Exhibit 10.11
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of November 3, 1999, by and
between Bluefly, Inc., a New York corporation (the "Company"), and Xxxxxx
Xxxxxxx ("Xxxxxxx").
RECITALS
1. The Company desires to retain the services of Xxxxxxx as an Executive
Vice President of the Company in accordance with the terms and conditions of
this Agreement.
2. Xxxxxxx will serve the Company as an Executive Vice President in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxxxx agree as
follows:
1. TERM
The Company hereby agrees to employ Xxxxxxx as an Executive Vice President
of the Company, and Xxxxxxx hereby agrees to serve in such capacity, for a term
commencing no later than January 1, 2000 and ending on January 1, 2004 (the
"Employment Term"), upon the terms and subject to the conditions contained in
this Agreement. The Company and Xxxxxxx further agree that, for a term
commencing as of the date hereof and ending upon the commencement of the
Employment Term (the "Consulting Term," and, together with the Employment Term,
the "Term"), Xxxxxxx shall serve as a consultant to the Company performing such
duties as may be agreed by the Company and Xxxxxxx.
2. DUTIES
During the Employment Term, Xxxxxxx shall serve as an Executive Vice
President of the Company, and shall be responsible for the duties attendant to
such office and such other managerial duties and responsibilities with the
Company as may be assigned from time to time by the Chief Executive Officer
and/or the Board of Directors of the Company.
The principal location of Xxxxxxx' employment shall be in the New York City
vicinity, although Xxxxxxx understands and agrees that he will be required to
travel frequently for business reasons. Xxxxxxx shall diligently and faithfully
perform his obligations under the Agreement and shall devote his full
professional and business time and best efforts to the performance of his
duties as an Executive Vice President of the Company during the Employment Term.
Xxxxxxx shall not, directly or indirectly, render business services to any other
person or entity, without the consent of the Company's Board of Directors.
3. BASE SALARY
For services rendered by Xxxxxxx to the Company during the Employment Term,
the Company shall pay him a base salary of $175,000 per year, payable in
accordance with the standard payroll practices of the Company, subject to annual
increases in the sole discretion of the Chief Executive Officer and the
Company's Board of Directors, taking into account the financial and operating
performance of the Company's business and divisions and a qualitative assessment
of Xxxxxxx' performance during such year. Xxxxxxx shall not receive any salary
or fees for services rendered during the Consulting Term, other than the
granting of the Options.
4. BONUS/OPTIONS
a. During the Employment Term, Xxxxxxx shall be eligible to receive a
bonus set by the Board of Directors in its sole discretion and based on such
factors as the Board of Directors deems appropriate.
b. The Company hereby agrees to cause the issuance to Xxxxxxx of
options ("Options") to purchase 100,000 shares of the Company's common stock,
$.01 par value ("Common Stock"). The Options shall be issued pursuant to, and in
accordance with, the Company's 1997 Stock Option Plan (the "Plan"). The Options
shall be Non-Qualified Stock Options (as defined in the Plan), and shall be
exercisable at a price equal to the Fair Market Value (as defined in the Plan)
of the Common Stock on the date hereof. The Options shall vest over a
forty-eight (48) month period as follows: (i) 12.50% of the Options shall vest
on the six month anniversary of the date of grant and (ii) 2.083% of the Options
shall vest each month thereafter until all such Options shall have vested, but
subject to shareholder approval to the extent there are then insufficient shares
available for grant provided that if shareholder approval is not obtained, the
Company shall use its best efforts to adopt a stock appreciation rights plan
(the "SAR Plan") and provide Xxxxxxx with rights under the SAR Plan that mirror
in all material respects the terms and conditions of the Options had the Options
not been declared null and void by virtue of the failure to obtain such
shareholder approval, except that the aggregate amount payable by the Company to
Xxxxxxx pursuant to any such rights granted under the SAR Plan shall not exceed
$100,000. The Term of each Option shall be 10 years from the date of grant. In
the event of the termination of Xxxxxxx'x employment for any reason, he shall
have 30 days within which to exercise any vested Options and any unvested
Options shall be forfeited. During the Term of this Agreement, Xxxxxxx shall be
eligible to participate in the Company's future stock option grants as
determined appropriate by the Committee in its sole discretion.
