Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of this 1st day of
March, 2000, by and between Xxxxxx.xxx, Inc., a Delaware corporation (the
"COMPANY"), and Xxxxxx Xxxxxx (the "EXECUTIVE").
RECITALS:
A. The Company is actively engaged in operating an e-commerce site
(Xxxxxx.xxx) which facilitates both the purchase and sending of liquor, wine,
and other alcoholic or non-alcoholic beverage by businesses and individuals for
gift delivery and personal consumption.
B. The Company is currently expanding its business by further utilizing
its existing network of affiliates in the alcoholic beverage industry to reduce
the cost and increase the efficiency at each tier of the alcoholic beverage
distribution system.
C. Executive is a founding shareholder and executive of the Company and
has obtained certain unique and particular talents and abilities in managing and
developing the Company's business.
D. The Company is undergoing certain fundamental changes to its
business plan, capitalization and management structure pursuant to which
Executive is relinquishing management control of the Company.
E. The Company desires to assure itself of the continued
availability of Executive's talents and abilities and Executive desires to
secure continued employment with the Company, subject to the terms,
conditions and covenants hereinafter set forth;
F. The Executive has previously executed and delivered the
Confidentiality/Proprietary Information Agreement dated January 7, 2000 attached
hereto as EXHIBIT A (the "CONFIDENTIALITY AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the agreements,
covenants and conditions set forth herein, the Executive and the Company hereby
agree as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby employs, engages and hires
Executive, and Executive hereby accepts employment, upon the terms and
conditions set forth in this Agreement. The Executive shall serve as the
Founder, Chief Operating Officer and Chief Libation Officer of the Company and
shall be an Executive Vice President of the Company. Executive shall have and
fully perform such duties and responsibilities that are commensurate with his
position, as may be, from
time to time, assigned to him by the Board of Directors of the Company and/or
the Chief Executive Officer of the Company. The Executive shall report directly
to the Chief Executive Officer of the Company.
1.2 ACTIVITIES AND DUTIES DURING EMPLOYMENT. Executive represents and
warrants to the Company that he is free to accept employment with the Company,
and that he has no prior or other commitments or obligations of any kind to
anyone else which would hinder or interfere with his acceptance of his
obligations under this Agreement, or the exercise of his best efforts as an
officer and employee of the Company. During the Employment Term (as defined
below), Executive agrees:
(a) to devote substantially all of his business, time,
attention and efforts to the faithful and diligent performance of his
services to the Company;
(b) to faithfully serve and further the interests of the
Company in every lawful way, giving honest, diligent, loyal and
cooperative service to the Company; and
(c) to comply with all rules and policies which, from time to
time, may be adopted by the Company.
ARTICLE II
TERM
2.1 Term. The term of employment under this Agreement shall be three
(3) years (the "INITIAL TERM"), commencing on the date of the Agreement, which
Employment Term shall automatically renew for one year periods unless terminated
by either party by written notice not less than sixty (60) days prior to
expiration of the then-current term (such term of employment, as it may be
extended or terminated, is herein referred to as the "EMPLOYMENT TERM").
2.2 TERMINATION. The employment of Executive may be terminated as
follows:
(a) After the Initial Term, by either party upon at least
sixty (60) days notice to the other party, in which event such
termination shall be effective upon expiration of the notice period. If
Executive terminates his employment pursuant to this SECTION 2.2(a),
such termination is hereinafter referred to as a "VOLUNTARY
TERMINATION".
(b) By the Company immediately for "CAUSE." For the purpose of
this Agreement, "CAUSE" shall mean (i) conduct amounting to fraud,
embezzlement, or willful or illegal misconduct in connection with
Executive's duties under this Agreement; (ii) the indictment or
conviction of Executive by a court of proper jurisdiction of (or his
written voluntary and freely given confession to) a crime which
constitutes a felony and/or results in material injury to the Company's
property, operation or reputation; (iii) breach of the
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Confidentiality Agreement; or (iv) substantial and continued
failure to perform duties reasonably directed by the Board of
Directors and/or the Chief Executive Officer after written
notice from the Company and a ten (10) day opportunity to
cure.
(c) Upon the death of Executive.
(d) By either party upon the Total Disability of the
Executive. The Executive shall be considered to have a Total
Disability for purposes of this Agreement if he is unable by
reason of accident or illness to substantially perform his
employment duties, and is expected to be in such condition for
periods totaling six (6) months (whether or not consecutive)
during any consecutive period of twelve (12) months. During a
period of disability prior to termination hereunder, Executive
shall continue to receive his base salary.
