EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
entered into on December 1, 2008 (the "Effective Date"), by and between Bluefly,
Inc., a Delaware corporation (the "Company"), and Xxxxx Xxxxx ("Xxxxx").
RECITALS
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WHEREAS, the Company and Xxxxx are parties to that certain Employment
Agreement, dated as of January 28, 2008 (the "Previous Agreement"), which
provided for the retention of the services of Xxxxx as the President and Chief
Operating Officer of the Company.
WHEREAS, the Company and Xxxxx desire to amend and restate the Previous
Agreement in its entirety, effective as of the Effective Date, to provide for
Xxxxx to serve as a non-executive employee of the Company 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 Xxxxx agree that
the Previous Agreement shall be amended and restated, effective as of the
Effective Date, as follows:
1. TERM
----
The Company hereby agrees to employ Xxxxx as a non-executive employee, and
Xxxxx hereby agrees to serve in such capacity, for a term commencing on the
Effective Date and ending November 30, 2009 (the "Remaining Term"), upon the
terms and subject to the conditions contained in this Agreement. Xxxxx'
employment with the Company shall automatically be deemed to have terminated as
of the end of the Remaining Term unless the parties otherwise agree in writing.
2. DUTIES
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During the Remaining Term, Xxxxx shall serve as non-executive employee of
the Company reporting directly to the Chief Executive Officer of the Company,
and he shall perform such duties, and have such powers, authority, functions,
duties and responsibilities for the Company as are reasonably assigned to him by
the Chief Executive Officer and the Board of Directors of the Company (the
"Board"). Xxxxx hereby resigns from the positions of President and Chief
Operating Officer of the Company, effective as of the Effective Date.
Xxxxx will not be required to report to the Company's offices on a regular
basis, and will not be required to devote his full business time to the
performance of his duties hereunder,
provided that he shall be available for special projects on an as-needed basis
and may be required to travel from time to time for business reasons.
3. COMPENSATION
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For services rendered by Xxxxx to the Company during the Remaining Term,
the Company shall pay him a base salary of two hundred and twelve thousand, five
hundred dollars ($212,500) per year ("Base Salary"), payable in accordance with
the standard payroll practices of the Company.
4. INCENTIVE COMPENSATION AND GRANT OF DEFERRED STOCK UNITS
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a. Incentive Compensation. Xxxxx shall not receive a performance bonus
for 2008 or 2009.
b. Deferred Stock Units. Pursuant to the Previous Agreement, Xxxxx has
been granted under the Plan a Deferred Stock Unit Award (the "DSUs") for and
representing 250,000 underlying Shares. The parties agree that, notwithstanding
anything to the contrary in the award agreement entered into by the Company and
Xxxxx with respect to the DSUs (the "Award Agreement") all vesting of the DSUs
shall cease as of the Effective Date. Accordingly, as of the Effective Date
62,500 DSUs shall be vested, and the remaining 187,500 DSUs shall be unvested
and shall be forfeited immediately by Erdos. The vested DSUs will be distributed
in shares of the Company's Common Stock as provided in the Award Agreement.
5. EXPENSE REIMBURSEMENT AND PERQUISITES
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a. During the Remaining Term, Xxxxx 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,
provided that the expenses are properly accounted for.
b. During the Remaining Term, Xxxxx shall be entitled to reasonable
vacation with full pay; provided, however, that Xxxxx shall schedule such
vacations at times convenient to the Company.
c. As provided in the Previous Agreement, the Company shall provide,
for calendar year 2008, an annual allowance of twenty thousand dollars ($20,000)
for the purchase of term life insurance by the Company for the benefit of Xxxxx
(which shall be in lieu of any other life insurance benefit) and the purchase of
a supplemental disability insurance policy. The Company shall not provide such
allowance for any year other than 2008. During the Remaining Term, Xxxxx shall
not be entitled to participate in the Company's medical insurance plan, but
shall be entitled to COBRA benefits as provided by law. The Company shall pay
Xxxxx'x COBRA premiums for the Remaining Term.
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6. NON-COMPETITION; NON-SOLICITATION
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a. In consideration of the grant of the DSUs and severance benefits
provided hereunder, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, during the Remaining Term and
during the "Non-Competition Period" (as defined in paragraph 6(c) below) Xxxxx
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" (as defined below); (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 on the date of termination of this Agreement
or who had been employed by the Company within the nine month period prior to
the date of termination of this Agreement, except if, at the time of such
employment or retention, such person had not been employed by the Company during
the nine month period immediately preceding such employment or retention; 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: (a) any person, corporation,
partnership, firm or other entity whose primary business is the sale or
consignment of off-price apparel and/or off-price fashion accessories; (b) any
division of a person, corporation, partnership, firm or other entity (but not
the person, corporation, partnership, firm or other entity itself) whose primary
business is internet based selling or consignment, and, in either such case,
consists of ten (10) or more brands of off-price apparel and/or off-price
fashion accessories; or (c) the off-price divisions of Nordstrom, Saks Fifth
Avenue, Neiman Marcus or the off-price division of another retailer of ten (10)
or more brands of apparel and/or fashion accessories. However, nothing in this
Agreement shall preclude Xxxxx from 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 3% of the publicly-traded equity
securities of such Competitive Business.