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5. EXPENSE REIMBURSEMENT AND PERQUISITES
a. During the Term of this Agreement, Xxxxxxx shall be entitled to
reimbursement of all reasonable and actual out-of-pocket expenses incurred by
him in the performance of his services to the Company consistent with corporate
policies, if any, provided that the expenses are properly accounted for.
b. During each calendar year of the Employment Term, Xxxxxxx shall be
entitled to reasonable vacation with full pay in accordance with they Company's
then-current vacation policies; provided, however, that Xxxxxxx shall schedule
such vacations at times convenient to the Company.
c. During the Employment Term, the Company shall provide Xxxxxxx with
$500,000 worth of term life insurance and disability insurance purchased for
annual premiums of up to $5,000 per year, both subject to availability on
commercially reasonable terms, major medical insurance coverage as determined by
the Company in its sole discretion, and Xxxxxxx shall be entitled to participate
in all dental insurance and other employee benefit plans instituted by the
Company from time to time on the same terms and conditions as other similarly
situated employees of the Company, to the extent permitted by law. In addition,
Xxxxxxx shall be a covered officer under the Company's now existing and any
future Directors and Officers liability policy.
6. NON-COMPETITION; NON-SOLICITATION
a. In consideration of the offer of employment, severance benefits and
Options to be granted to Xxxxxxx hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
during the Term of this Agreement and for a period equal to two years
thereafter, Xxxxxxx shall not, without the prior written consent of the Company,
anywhere in the world, directly or indirectly, (i) enter into the employ of or
render any services to any Competitive Business; (ii) engage in any Competitive
Business for his own account; (iii) become associated with or interested in any
Competitive Business as an individual, partner, shareholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in any
other relationship or capacity; (iv) employ or retain, or have or cause any
other person or entity to employ or retain, any person who was employed or
retained by the Company while Xxxxxxx was employed by the Company; or (v)
solicit, interfere with, or endeavor to entice away from the Company, for the
benefit of a Competitive Business, any of its customers or other persons with
whom the Company has a contractual relationship. For purposes of this Agreement,
a "Competitive Business" shall mean any person, corporation, partnership, firm
or other entity which sells or has plans to sell apparel, fashion accessories,
or home furnishings via the Internet or otherwise engages in any business which
now or at the time has material operations which are competitive (directly or
indirectly) with the business of the
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Company (including any line of business for which the Company has undertaken any
substantial amount of planning) as of the time Xxxxxxx employment with the
Company terminates, provided that activities in the energy or gaming industries
shall in no event be considered to be competitive (directly or indirectly) with
the business of the Company. However, nothing in this Agreement shall preclude
Xxxxxxx from (i) investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than three percent (3%) of the
publicly-traded equity securities of such Competitive Business; or (ii) working
for or becoming a principal of any consulting firm that provides consulting
services to a Competitive Business, so long as Xxxxxxx does not directly
participate in the provision of such services.
x. Xxxxxxx and the Company agree that the covenants of non-competition
and non-solicitation contained in this paragraph 6 are reasonable covenants
under the circumstances, and further agree that if, in the opinion of any court
of competent jurisdiction, such covenants are not reasonable in any respect,
such court shall have the right, power and authority to excise or modify such
provision or provisions of these covenants as to the court shall appear not
reasonable and to enforce the remainder of these covenants as so amended.
Xxxxxxx agrees that any breach of the covenants contained in this paragraph 6
would irreparably injure the Company. Accordingly, Xxxxxxx agrees that the
Company, in addition to pursuing any other remedies it may have in law or in
equity, may obtain an injunction against Xxxxxxx from any court having
jurisdiction over the matter, restraining any further violation of this
paragraph 6.
7. TERMINATION
a. This Agreement, the employment of Xxxxxxx, and Xxxxxxx' position as
an Executive Vice President of the Company shall terminate upon the first to
occur of:
(i) his death;
(ii) his "permanent disability," due to injury or sickness for a
continuous period of four (4) months, or a total of eight
months in a twenty-four month period (vacation time excluded),
during which time Xxxxxxx is unable in substantial part to
attend to his ordinary and regular duties, provided that the
Company shall give Xxxxxxx thirty (30) days' written notice
prior to any such termination;
(iii) a "Constructive Termination" by the Company during the
Employment Term, which, for purposes of this Agreement, shall
be deemed to have occurred upon (A) the removal of Xxxxxxx
without his consent from his position as an Executive Vice
President of the Company, or (B) the material breach by the
Company of this Agreement; provided that no such
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breach shall be considered a Constructive Termination unless
Xxxxxxx has provided the Company with at least thirty (30)
days' prior written notice of such breach and the Company has
failed to cure such breach within such thirty (30) day period;
(iv) the termination of this Agreement at any time without cause by
the Company;
(v) the termination of this Agreement for cause, which, for
purposes of this Agreement, shall mean that (1) Xxxxxxx has
been convicted of a felony or any serious crime involving
moral turpitude, or engaged in materially fraudulent or
materially dishonest actions in connection with the
performance of his duties hereunder, or (2) Xxxxxxx has
willfully and materially failed to perform his duties
hereunder, or (3) Xxxxxxx has willfully or negligently
breached the terms and provisions of this Agreement in any
material respect, or (4) Xxxxxxx has failed to comply in any
material respect with the Company's policies of conduct
including with respect to trading in securities, provided that
the Company shall provide Xxxxxxx with at least five (5)
business days' prior written notice of any such failure to
comply and an opportunity to cure such failure, to the extent
curable; or
(vi) the termination of this Agreement by Xxxxxxx, which shall
occur on not less than 60 days prior written notice from
Xxxxxxx.
