EXHIBIT 10.8
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of June 2, 1998, is by and between Xxxxxx
Xxxx, residing at 00 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 (the "Executive")
and Cyberian Outpost, Inc., a Connecticut corporation with its principal offices
at 00 X. Xxxx Xxxxxx, Xxxx, Xxxxxxxxxxx 00000 (the "Company").
WHEREAS the Company wishes to employ the services of the Executive for the
period and upon the terms and conditions hereinafter set forth, and Executive
desires to serve in such capacities upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and Executive hereby agree as follows:
1. Employment.
----------
(a) The Company will employ the Executive, and the Executive agrees to be
employed by the Company, as President and Chief Executive Officer of the
Company. Executive will have the responsibilities, duties and authority
commensurate with his position as President and Chief Executive Officer.
(b) Executive shall devote his full business time and energies to the
business and affairs of the Company; provided, however, that nothing contained
in this Paragraph 1(b) shall be deemed to prevent or limit his right to: (i) own
not more than one percent (1%) of the securities of a company that is publicly
traded on a securities exchange or over-the-counter market ( a "Public
Company"), provided that Executive does not otherwise have any relationship with
such company; (ii) make passive investments aggregating to not more than ten
percent (10%) of the securities of any entity that is not a Public Company and
is not engaged in a competing business with the Company and with respect to
which he is not obligated or required to, and which he does not in fact, devote
any substantial efforts which interfere with his fulfillment of his duties
hereunder; and (iii) subject to the prior approval of the Board of Directors of
the Company (the "Board"), to serve as a member on the Board of Directors, Board
of Trustees or other similar body of other corporations, trade associations,
professional associations or entities.
2. Term of Employment.
------------------
(a) Executive's employment hereunder shall commence on June 2, 1998 (the
"Commencement Date") and continue until the second anniversary thereof, subject
to extension in accordance with the provisions of the following paragraph,
unless terminated earlier in accordance with the terms hereof (the "Employment
Term").
(b) On each two-year anniversary of the Commencement Date, Executive's
employment hereunder shall be automatically extended for a period ending on the
second anniversary of such date, unless earlier terminated in accordance with
the terms hereof, and
unless either Executive or the Company shall have given written notice to the
other of a desire that such automatic extension not occur, which notice was
given no later than thirty (30) days prior to the relevant anniversary of the
Commencement Date. If either party gives such notice and absent earlier
termination in accordance with the terms hereof, the Termination Date (as
defined below) shall be the last day of the Employment Term.
As used herein, "Termination Date" shall mean the last date of Executive's
employment, as determined in accordance with the terms of this Agreement.
3. Compensation.
------------
(a) Base Salary. In consideration for Executive's services under this
Agreement, Executive will be paid (i) during the period commencing on the
Commencement Date and ending on the first anniversary thereof, salary at an
annual salary rate of $175,000 and (ii) during the twelve (12) month period
commencing on the first anniversary of the Commencement Date and each twelve
(12) month period commencing on each anniversary of the Commencement Date
thereafter during the Employment Term, at an annual salary rate as determined by
the Board or its Compensation Committee, but in any event at least equal to the
annual salary rate in effect immediately preceding the commencement of the
twelve (12) month period in question. Executive's annual salary rate in effect
from time to time is referred to herein as the "Base Salary." Executive's Base
Salary shall be paid in periodic installments at such times as salaries are
generally paid to other senior executives of the Company.
(b) Bonus Plans. In addition to Executive's Base Salary, Executive shall
be entitled to participate in any bonus plans which the Company provides or may
establish for the benefit of its senior executives pursuant to which he may be
paid any such discretionary bonus payments as the Board or its Compensation
Committee shall determine in recognition of Executive's and the Company's
performance.
