EXHIBIT 10.1
EMPLOYMENT AGREEMENT
Parties: GLOBAL SPORTS, INC.,
a Delaware corporation ("Employer")
000 Xxxxx Xxxxxxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
XXXXXX X. XXXXXX ("Executive")
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Date: August 9, 1999
Background: Employer and its subsidiaries are in the business of selling
sporting goods over the Internet (the "Business"). Employer desires to employ
Executive, and Executive desires to accept such employment, on the terms and
conditions stated below.
INTENDING TO BE LEGALLY BOUND, and in consideration of the mutual
agreements stated below, Executive and Employer agree as follows:
1. Employment and Term. Employer hereby employs Executive, and Executive
accepts such employment, subject to all of the terms and conditions of this
Agreement, for a term of five (5) years beginning on September 20, 1999 and
ending on December 31, 2004, unless sooner terminated in accordance with other
provisions hereof.
2. Position and Duties. Executive shall serve as Executive Vice President
and General Counsel and in such capacity shall have supervision and control
over, and responsibility for, the legal affairs of Employer. Executive shall
report to, and be subject to the direction of, Employer's Chief Executive
Officer (the "CEO"), as well as Employer's Board of Directors (the "Board").
Executive shall also have such other responsibilities and duties consistent with
his present duties and current position with Employer, as may from time to time
be prescribed by the CEO or the Board. Executive shall devote all of his working
time, energy, skill and best efforts to the performance of his duties hereunder
in a manner which will faithfully and diligently further the business and
interests of Employer.
3. Place of Employment. Executive's principal place of employment will be
at the Employer's principal executive office located at 000 Xxxxx Xxxxxxxxx
Xxxx, Xxxx xx Xxxxxxx, XX, or at such other location as the Employer shall
specify, provided that Executive's principal place of employment shall at all
times during the term hereof be located within 25 miles of the border of the
City of Philadelphia, PA.
4. Compensation, Benefits and Expenses.
4.1 Compensation. Employer shall pay to Executive an annual base
salary ("Base Salary") in the amounts (or a pro rata amount thereof with respect
to the period from September 20, 1999 through December 31, 1999) set forth
below:
Period Base Salary
------ -----------
September 20, 1999 - December 31, 1999 $175,000
January 1, 2000 - December 31, 2000 $200,000
January 1, 2001 - December 31, 2001 $225,000
January 1, 2002 - December 31, 2002 $250,000
January 1, 2003 - December 31, 2003 $275,000
January 1, 2004 - December 31, 2004 $300,000
Executive's Base Salary shall be payable no less frequently than twice monthly.
4.2 Bonuses. In addition to his Base Salary, for each year of this
Agreement, Employer shall pay Executive an incentive bonus in an amount up to
$100,000 (or up to a pro rata amount thereof with respect to the period from
September 20, 1999 through December 31, 1999), as determined by the CEO.
Employer shall pay such incentive bonuses to Executive on or before January 31
of the calendar year immediately following the year (or part thereof) for which
such bonus was payable.
4.3 Benefits. Executive shall be entitled to participate and shall
be included in all equity incentive, stock option, stock purchase, profit
sharing, savings, bonus, health insurance, life insurance, group insurance,
disability insurance, pension, retirement and other benefit plans or programs of
Employer now existing, or established hereafter, and offered to its executive
officers, subject to the terms and provisions thereof. Employer and Executive
acknowledge that the employee benefit plans and programs provided by Employer at
the commencement date of this Agreement will consist of: (i) fully paid health
and dental insurance benefits for Executive and his family members; (ii)
long-term disability insurance providing for a monthly benefit equal to 60% of
Executive's monthly Base Salary up to a maximum monthly benefit of $10,000 until
the earlier of Executive's death or attainment of age 65; (iii) term life
insurance providing a death benefit equal to 1 1/2 times Base Salary up to a
maximum death benefit of $250,000; and (iv) Employer's 401K Plan providing for a
matching contribution by Employer equal to 25% of the amount of Executive's
contribution up to a maximum contribution by Executive equal to 6% of
Executive's Base Salary. During the first year of Executive's employment,
Employer shall pay for Executive to continue the health insurance, life
insurance and long term disability insurance that Executive had with his prior
employer at the commencement of Executive's employment with Employer (or make
alternative comparable arrangements) if such benefits are better than those
provided by Employer.
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4.4 Automobile. Employer shall pay to Executive an automobile
allowance of $1,000 per month, which will include the cost of leasing or
purchasing an automobile, insurance, operation and maintenance.
