient if addressed to Employee as provided in this
Section 13. Any notice or other communication given by certified mail shall be
deemed given seven days after the time of certification thereof, except for a
notice changing a party's address which shall be deemed given at the time of
receipt thereof.
15. WAIVER
Any waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing, signed by the party giving
such waiver.
16. BINDING EFFECT
Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrance or the claims of Employee's creditors, and any attempt
to do any of the foregoing shall be void. The provisions of this Agreement shall
be binding upon the inure to the benefit of Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors and those who are its assigns under Section 10.
17. NO THIRD PARTY BENEFICIARIES
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement (except as
provided in Section 15).
18. HEADINGS
The headings in this Agreement are solely for the convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
19. REMEDY; LEGAL FEES
In the event that any term or provision of this Agreement shall be
deemed by a court of competent jurisdiction, arbitrator or mediator, as the case
may be, to be overly broad in scope, duration or area of applicability, the
court, arbitrator or mediator, as the case may be, considering the same shall
have the power and hereby is authorized and directed to modify such term or
provision to limit such scope, duration or area, or all of them, so that such
term or provision is no longer overly broad and to enforce the same as
so limited. In the event of a dispute hereunder or if Employee requires counsel
related to his employment, the Company shall advance Employee amounts necessary
to cover legal fees and disbursements in connection therewith (such amounts to
be delivered within 10 days of written request therefor), subject to an
undertaking to repay such amounts if an non-applicable final adjudication is
made that Employee was not entitled thereto under applicable law.
20. COUNTERPARTS; GOVERNING LAW
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute on and
the same instrument. It shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflict of
laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and CEO
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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