4. Benefits and Reimbursement of Expenses.
--------------------------------------
(a) Vacation. Executive shall be entitled to four (4) weeks of vacation in
the twelve (12) month period commencing on the Commencement Date and ending on
the first anniversary thereof and each twelve (12) month period thereafter
during the Employment Term (an "Employment Year"). All vacation days shall be
taken at such time or times reasonably calculated so as not to interfere with
the business of the Company. If Executive does not use his vacation leave in any
Employment Year, he may carry the unused days, including thirty-two (32)
vacation days which are accrued as of the date of this Agreement , over from
year to year on a cumulative basis.
(b) Employee Benefit Plans and Other Benefits. Executive shall also be
entitled to participate in any employee benefit plans which the Company provides
or may establish for the benefit of its senior executives (including, without
limitation, group life, medical, dental and other insurance, retirement,
pension, profit-sharing and similar plans).
-2-
(c) Reimbursement of Expenses. Executive shall be entitled to
reimbursement for all ordinary and reasonable out-of-pocket business expenses
which are reasonably incurred by him in furtherance of the Company's business in
accordance with reasonable policies adopted from time to time by the Company.
The Company will also provide Executive with a monthly allowance to partially
offset the cost of acquisition and maintenance of a first class automobile for
use by Executive primarily in connection with the performance by him of his
duties under this Agreement.
(d) Life Insurance. During the Employment Term, the Company will provide
$1,000,000 of term life insurance for Executive, with Executive's designee
as beneficiary.
5. Termination upon Death or Disability.
------------------------------------
(a) Executive's employment by the Company shall terminate upon his death,
or upon fifteen (15) days prior written notice from the Company if, by virtue of
total and permanent disability (as hereinafter defined), Executive is unable to
perform his duties hereunder.
(b) Executive shall be considered to be totally and permanently disabled
hereunder if for reasons involving mental or physical illness or physical injury
Executive is unable to or fails to perform a substantial portion of his duties
hereunder for a period of one hundred eighty (180) consecutive calendar days or
more. The determination that, by virtue of total and permanent disability,
Executive is unable to perform a substantial portion of his duties hereunder
shall be made by a physician chosen by the Company and reasonably satisfactory
to Executive (or his legal representative). The cost of such examination shall
be borne by the Company. Executive shall submit to such examination upon the
Company's request.
(c) For purposes of this Paragraph 5, the Termination Date in the event of
death shall be the date of death and in the event of total and permanent
disability shall be the date fifteen (15) days after the Company's written
notice to Executive that the physician referenced to above in Paragraph 5(b) has
made a determination of Executive's total and permanent disability in accordance
with Paragraph 5(b) above.
6. Termination by the Executive. Executive's employment may be
----------------------------
terminated by him, by giving a Notice of Termination, as follows: (a) at any
time by written notice of at least sixty (60) days to the Company and; (b) at
any time by written notice for a "Constructive Termination". The Termination
Date in the event of any such termination shall be the date set forth in the
Notice of Termination.
As used herein, a "Constructive Termination" shall mean: (i) a failure of
the Company to comply with any provision of this Agreement which failure, if
capable of remedy, has not been cured within thirty (30) days after notice of
such noncompliance has been given by the Executive to the Company, provided that
any notice of termination hereunder shall be given within ninety (90) days after
the end of such thirty (30) day period; or (ii) a material change by the Company
in Executive's authority, functions, duties or responsibilities which materially
adversely affects his position with the Company or causes it to become of less
responsibility, scope or importance, provided that such material change is not
in connection with a termination of Executive's employment hereunder for Cause.
-3-
7. Termination by the Company.
--------------------------
(a) Termination Events. Executive's employment may be terminated at any
time by the Company (i) with Cause (in accordance with Paragraph (b) below) by a
Notice of Termination to Executive, effective immediately unless a later date
otherwise stated in such notice, which date shall be the Termination Date
therefor, (ii) without Cause at any time, by a Notice of Termination to
Executive, effective sixty (60) days after the date given, except as Executive
and the Company may otherwise agree, which date of effectiveness shall be the
Termination Date therefor, or (iii) for total and permanent disability in
accordance with Paragraph 5.