4.5 Vacation. Executive shall be entitled to four (4) weeks of
vacation during each year, in addition to such paid holidays, personal days and
days of paid sick leave as are generally permitted to employees of Employer.
4.6 Expenses. Employer shall reimburse Executive for all actual,
ordinary, necessary and reasonable expenses incurred by Executive in the course
of his performance of services hereunder. Executive shall properly account for
all such expenses.
4.7 Relocation. If, during the term of his employment with Employer,
Executive relocates his principal residence outside the City of Philadelphia,
Employer will reimburse Executive for such relocation, including moving
expenses, real estate commissions, and transfer taxes, up to a maximum
reimbursement of $25,000.
4.8 Other. Employer shall pay for on behalf of Executive, or provide
to Executive at Employer's expense, the following: (i) professional
organizations, conferences and publications related to Executive's profession or
responsibilities; (ii) professional liability insurance; (iii) cell phone and
cell phone account; and (iv) lap top computer.
5. Termination.
5.1 Termination by Death. If Executive dies, then this Agreement
shall terminate immediately, and Executive's rights to compensation and benefits
hereunder shall terminate as of the date of death, except that Executive's
heirs, personal representatives or estate shall be entitled to any unpaid
portion of Executive's salary, a pro rata amount of Executive's incentive bonus
for the year in which such termination occurred, accrued benefits up to the date
of termination and any benefits which are to be continued or paid after the date
of termination in accordance with the terms of the corresponding benefit plans
or programs.
5.2 Termination by Disability. If Executive becomes totally
disabled, Executive shall continue to receive all of his compensation and
benefits in accordance with Section 3 for a period of six (6) months following
the Onset of Disability (as defined in this Section 5.2). Any amounts due to
Executive under this Section 5.2 shall be reduced, dollar-for-dollar, by any
amounts received by Executive under any disability insurance policy or plan
provided to Executive by Employer. "Onset of Disability" means the first day on
which Executive shall be unable to attend to the regular affairs of Employer on
a full time basis by reason of physical or mental incapacity, sickness or
infirmity. If Executive's disability continues for more than six (6) consecutive
months after the Onset of Disability or for periods aggregating more than six
(6) months during any twenty-four (24) month period, then Employer may, upon
thirty (30) days prior written notice, terminate Executive's employment, and
Executive's rights to compensation and benefits hereunder, except that
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Executive shall be entitled to any unpaid portion of his salary, a pro rata
amount of Executive's incentive bonus for the year in which such termination
occurred, accrued benefits up to the date of termination and any benefits which
are to be continued or paid after the date of termination in accordance with the
terms of the corresponding benefit plans or programs.
5.3 Termination for Cause. Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment, and Executive's
rights to compensation and benefits hereunder, for Cause (as defined in this
Section 5.3), except that Executive shall be entitled to any unpaid portion of
his salary, a pro rata amount of Executive's incentive bonus for the year in
which such termination occurred, accrued benefits up to the date of termination
and any benefits which are to be continued or paid after the date of termination
in accordance with the terms of the corresponding benefit plans or programs.
"Cause" shall exist if (i) Executive is grossly negligent or engages in willful
misconduct in the performance of his duties under this Agreement, (ii) Executive
is convicted of a crime constituting a felony under the laws of the United
States or any state thereof, or (iii) Executive willfully breaches this
Agreement in a material respect; but only if, in the case of clause (i) or
(iii), Executive is given written notice specifying, in reasonable detail, the
nature of the alleged neglect, misconduct, or breach and either (A) Executive
had a reasonable opportunity to take remedial action but failed or refused to do
so, or (B) an opportunity to take remedial action would not have been meaningful
or appropriate under the circumstances.
5.4 Termination Without Cause. Employer may, upon thirty (30) days
prior written notice to Executive, terminate Executive's employment, and
Executive's rights to compensation and benefits hereunder, for any reason
Employer deems appropriate, in which case Employer shall pay Executive upon such
termination a lump sum payment in an amount equal to the sum of (i) Executive's
annual Base Salary for the year in which such termination occurred, plus (ii)
Executive's maximum annual incentive bonus for the year in which such
termination occurred, and, for one year after such termination, Employer shall
provide Executive with all benefits (or substantially equivalent benefits) under
any benefit plans or programs of Employer applicable to Executive immediately
prior to the termination of his employment under this Section 5.4.