(e) By the Executive upon five (5) business days
notice to the Company for Good Reason, which notice shall
state the reason for termination. For the purpose of this
Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any
duties inconsistent with the Executive's position
(including status, offices and titles, office
facilities, staff support and reporting
requirements), authority, duties or responsibilities
as contemplated by ARTICLE I of this Agreement, or
any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities without prior written consent of the
Executive, excluding for this purpose an isolated
action not taken in bad faith and which is remedied
by the Company within five (5) business days after
receipt of written notice thereof given by the
Executive;
(ii) any material failure by the Company to
comply with any of the provisions of this Agreement,
other than an isolated failure not occurring in bad
faith and which is remedied by the Company within
five (5) business days after receipt of written
notice thereof given by the Executive;
(iii) any purported termination by the
Company of the Executive's employment otherwise than
as expressly permitted by this Agreement; or
(iv) the failure of the Company to appoint
Executive as a director of the Company upon the
increase of the number of directors from five to
seven which shall occur no later than 180 days from
the date hereof, and thereafter, any action taken by
the Company, including a proxy solicitation, failure
to nominate and/or recommend Executive as a
director of the corporation, that results in or is
intended to result in the removal of Executive from
the Board of Directors.
If there is any dispute between the parties as to whether Cause, Good Reason,
or Total Disability exists, either party may submit the dispute to binding
arbitration. Any such arbitration proceeding will be conducted in Chicago,
Illinois and except as otherwise provided in this Agreement, will be
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conducted under the auspices of JAMS/Endispute, in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator(s) shall allow such discovery as the arbitrator(s) determines
appropriate under the circumstances. The arbitrator(s) shall determine which
party, if either, prevailed and shall award the prevailing party its costs
and attorneys fees. The award and decision of the arbitrator shall be
conclusive and binding on all parties to this Agreement and judgment on the
award may be entered in any court of competent jurisdiction. The parties
acknowledge and agree that any arbitration award may be enforced against
either or both of them in a court of competent jurisdiction and each waives
any right to contest the validity or enforceability of such award. The
parties further agree to be bound by the provisions of any statute of
limitations which would be applicable in a court of law to the controversy or
claim which is the subject of any arbitration proceeding initiated under this
Agreement. The parties further agree that they are entitled in any
arbitration proceeding to the entry of an order, by a court of competent
jurisdiction pursuant to an opinion of the arbitrator, for specific
performance of any of the requirements of this Agreement.
2.3 CESSATION OF RIGHTS AND OBLIGATIONS; SURVIVAL OF CERTAIN
PROVISIONS. On the date of expiration or earlier termination of the
Employment Term for any reason, all of the respective rights, duties,
obligations and covenants of the parties, as set forth herein, shall, except
as specifically provided herein to the contrary, cease and become of no
further force or effect as of the date of said termination, and shall only
survive as expressly provided for herein.
2.4 TREATMENT OF EXECUTIVE UPON TERMINATION OF EMPLOYMENT. In lieu
of any severance under any severance plan that the Company may then have in
effect, and subject to any set-offs for any damages suffered by the Company
or other amounts owed by the Executive to the Company, the Company shall pay
to the Executive, and the Executive shall be entitled to receive in one lump
sum payment, the following amounts within thirty (30) days of the date of a
termination of the Employment Term:
(a) VOLUNTARY TERMINATION OR FOR CAUSE. Upon a Voluntary
Termination of the Employment Term by the Executive, the expiration of
the Employment Term because the Executive elects not to extend the
Employment Term, or a termination of the Employment Term for Cause by
the Company, the Executive shall be entitled to receive his current
Base Salary (as defined herein) and expense reimbursement through the
date of termination and pro rata portion of the prior year's
Performance Bonus (as defined herein).
(b) DEATH OR TOTAL DISABILITY. Upon the termination of the
Employment Term by either party by reason of the Death or Total
Disability of the Executive, the Executive shall be entitled to receive
(i) Base Salary and expense reimbursement through the date of
termination, (ii) an amount equal to the prior year's Performance
Bonus, and (iii) an amount equal to one year of his current Base
Salary.
(c) GOOD REASON; INVOLUNTARY PRIOR TO MARCH 1, 2002. Upon the
termination of the Employment Term by the Executive for Good Reason, or
by the Company in breach of this Agreement in either case at any time
before March 1, 2002, the Executive shall be
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entitled to receive (i) the Base Salary and expense reimbursement
through the date of termination, (ii) the balance of his current Base
Salary due through the end of the Initial Term, and (iii) an amount
equal to the number of years remaining (including the year of
termination) in the Initial Term multiplied by the prior year's
Performance Bonus.
(d) Good Reason; Involuntary After March 1, 2002. Upon the
expiration of the Employment Term by the Company by not electing to
extend the Employment Term, by the Company pursuant to SECTION 2.2
(a), by the Company in breach of this Agreement after March 1, 2002, or
by Executive for Good Reason after March 1, 2002, the Executive shall
be entitled to receive (i) his Base Salary and expense reimbursement
through the date of termination, (ii) one year's Base Salary, and (iii)
an amount equal to the prior year's Performance Bonus.
In addition, the Executive shall be entitled to continue to receive, at the
Company's sole expense, all health and disability benefits for a period of
one year after the termination date. If the Executive's employment is
terminated in the first year of the Initial Term, his prior year "Performance
Bonus" shall be deemed to be $50,000.
2.5 NO MITIGATION OF DAMAGES DEFENSE. The Company shall not be entitled
to interpose in any forum or proceedings whatsoever the defense of "mitigation
of damages," notwithstanding that the Executive shall have entered into or could
have entered into any other employment.