(b) Definition of "Cause". For purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder upon: (i) the
continued failure by Executive to substantially perform his duties hereunder
(other than any such failure resulting from his incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of a
Notice of Termination by Executive for a Constructive Termination); (ii) the
willful engaging by Executive in misconduct which is materially injurious to the
Company's business or reputation, monetarily or otherwise; (iii) the willful
violation by Executive of any material provision of this Agreement; or (iv)
Executive's conviction of an act of fraud or embezzlement against the Company.
Executive shall not be deemed to have been terminated for Cause unless (1)
reasonable notice has been delivered to him setting forth the reasons for the
Company's intention to terminate for Cause, and (2) a period of twenty (20) days
has elapsed since delivery of such notice during which Executive was afforded an
opportunity to cure, if capable of remedy, the reasons for the Company's
intention to terminate for Cause.
8. Notice of Termination. Any termination of Executive's employment by
---------------------
the Company or by Executive (other than as a result of death) shall be
communicated by written notice of termination to the other party hereto in
accordance with Paragraph 16(a) (a "Notice of Termination").
9. Payments of Compensation Upon Termination or Expiration.
-------------------------------------------------------
(a) Without Cause, Expiration Occasioned by Company or Constructive
Termination. In the event Executive's employment hereunder is terminated by the
Company without Cause under Paragraph 7, or if Executive's employment is
terminated by Executive for a Constructive Termination, or if the Company gives
Executive written notice under Paragraph 2(b) above that the Employment Term
shall not be extended, Executive shall be entitled to a lump-sum payment payable
within thirty (30) days of the Termination Date equal to the sum of (i) two (2)
times the annual Base Salary rate in effect immediately prior to the Termination
Date, plus (ii) to the extent earned and not already paid, any bonus payable
pursuant to Paragraph 3 for the prior fiscal year. Furthermore, in such event,
Executive shall be entitled to the continuation of benefits set forth in
Paragraph 11 below.
-4-
(b) For Cause, by Executive other than for Constructive Termination, or
upon Death or Total and Permanent Disability. In the event the Company shall
terminate Executive's employment for Cause, or Executive shall terminate his
employment for other than Constructive Termination, or Executive gives written
notice under Paragraph 2(b) of his desire to end the automatic extension of the
Employment Term, or in the event of the death or total and permanent disability
of Executive pursuant to Paragraph 5, then Executive shall be entitled as of the
Termination Date to no compensation under this Agreement, except as provided in
Paragraph 12.
(c) Termination following a Change of Control. In the event that,
following a Change of Control (as defined below) of the Company, (i) Executive's
employment hereunder is terminated by the Company without Cause under Paragraph
7, or (ii) Executive's employment is terminated by Executive for a Constructive
Termination, or (iii) if the Company gives Executive written notice under
Paragraph 2(b) above that the Employment Term shall not be extended, Executive
shall be entitled to a lump-sum payment payable within thirty (30) days of the
expiration of the Employment Term equal to the sum of (i) three (3) times the
annual Base Salary rate in effect immediately prior to such Termination Date,
plus (ii) to the extent earned and not already paid, any bonus payable pursuant
to Paragraph 3 for the prior fiscal year. Furthermore, in such event, Executive
shall be entitled to the continuation of benefits set forth in Paragraph 11
below.