5.5 Termination for Good Reason. Executive may, upon thirty (30)
days prior written notice to Employer, resign his employment for Good Reason (as
defined in this Section 5.5), in which case Employer shall pay Executive upon
such termination a lump sum payment in an amount equal to the sum of (i)
Executive's annual Base Salary for the year in which such termination occurred,
plus (ii) Executive's maximum annual incentive bonus for the year in which such
termination occurred, and, for one year after such termination, Employer shall
provide Executive with all benefits (or substantially equivalent benefits) under
any benefit plans or programs of Employer applicable to Executive immediately
prior to the termination of Executive's employment under this Section 5.5. "Good
Reason" shall exist if (i) Executive is demoted, removed or not re-elected to
any of his positions or offices, or there is a material diminishment of
Executive's title, position, responsibilities, or authorities, (ii) there is a
reduction in Executive's Base Salary or a material reduction in Executive's
benefits, (iii) Employer materially breaches this Agreement, (iv) Executive is
relocated to more than twenty-five (25) miles beyond the border of the City of
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Philadelphia without Executive's consent, (v) any failure by Employer to obtain
the assumption of this Agreement by any successor to the business or
substantially all of the assets of Employer, (vi) any purported termination of
Executive for Cause which is not effected pursuant to the method described in
Section 5.3, or (vii) any other reason agreed to in writing by Executive and the
CEO.
5.6 Procedure Upon Termination. Upon termination of his employment,
Executive shall promptly return to Employer all documents (including copies) and
other materials and property of Employer, or pertaining to its business,
including without limitation customer and prospect lists, contracts, files,
manuals, letters, reports and records in his possession or control, no matter
from whom or in what manner acquired.
6. Discoveries. Executive shall communicate to Employer, in writing when
requested, and preserve as confidential information of Employer, all inventions,
marketing concepts, software ideas and other ideas or designs relating to the
business of the Employer which are conceived, developed or made by Executive,
whether alone or jointly with others, at any time during the term of Executive's
employment with Employer, which relate to the business or operations of Employer
or which relate to methods, designs, products or systems sold, leased, licensed
or under development by Employer (such concepts, ideas and designs are referred
to as "Executive's Discoveries"). All of Executive's Discoveries shall be
Employer's exclusive property, and Executive shall, at Employer's expense, sign
all documents and take such other actions as Employer may reasonably request to
confirm its ownership thereof.
7. Nondisclosure. At all times after the date of this Agreement, except
with Employer's express prior written consent or in connection with the proper
performance of services under this Agreement, Executive shall not, directly or
indirectly, communicate, disclose or divulge to any Person, or use for the
benefit of any Person, any confidential or proprietary knowledge or information,
no matter when or how acquired, concerning the conduct or details of the
business of Employer, including, but not limited to, (i) marketing methods and
strategies, pricing policies, product strategies and methods of operation, (ii)
software source code, software design concepts (including visual expressions and
system architecture), technical documentation and technical know-how, (iii)
budget and other non-public financial information, and (iv) expansion plans,
management policies and other business strategies and policies. For purposes of
this Section 7, confidential information shall not include any information which
is now known by the general public, which becomes known by the general public
other than as a result of a breach of this Agreement by Executive or which is
independently acquired by Executive.
8. Non-Competition. Executive acknowledges that Employer's business is
highly competitive. Accordingly, for a period of one (1) year after the date of
such termination, except with Employer's express prior written consent,
Executive shall not, directly or indirectly, in any capacity, for the benefit of
any Person:
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(a) Communicate with or solicit any Person who is or during such
period becomes an employee of Employer or its subsidiaries in an effort to
obtain such Person as an employee of any Person the principal business of which
competes with the Business.
(b) Establish, own, manage, operate or control, or participate in
the establishment, ownership, management, operation or control of, any Person
the principal business of which competes with the Business.
Notwithstanding anything in this Section 8 to the contrary, but subject to
Section 7 hereof, Executive shall not be prohibited from being an officer,
director, employee, partner, member or otherwise having an ownership interest in
or being affiliated with any law firm, accounting firm, investment banking firm,
venture capital firm, leveraged buyout firm or other similar firm that provides
services and/or financing to any Person which competes with the Business.
9. Consideration and Enforcement of Covenants. Executive expressly
acknowledges that the covenants contained in Sections 6, 7 and 8 of this
Agreement ("Covenants") are a material part of the consideration bargained for
by Employer and, without the agreement of Executive to be bound by the
Covenants, Employer would not have agreed to enter into this Agreement.
Executive acknowledges that any breach by Executive of any of the Covenants will
result in irreparable injury to Employer for which money damages could not
adequately compensate. If there is such a breach, Employer shall be entitled, in
addition to all other rights and remedies which Employer may have at law or in
equity, to have an injunction issued by any competent court enjoining and
restraining Executive and all other Persons involved therein from continuing
such breach. The existence of any claim or cause of action which Executive or
any such other Person may have against Employer shall not constitute a defense
or bar to the enforcement of any of the Covenants. If Employer must resort to
litigation to enforce any of the Covenants which has a fixed term, then such
term shall be extended for a period of time equal to the period during which a
breach of such Covenant was occurring, beginning on the date of a final court
order (without further right of appeal) holding that such a material breach
occurred or, if later, the last day of the original fixed term of such Covenant.