b. In the event that this Agreement is terminated during the Employment
Term pursuant to paragraphs 7(a)(i), 7(a)(ii), 7(a)(v) or 7(a)(vi), the Company
shall pay Xxxxxxx his base salary only through the date of termination. In the
event that this Agreement is terminated during the Employment Term pursuant to
paragraphs 7(a)(iii) or 7(a)(iv), the Company shall pay Xxxxxxx, in lieu of all
salary, compensation payments and perquisites set forth in paragraphs 3, 4 and 5
(including bonus payments and unvested option grants, but excluding vested
option grants), severance payments (the "Severance Payments") as follows:
(i) the then-current base salary for a period of ninety (90) days,
if Xxxxxxx is terminated during the first year of the Term of
this Agreement;
(ii) the then-current base salary for a period of one-hundred
twenty (120) days, if Xxxxxxx is terminated during the second
year of the Term of this Agreement; or
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(iii) the then-current base salary for a period of one-hundred fifty
(150) days, if Xxxxxxx is terminated during the third year of
the Term of this Agreement or any time during the Term of this
Agreement thereafter.
The Severance Payments shall be payable in periodic installments in accordance
with the Company's standard payroll practices.
8. CONFIDENTIALITY
x. Xxxxxxx recognizes that the services to be performed by him are
special, unique and extraordinary in that, by reason of his employment and
provision of consulting services under this Agreement, he may acquire or has
acquired confidential information and trade secrets concerning the operation of
the Company, its predecessors, and/or its affiliates, the use or disclosure of
which could cause the Company, or its affiliates substantial loss and damages
which could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Xxxxxxx covenants and agrees with the Company that he
will not at any time during the Term of this Agreement or thereafter, except in
the performance of his obligations to the Company or with the prior written
consent of the Board of Directors or as otherwise required by court order,
subpoena or other government process, directly or indirectly, disclose any
secret or confidential information that he may learn or has learned by reason of
his association with the Company. If Xxxxxxx shall be required to make such
disclosure pursuant to court order, subpoena or other government process, he
shall notify the Company of the same, by personal delivery or electronic means,
confirmed by mail, within twenty-four (24) hours of learning of such court
order, subpoena or other government process and, at the Company's expense (such
expenses to be advanced by the Company as reasonably required by Xxxxxxx), shall
(i) take all necessary and lawful steps reasonably required by the Company to
defend against the enforcement of such subpoena, court order or government
process, and (ii) permit the Company to intervene and participate with counsel
of its choice in any proceeding relating to the enforcement thereof. The term
"confidential information" includes, without limitation, information not in the
public domain and not previously disclosed to the public or to the trade by the
Company's management with respect to the Company's or its affiliates' facilities
and methods, trade secrets and other intellectual property, designs, manuals,
confidential reports, supplier names and pricing, customer names and prices
paid, financial information or business plans.
x. Xxxxxxx confirms that all confidential information is and shall
remain the exclusive property of the Company. All memoranda, notes, reports,
software, sketches, photographs, drawings, plans, business records, papers or
other documents or computer-stored or disk-stored information kept or made by
Xxxxxxx relating to the business of the Company shall be and will remain the
sole and exclusive property of the Company and all such materials containing
confidential information shall be promptly delivered and returned to the Company
immediately upon the termination of his employment with the Company.