x. Xxxxx 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. Xxxxx
agrees that any breach of the covenants contained in this paragraph 6 would
irreparably injure the Company. Accordingly, Xxxxx agrees that the Company, in
addition to pursuing any other remedies it may have in law or in equity, may
obtain an injunction against Xxxxx from any court having jurisdiction over the
matter, restraining any further violation of this paragraph 6.
c. The "Non-Competition Period" shall extend for a period of eighteen
months following the end of the Remaining Term; provided, however that, in the
event that the
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Agreement is terminated by the Company without "Cause" (as defined in paragraph
7(a)(iv)), the Non-Competition Period shall expire on the first anniversary of
the termination of this Agreement (the "Modified Non-Competition Period"); and
further provided that in the event that during the Non-Competition Period or the
Modified Non-Competition Period, as the case may be, Xxxxx receives notice in
writing from the Company of any material breach of any of the covenants
contained in this paragraph 6 by him and Xxxxx cures such material breach within
21 days of the date he receives such notice, then the Company will continue the
Severance Benefits provided pursuant to paragraph 7(b) below; provided, that
Xxxxx shall not be entitled to Severance Benefits for periods during which he
was in material breach of such covenants.
7. TERMINATION
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a. This Agreement (other than as specifically stated herein), the
employment of Xxxxx 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 twelve (12) month period (vacation time excluded), during
which time Xxxxx is unable to attend to his ordinary and regular
duties;
(iii) [reserved];
(iv) the termination of this Agreement at any time without Cause
(as defined below) by the Company;
(v) the expiration of the Remaining Term;
(vi) the termination of this Agreement for "Cause", which, for
purposes of this Agreement, shall mean that (1) Xxxxx 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, (2) Xxxxx has willfully and materially failed
to perform his reasonably assigned duties hereunder, (3) Xxxxx
has breached the terms and provisions of this Agreement in any
material respect, or (4) Xxxxx has failed to comply in any
material respect with the Company's written policies of conduct
of which he had actual notice, including with respect to trading
in securities; provided that the Company shall not have any
right to terminate this Agreement for Cause pursuant to clauses
(2), (3) or (4) of this sub-paragraph (vi) as a result of a
breach unless the Company has provided Xxxxx with written notice
of such breach and Xxxxx has failed to cure such breach within
the twenty day period following his receipt of such notice; or
(vii) the termination of this Agreement by Xxxxx, which shall occur
on not less than thirty (30) days prior written notice from
Xxxxx.
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b. In the event that this Agreement is terminated, other than by the
Company without Cause, the Company shall pay Xxxxx his accrued but unpaid Base
Salary and unreimbursed business expenses and bonuses that have been earned and
awarded but not yet paid as of the date of his termination of employment and
shall make no other payments or provide any other benefits under this Agreement.
In the event that this Agreement is terminated by the Company without Cause
pursuant to paragraph 7(a)(iv), and subject to Xxxxx'x execution of a mutual
release reasonably acceptable to the Company and Xxxxx, the Company shall pay
Xxxxx his Base Salary through the date of termination, plus unreimbursed
business expenses, as well as his then-current Base Salary through the Remaining
Term (the "Severance Benefits"). The Severance Benefits shall be payable in
periodic installments in accordance with the Company's standard payroll
practices.
c. Notwithstanding anything herein to the contrary, if any payments
due under this Agreement (including, but not limited to the distribution of the
DSUs hereunder) would subject Xxxxx to any tax imposed under Section 409A of the
Code if such payments were made at the time otherwise provided herein, then the
payments that cause such taxation shall be payable in a single lump sum on the
first day which is at least six (6) months after the date of Xxxxx'x "separation
from service" as set forth in Code Section 409A(2)(A)(i) and the official
guidance issued thereunder.