If any portion of any Covenant or its application is construed to be invalid,
illegal or unenforceable, then the other portions and their application shall
not be affected thereby and shall be enforceable without regard thereto. If any
of the Covenants is determined to be unenforceable because of its scope,
duration, geographical area or similar factor, then the court making such
determination shall have the power to reduce or limit such scope, duration, area
or other factor, and such Covenant shall then be enforceable in its reduced or
limited form. The provisions of Sections 6, 7 and 8 shall survive the
termination of this Agreement.
10. Indemnification. Executive shall be indemnified by Employer, to the
maximum extent permitted under applicable law and the certificate of
incorporation and bylaws of Employer, for all acts of Executive as an officer
and/or director of Employer and/or any other company which Executive serves as
an officer and/or director at the request of Employer.
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11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws (and not the choice of laws rules) of the
Commonwealth of Pennsylvania applicable to contracts made and to be performed
entirely therein. Each of the parties irrevocably consents to service of process
by certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance herewith. Each of the
parties irrevocably consents to the jurisdiction of the state courts in
Xxxxxxxxxx County, Pennsylvania and the federal courts in the Eastern District
of Pennsylvania in any and all actions between the parties arising hereunder.
12. Legal Fees. Employer shall pay all legal fees and expenses which
Executive may incur in enforcing any of his rights or remedies, or obtaining any
benefit, under this Agreement.
13. Notices. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (i) when delivered personally, (ii) three
business days after being mailed by first class certified mail, return receipt
requested, postage prepaid, or (iii) one business day after being sent by a
nationally recognized express courier service, postage or delivery charges
prepaid, to the parties at their respective addresses stated on the first page
of this Agreement. Notices may also be given by prepaid telegram or facsimile
and shall be effective on the date transmitted if confirmed within 24 hours
thereafter by a signed original sent in the manner provided in the preceding
sentence. Either party may change its address for notice and the address to
which copies must be sent by giving notice of the new addresses to the other
party in accordance with this Section 13, provided that any such change of
address notice shall not be effective unless and until received.
14. Prior Agreements. Executive represents to Employer (i) that there are
no restrictions, agreements or understandings whatsoever to which Executive is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (ii) that Executive's execution of this Agreement and
Executive's employment hereunder do not constitute a breach of any contract,
agreement or understanding, oral or written, to which Executive is a party or
which Executive is bound, and (iii) that Executive has full legal right and
capacity to execute this Agreement and to enter into employment by Employer. All
prior employment agreements between Executive and Employer are hereby terminated
as of the date hereof as fully performed on both sides.
15. Parties in Interest. This Agreement is for the personal services of
Executive and shall not be assignable by either party without the express prior
written consent of the other party; provided, however, Employer shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Employer to
assume and agree to perform this Agreement in the same manner and to the same
extent that Employer would be required to perform if no such succession had
taken place; provided, further, that no such assumption or agreement to such
successor shall relieve Employer of any of its obligations under this Agreement.
Subject to the provisions of Section 5 and this Section 15, this Agreement shall
inure to the benefit of and bind each of the parties hereto and the successors
and assigns of Employer and the personal representatives, estate and heirs of
Executive.
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16. Entire Understanding. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous, oral or written, express or
implied, agreements and understandings.
17. Amendment and Waiver. This Agreement shall not be amended, modified or
terminated unless in writing and signed by Executive and a duly authorized
representative of Employer other than Executive. No waiver with respect to this
Agreement shall be enforceable unless in writing and signed by the parties
against which enforcement is sought (which, in the case of the Employer, must be
a duly authorized representative of Employer other than Executive). Neither the
failure nor any delay on the part of either party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence by construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence.
18. Section Headings. Any headings preceding the text of any of the
Sections or Subsections of this Agreement are inserted for convenience of
reference only, and shall neither constitute a part of this Agreement nor affect
its construction, meaning, or effect.
19. Definitions. As used herein, the term "Person" means any individual,
sole proprietorship, joint venture, partnership, corporation, association,
cooperative, trust, estate, government body, administrative agency, regulatory
authority or other entity of any nature.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first stated above.
GLOBAL SPORTS, INC.
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxx
--------------------------- ------------------------
Name: Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxx
Title: President
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