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x. Xxxxxxx shall make full and prompt disclosure to the Company of all
inventions, improvements, ideas, concepts, discoveries, methods, developments,
software and works of authorship, whether or not copyrightable, trademarkable or
licensable, which are created, made, conceived or reduced to practice by Xxxxxxx
during his services with the Company, whether or not during normal working hours
or on the premises of the Company and which relate in any manner to the business
of the Company (all of which are collectively referred to in this Agreement as
"Developments"). All Developments shall be the sole property of the Company, and
Xxxxxxx hereby assigns to the Company, without further compensation, all of his
rights, title and interests in and to the Developments and any and all related
patents, patent applications, copyrights, copyright applications, trademarks and
trade names in the United States and elsewhere.
x. Xxxxxxx shall assist the Company in obtaining, maintaining and
enforcing patent, copyright and other forms of legal protection for intellectual
property in any country. Upon the request of the Company, Xxxxxxx shall sign all
applications, assignments, instruments and papers and perform all acts necessary
or desired by the Company in order to protect its rights and interests in any
Developments.
x. Xxxxxxx agrees that any breach of this paragraph 8 will cause
irreparable damage to the Company and that, in the event of such breach, the
Company will have, in addition to any and all remedies of law, including rights
which the Company may have to damages, the right to equitable relief including,
as appropriate, all injunctive relief or specific performance or other equitable
relief. Xxxxxxx understands and agrees that the rights and obligations set forth
in paragraph 8 shall survive the termination or expiration of this Agreement.
9. REPRESENTATIONS AND WARRANTIES
x. Xxxxxxx represents and warrants to the Company that he was advised
to consult with an attorney of Xxxxxxx' own choosing concerning this Agreement.
x. Xxxxxxx represents and warrants to the Company that, to the best of
his knowledge, the execution, delivery and performance of this Agreement by
Xxxxxxx complies with all laws applicable to Xxxxxxx or to which his properties
are subject and does not violate, breach or conflict with any agreement by which
he or his assets are bound or affected.
10. INDEMNIFICATION
The Company shall indemnify and hold Xxxxxxx harmless to the fullest extent
permitted by law from and against any and all claims, losses, liabilities,
damages and expenses including, but not limited to, reasonable attorneys' fees
incurred by, imposed upon or asserted against Xxxxxxx as a result of or arising
out of any acts or omission by Xxxxxxx in his capacity as an officer, director,
employee or consultant of the Company.
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11. MEDIATION
(a) The Company and Xxxxxxx hereby state their mutual desire for any
dispute concerning a legally cognizable claim arising out of this Agreement or
in connection with the employment of Xxxxxxx by the Company (other than a claim
for injunctive relief in connection with an alleged violation of Xxxxxxx'
obligations under Sections 6 and 8 hereunder), including, but not limited to,
claims of breach of contract, unlawful termination, discrimination, harassment,
workers' compensation retaliation, defamation, tortious infliction of emotional
distress, fraud and conversion ( "Legal Dispute"), be resolved amicably, if
possible, and without the need for litigation.
(b) Based on this mutual desire, in the event a Legal Dispute arises,
the parties agree that before instituting an action in a court of law, the
parties shall first submit the Legal Dispute to mediation under the auspices of
the American Arbitration Association (the "AAA") or such other mediation
provider as shall be mutually agreed upon by the parties pursuant to the
mediation rules and procedures promulgated by the AAA or another agreed
mediation provider at such time the Legal Dispute is submitted for resolution.
The parties further agree to make a good faith effort to resolve the Legal
Dispute through such mediation.
12. GOVERNING LAW
This Agreement shall be deemed a contract made under, and for all purposes
shall be construed in accordance with, the laws of the State of New York,
without giving effect to its conflict of law provisions.
13. ENTIRE AGREEMENT
This Agreement contains all of the understandings between Xxxxxxx and the
Company pertaining to Xxxxxxx' employment with the Company, and it supersedes
all undertakings and agreements, whether oral or in writing, previously entered
into between them.
14. AMENDMENT OR MODIFICATION; WAIVER
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing, signed by Xxxxxxx and by an
officer of the Company duly authorized to do so. Except as otherwise
specifically provided in this Agreement, no waiver by either party of any breach
by the other party of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior or subsequent time.
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15. NOTICES
Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently designate by like notice:
If to the Company, to:
Bluefly, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: E. Xxxxxxx Xxxxx
If to Xxxxxxx, to:
Xxxxxx Xxxxxxx
c/o Xxxxxx Xxx
Xxxxxx Xxxxxxxxxx Cabot Xxxxxxxx & Renneison, LLC
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Any such notice shall be deemed given upon receipt.
16. SEVERABILITY
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
17. TITLES
Titles of the paragraphs of this Agreement are intended solely for
convenience of reference and no provision of this Agreement is to be construed
by reference to the title of any paragraphs.
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18. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
BLUEFLY, INC.
By: /s/ E. Xxxxxxx Xxxxx
-----------------------------
E. Xxxxxxx Xxxxx
Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx
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