ARTICLE III
COMPENSATION OF BENEFITS
3.1 COMPENSATION.
(a) During the Employment Term, the Company shall pay
Executive a base salary ("BASE SALARY") of One Hundred Fifty Thousand
Dollars ($150,000) per year. The Base Salary will be reviewed annually
by the Board of Directors with a view to increasing it. The Company
shall not be permitted to reduce the Base Salary.
(b) The Company shall, in addition to Executive's Base Salary,
pay Executive an annual performance bonus (the "PERFORMANCE BONUS")
based on the Company obtaining certain targeted financial goals, as
established by the Board of Directors of the Company after consultation
with the Executive.
(c) The Company may pay such additional bonuses as the Board
of Directors of the Company may deem appropriate.
(d) The Company shall pay Executive a bonus of $50,000 within
thirty days of the closing of an initial public offering or other
significant financing event for the Company.
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3.2 PAYMENT. All compensation shall be payable in intervals in
accordance with the general payroll payment practice of the Company. The
compensation shall be subject to such withholdings and deductions by the Company
as are required by law.
3.3 BUSINESS EXPENSES.
(a) REIMBURSEMENT. The Company shall reimburse the Executive
for all reasonable, ordinary, and necessary business expenses incurred
by him in connection with the performance of his duties hereunder,
including, but not limited to, ordinary and necessary travel expenses
and entertainment expenses.
(b) ACCOUNTING. The Executive shall provide the Company with
an accounting of his expenses, which accounting shall clearly reflect
which expenses are reimbursable by the Company. The Executive shall
provide the Company with such other supporting documentation and other
substantiation of reimbursable expenses as will conform to Internal
Revenue Service or other requirements. All such reimbursements shall be
payable by the Company to the Executive within a reasonable time after
receipt by the Company of appropriate documentation therefor.
3.4 OTHER BENEFITS. Executive shall be entitled to participate in any
retirement, pension, profit-sharing, stock option, health plan, incentive
compensation and welfare or any other benefit plan or plans of the Company which
may now or hereafter be in effect for executive officers of the Company. The
Company shall pay to Executive a car allowance of $500 per month.
ARTICLE IV
MISCELLANEOUS
4.1 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received
(a) when delivered, if delivered personally, (b) four days after mailing, when
sent by registered or certified mail, return receipt requested and postage
prepaid, (c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service,
and (d) on the date of delivery if delivered by telecopy, receipt confirmed,
provided that a confirmation copy is sent on the next business day by first
class mail, postage prepaid, in each case addressed as follows:
To Executive at his home address.
To Company at: Xxxxxx.xxx, Inc.
0000 X. Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
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Ph: 000-000-0000
Fax: 000-000-0000
With a copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
4.2 ENTIRE AGREEMENT: AMENDMENTS, ETC. This Agreement contains the
entire agreement and understanding of the parties hereto, and supersedes all
prior agreements and understandings relating to the subject matter thereof.
No modification, amendment, waiver or alteration of this Agreement or any
provision or term hereof shall in any event be effective unless the same
shall be in writing, executed by both parties hereto, and any waiver so given
shall be effective only in the specific instance and for the specific purpose
for which given.
4.3 BENEFIT. This Agreement shall be binding upon, and inure to the
benefit of, and shall be enforceable by, the heirs, successors, legal
representatives and permitted assignees of Executive and the successors,
assignees and transferees of the Company. This Agreement or any right or
interest hereunder may not be assigned by Executive without the prior written
consent of the Company.
4.4 NO WAIVER. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder or pursuant hereto shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or pursuant
thereto.
4.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but, if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement. If any part
of any covenant or other provision in this Agreement is determined by a court
of law to be overly broad thereby making the covenant unenforceable, the
parties hereto agree, and it is their desire, that the court shall substitute
a judicially enforceable limitation in its place, and that as so modified the
covenant shall be binding upon the parties as if originally set forth herein.
4.6 COMPLIANCE AND HEADINGS. Time is of the essence of this Agreement.
The headings in this Agreement are intended to be for convenience and
reference only, and shall not define or limit the scope, extent or intent or
otherwise affect the meaning of an portion hereof.
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4.7 GOVERNING LAW. The parties agree that this Agreement shall be
governed by, interpreted and construed in accordance with the laws of the
State of Illinois, and the parties agree that any suit, action or proceeding
with respect to this Agreement shall be brought in the courts of Xxxx County
in the State of Illinois or in the U.S. District Court for the Northern
District of Illinois. The parties hereto hereby accept the exclusive
jurisdiction of those courts for the purpose of any such suit, action or
proceeding. Venue for any such action, in addition to any other venue
permitted by statute, will be Xxxx County, Illinois.
4.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
4.9 RECITALS. The Recitals set forth above are hereby incorporated in
and made a part of this Agreement by this reference.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed and delivered as of the day and year first above written.
XXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
---------------------------
EXECUTIVE:
/s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx
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