As used herein, a "Change of Control" shall be deemed to have occurred upon
the occurrence of any of the following:
(i) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of the
Company;
(ii) individuals who, as of the date hereof, constitute the entire Board
of Directors of the Company (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board of Directors
(hereinafter referred to as a "Board Change"), provided that any individual
becoming a director subsequent to the date hereof whose election or
nomination for election was approved by a vote of at least a majority of
the then Incumbent Directors shall be, for purposes of this provision,
considered as though such individual were an Incumbent Director; or
(iii) any consolidation or merger of the Company (including, without
limitation, a triangular merger) where the shareholders of the Company,
immediately prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own, directly or
indirectly, shares representing in the aggregate more than fifty percent
(50%) of the combined voting power of all the outstanding securities of the
corporation issuing cash or securities in the consolidation or merger (or
of its ultimate parent corporation, if any); or
(iv) any "person," as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (or any successor provision)
(the "Exchange Act") (other than Xxxxxx Xxxx, the Company, any employee
benefit plan of the Company or any entity organized, appointed or
established by the Company
-5-
for or pursuant to the terms of any such plan), together with all
"affiliates" and "associates" (as such terms are defined in Rule 12b-2
under the Exchange Act or any successor provision) of such person, shall
become the "beneficial owner" or "beneficial owners" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act or any successor provision),
directly or indirectly, of securities of the Company representing in the
aggregate (A) in the event the Company is not a "Reporting Company"
(meaning a Company that is subject to the reporting requirements of the
Exchange Act and has registered shares of a class of equity securities
pursuant to Section 12(g) or 12(b) of the Exchange Act), fifty percent
(50%) or more or (B) in the event the Company is a Reporting Company,
twenty-five percent (25%) or more of either (1) the then outstanding shares
of Common Stock of the Company or (2) the combined voting power of all then
outstanding securities of the Company having the right under ordinary
circumstances to vote in an election of the Board of Directors of the
Company.
10. Equity Compensation. No later than the effective date of the
-------------------
Company's initial public offering, the Company shall grant to Executive, an
option (which shall, in the discretion of Executive, be either a non-qualified
option or an incentive option within the meaning of Section 422 of the Internal
Revenue Code ("Section 422") (or any combination thereof), provided that any
incentive option must comply with all applicable provisions of Section 422) to
purchase 400,000 shares of the common stock of the Company pursuant to the
Company's 1998 Employee, Director and Consultant Stock Plan at a per share
exercise price equal to the price to the public in the initial public offering.
The option will have a term of ten years. The option will become exercisable for
80,000 shares on the first anniversary of the grant of the option and the
remainder of the option will become exercisable in 48 equal monthly installments
over the subsequent four years. The option will be subject to such other terms
as deemed appropriate by the Board or its Compensation Committee and set forth
in the applicable option agreement. In the event of a Change of Control
following the Company's initial public offering, the option will become fully
exercisable.
11. Continuation of Benefits. In the event Executive's employment
------------------------
hereunder is terminated by Executive for a Constructive Termination or by the
Company without Cause or if the Company gives Executive written notice under
Paragraph 2(b) above that the Employment Term shall not be extended, then
Executive shall continue to be entitled to the insurance benefits to which he
was entitled, pursuant to Paragraph 4(b) hereof, as of immediately preceding the
applicable Termination Date at the Company's expense for the period of time
following the Termination Date until the date which is two (2) years after the
Termination Date.
12. Accrued Compensation. In the event of any termination of Executive's
--------------------
employment for any reason, Executive (or his estate) shall be paid such portion
of Executive's Base Salary as has accrued by virtue of his employment during the
period prior to termination and has not yet been paid, together with any amounts
for accrued but unused vacation time and for expense reimbursement and similar
items which have been properly incurred in accordance with the provisions hereof
prior to termination and have not yet been paid. Such amounts shall be paid
within thirty (30) days of the Termination Date.
-6-
13. Confidential Information. The Executive shall not use for his own
------------------------
advantage or disclose any proprietary or confidential information relating to
the business operations or properties of the Company or any other entity
directly or indirectly controlled by the Company (each an "Affiliate") or any of
their respective customers, suppliers, servicers, licensors or licensees, unless
such information has become public through no fault of the Executive. Upon
termination of the Executive's employment, the Executive will surrender and
deliver to the Company all documents and information of every kind relating to
or connected with the Company or any Affiliate and their respective businesses,
customers, suppliers, servicers, landlords, licensors and licensees.