8. [reserved]
9. CONFIDENTIALITY; INVENTIONS
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x. Xxxxx recognizes that the services to be performed by him are
special, unique and extraordinary in that, by reason of his employment 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, Xxxxx covenants
and agrees with the Company that he will not, directly or indirectly, at any
time during the Remaining Term or thereafter, except in the performance of his
obligations to the Company or with the prior written consent of the Board 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 Xxxxx
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 24 hours of learning of
such court order, subpoena or other government process and, at the Company's
expense, shall (i) take all reasonably necessary and lawful steps 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, studies, surveys, analyses, sketches,
drawings, notes, records, software, computer-stored or disk-stored information,
processes, techniques, research data,
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marketing and sales information, personnel data, trade secrets and other
intellectual property, designs, design concepts, manuals, confidential reports,
supplier names and pricing, customer names and prices paid, financial
information or business plans.
x. Xxxxx 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 Xxxxx
relating to the business of the Company shall be and will remain the sole and
exclusive property of the Company and shall be promptly delivered and returned
to the Company immediately upon the termination of his employment with the
Company.
x. Xxxxx 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 Xxxxx
for the Company during his services with the Company, whether or not during
normal working hours or on the premises 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 Xxxxx 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 tradenames in the United
States and elsewhere.
x. Xxxxx 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, Xxxxx 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. Xxxxx agrees that any breach of this paragraph 9 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. Xxxxx understands and agrees that the rights and obligations set forth
in paragraph 9 shall survive the termination or expiration of this Agreement.
10. REPRESENTATIONS AND WARRANTIES
------------------------------
x. Xxxxx represents and warrants to the Company that he was advised to
consult with an attorney of Xxxxx'x own choosing concerning this Agreement and
that Xxxxx has done so.
x. Xxxxx represents and warrants to the Company that the execution,
delivery and performance of this Agreement by Xxxxx complies with all laws
applicable to Xxxxx 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.
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11. GOVERNING LAW; ARBITRATION
--------------------------
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. Except as set forth
below, any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be resolved by arbitration in accordance with the
rules of the American Arbitration Association (the "AAA") then pertaining in the
City of New York, New York, by a single arbitrator to be mutual agreed upon by
the parties or, if they are unable to so agree, by an arbitrator selected by the
AAA. The parties shall be entitled to a minimal level of discovery as determined
by the arbitrator. The arbitrator shall be empowered to award attorney's fees
and costs to Xxxxx (but not the Company) if he or she deems such award
appropriate. Judgment upon any award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Nothing contained in this paragraph 11
or the remainder of this Agreement shall be construed so as to deny the Company
the right and power to seek and obtain injunctive relief in a court of equity
for any breach or threatened breach by Xxxxx of the covenants contained in
paragraphs 6 and 9 of this Agreement.
12. INDEMNIFICATION
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a. The Company agrees that it shall to the fullest extent permitted by law
indemnify and hold Xxxxx harmless and shall pay and reimburse Xxxxx for any
loss, cost, damage, injury or other expense (including without limitation
reasonable attorneys' fees) which Xxxxx incurs by reason of being or having been
an officer or director of the Company or by reason of the fact that Xxxxx is or
was serving at the request of the Company as a director, officer, employee,
fiduciary or other representative of the Company. All indemnification shall be
paid by the Company in advance of the final disposition of the matter (as
incurred by Xxxxx) provided that Xxxxx executes and deliver to the Company an
undertaking to repay any amounts so advanced in the event that it shall be
determined that Xxxxx is not entitled to indemnification hereunder. This
indemnification obligation is in addition to any other indemnification provision
contained in the Company's By-laws or pursuant to any other document, instrument
or agreement and shall survive the term of Xxxxx'x employment hereunder.
b. In the event that Xxxxx asserts his right of indemnification under
paragraph 12(a) above, the Company shall have the right to select Xxxxx'x
counsel provided that there is no material conflict of interest between the
Company and Xxxxx and provided such counsel is reasonably acceptable to Xxxxx.
Notwithstanding the foregoing, the Company shall have the right to participate
in, or fully control, any proceeding, compromise, settlement, resolution or
other disposition of the claim or proceeding so long as Xxxxx is provided with a
general release from the Company and the claimant in form and substance
reasonably satisfactory to Xxxxx and no restrictions are imposed on Xxxxx as a
result of the settlement.
13. ENTIRE AGREEMENT
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This Agreement together with any equity agreements to which Xxxxx and the
Company are a party contain all of the understandings between Xxxxx and the
Company pertaining to Xxxxx'x employment with the Company and supersedes all
undertakings and agreements,
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whether oral or in writing, previously entered into between them, including
(without limitation) the Previous Agreement.
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 Xxxxx 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.
15. NOTICES.
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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, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chairman of Compensation Committee
With a copy to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
If to Xxxxx, to: at the address on file in the Company's records.
16. SEVERABILITY
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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
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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 paragraph.
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18. DUTY TO MITIGATE
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Xxxxx shall not be obligated to seek other employment by way of mitigation
of the amounts payable to him under any provision of this Agreement.
19. COUNTERPARTS
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date written below.
BLUEFLY, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Chief Executive Officer
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
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