14. Non-compete.
-----------
(a) During Executive's employment under this Agreement or otherwise and
for a period of one (1) year after the Termination Date, Executive will not,
without the express written consent of the Company, anywhere in the United
States or any territory or possession thereof or in any foreign country in which
the Company was active as of the Termination Date: (i) compete with the Company
or any Affiliate; or (ii) otherwise interfere with, disrupt or attempt to
interfere with or disrupt the relationship between the Company or an Affiliate
and any person or business that was a customer, supplier, lessor, licensor,
contractor or employee of the Company or such Affiliate on the Termination Date
or within two (2) years prior to the Termination Date. In addition, for a period
of one (1) year after the Termination Date, Executive will not, directly or
indirectly, solicit or endeavor to entice away from the Company any of its
employees.
(b) The term "compete" as used in this Paragraph 14 means directly or
indirectly, or by association with any entity or business, either as a
proprietor, partner, employee, agent, consultant, director, officer, shareholder
or in any other capacity or manner to solicit for hire, hire, sell to, rent
from, or otherwise conduct any business related to the Internet-based retail
sale of computer hardware, software or peripherals or any other material
business conducted by the Company or which the Company has made plans to conduct
at the Termination Date.
(c) The foregoing shall not prohibit Executive from owning not more than
one percent (1%) of the securities of a company that is publicly traded on a
securities exchange or over-the-counter market, provided that Executive does not
otherwise have any relationship with such company.
15. Indemnification; Insurance. During the period of Executive's
--------------------------
employment hereunder and thereafter, the Company agrees to indemnify Executive
in his capacity as an officer of the Company to the maximum extent permitted
under applicable state law, and, without limiting the foregoing, the Company
will pay all expenses incurred by Executive in accordance with Section 145(e) of
the Delaware General Corporation Law; this provision will survive the
termination of this Agreement. Further, if available upon payment of a
reasonable premium as determined by the Board, the Company will secure standard
Director and Officer Liability Insurance covering Executive in his capacity as
an officer of the Company to the extent such insurance is secured for other
senior executives of the Company.
-7-
16. General.
-------
(a) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy, (iii) sent by overnight courier, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company: Cyberian Outpost, Inc.
00 X. Xxxx Xxxxxx
Xxxx, Xxxxxxxxxxx 00000
Attn: Chief Financial Officer
If to Executive: Xxxxxx Xxxx
00 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, (iii) if sent by overnight courier, on
the next business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
-8-
(e) Parties. This Agreement is personal and shall in no way be subject to
assignment by Executive. This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns either by merger,
operation of law, consolidation, assignment, purchase or other acquisition of a
controlling interest in the business of the Company, and shall be binding upon
and shall inure to the benefit of Executive, his heirs, executors,
administrators, personal and legal representatives, distributees, devisees,
legatees, successors and permitted assigns. As used in this Agreement, "the
Company" shall mean the Company as hereinbefore defined and any successor as
aforesaid.
(f) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof.
(g) Jurisdiction and Service of Process. Any legal action or proceeding
with respect to this Agreement shall be brought in the courts of the State of
Connecticut or of the United States of America for the District of Connecticut.
By execution and delivery of this Agreement, each of the parties hereto accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the party at its address set forth in Paragraph 16(a)
hereof.
(h) Severability. The parties intend this Agreement to be enforced as
written. However, if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(i) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of the
terms or provisions hereof.
(j) No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
-9-
(k) Expenses. The Company will reimburse the Executive for his reasonable
legal fees in connection with the negotiation of this Agreement.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
CYBERIAN OUTPOST, INC.
By: /s/ XXXXXXXXX X. XXXX
-------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Chief Financial Officer
/s/ XXXXXX XXXX
-------------------------------
Xxxxxx Xxxx
-10-
