Exhibit 99.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of April 16, 2007, by and
between Bluefly, Inc., a Delaware corporation (the "Company"), and Xxxxxxx
Xxxxxx Xxxx ("Clay").
RECITALS
1. The Company desires to retain the services of Clay as Senior
Vice President of Operations and Technology of the Company in accordance with
the terms and conditions of this Agreement.
2. Clay will serve the Company as Senior Vice President of
Operations and Technology 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 Clay agree as
follows:
1. TERM
The Company hereby agrees to employ Clay as Senior Vice President of
Operations and Technology of the Company, and Clay hereby agrees to serve in
such capacity, for a term commencing on April 16, 2007or such other date as the
parties may mutually agree (the "Starting Date") and ending on April 15, 2010
(as the same may be earlier terminated pursuant to the terms of this Agreement,
the "Employment Term"), upon the terms and subject to the conditions contained
in this Agreement.
2. DUTIES
During the Employment Term, Clay shall serve as Senior Vice President
of Operations and Technology of the Company, and shall be responsible for the
duties attendant to such office and such other managerial duties and
responsibilities with the Company consistent with such office as may be
reasonably assigned to her from time to time.
The principal location of Clay's employment shall be in the New York
City vicinity (i.e., within a 50 mile radius), although Clay understands and
agrees that she will be required to travel from time to time for business
reasons. Clay shall diligently and faithfully perform her obligations under the
Agreement and shall devote her full professional and business time to the
performance of her duties as Senior Vice President of Operations and Technology
of the Company during the Employment Term. During the Employment Term, Clay
shall not, directly or indirectly, render business services to any other person
or entity, without the consent of the Company's Chief Executive Officer.
3. BASE SALARY
For services rendered by Clay to the Company during the
Employment Term, the Company shall pay her a base salary of $225,000 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 Clay's performance during such year.
4. BONUS/EQUITY GRANT
a. During the Employment Term, Clay shall be eligible to
receive a bonus of up to 35% of her base salary, as determined by the Company's
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
Clay on the Starting Date of Deferred Stock Units ("DSUs") with respect to
150,000 shares of the Company's common stock, $.01 par value ("Common Stock").
The DSUs shall be issued pursuant to, and in accordance with, the Company's 2005
Stock Incentive Plan (the "Plan"). The DSUs shall vest in twelve equal quarterly
installments, with the first quarter beginning on the Starting Date. The shares
of Common Stock issuable pursuant to any vested DSUs will be delivered to Clay
on the earliest of (a) the three-year anniversary of the Starting Date; (b) the
date of her death; or (c) the date on which she is disabled (as such term is
defined in Section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as
amended.
5. EXPENSE REIMBURSEMENT AND PERQUISITES
a. During the Term of this Agreement, Clay shall be
entitled to reimbursement of all reasonable and actual out-of-pocket expenses
incurred by her in the performance of her 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,
Clay shall be entitled to reasonable vacation with full pay in accordance with
the Company's then-current vacation policies and shall be no less than four
weeks; provided, however, that Clay shall schedule such vacations at times
convenient to the Company.
x. Xxxx shall be entitled to participate in all health
insurance, dental insurance, long-term disability insurance and other employee
benefit plans instituted by the
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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.
6. NON-COMPETITION; NON-SOLICITATION
a. In consideration of the offer of employment,
severance benefits and DSUs to be issued hereunder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, during the term of this Agreement and during the "Non-Competition
Period" (as defined in paragraph 6(c) below) Clay 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 her 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 Clay from investing her
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 him beneficially owning, at any time, more than 3% of the
publicly-traded equity securities of such Competitive Business.
x. Xxxx 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. Clay agrees that any
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breach of the covenants contained in this paragraph 6 would irreparably injure
the Company. Accordingly, Clay agrees that the Company, in addition to pursuing
any other remedies it may have in law or in equity, may obtain an injunction
against Clay from any court having jurisdiction over the matter, restraining any
further violation of this paragraph 6.
c. For purposes of this agreement, the "Non-Competition
Term" shall mean a period beginning upon the commencement of the Employment Term
and ending on the one (1) year anniversary of the end of the Employment Term.
7. TERMINATION
a. This Agreement, the employment of Clay, and Clay's
position as Senior Vice President of Operations and Technology of the Company
shall terminate upon the first to occur of:
(i) her death;
(ii) her "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 Clay is
unable perform her ordinary and regular duties,
provided that the Company shall give Clay 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 Clay without her consent from her
position as Senior Vice President of Operations and
Technology of the Company, or (B) the material breach
by the Company of this Agreement; provided that no
such breach shall be considered a Constructive
Termination unless Clay 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)
Clay 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 her duties
hereunder, or (2) Clay has willfully and materially
failed to perform her duties hereunder, provided that
the Company shall provide Clay with at least thirty
(30) business days' prior written notice of any such
failure to perform and an opportunity to cure such
failure, to the extent curable or (3) Clay has
willfully or negligently breached the terms and
provisions of this Agreement in any material respect,
provided that the
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Company shall provide Clay with at least ten (10)
business days' prior written notice of any such
breach and an opportunity to cure such breach, to the
extent curable or (4) Clay has failed to comply in
any material respect with the Company's policies of
conduct that have been communicated to her, including
with respect to trading in securities, provided that
the Company shall provide Clay with at least ten (10)
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 Clay, which
shall occur on not less than thirty (30) days prior
written notice from Clay.
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 Clay her base salary, earned bonus not yet paid,
and vested equity grants 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 Clay, in lieu of all salary,
compensation payments and perquisites set forth in paragraphs 3, 4 and 5
(including bonus payments and unvested equity grants, but excluding vested
equity grants) and contingent upon her continued performance of her obligations
under Section 6, severance payments (the "Severance Payments") as follows:
(a) the then-current base salary for a period of ninety
(90) days, if Clay is terminated prior to the end of the first year of the
Employment Term; or
(b) the then-current base salary for a period of hundred
and twenty (120) days, if Clay is terminated after the end of the first year of
the Employment Term
The Severance Payments shall be payable in periodic installments in accordance
with the Company's standard payroll practices and will be subject to any
applicable withholding, and shall be conditioned upon Clay executing a full
release of any claims against the Company, in a form reasonably satisfactory to
the Company.
8. CONFIDENTIALITY
x. Xxxx recognizes that the services to be performed by
her are special, unique and extraordinary in that, by reason of her employment
under this Agreement, she may acquire or has acquired confidential information
and trade secrets concerning the operation of the
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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, Clay covenants and agrees with the Company that she will
not at any time during the Term of this Agreement or thereafter, except in the
performance of her 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 she may learn or has learned by reason of his
association with the Company. If Clay shall be required to make such disclosure
pursuant to court order, subpoena or other government process, she 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 Clay), 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.
Notwithstanding the preceding paragraph, "confidential
information" shall not include any information which
(i) was publicly known and made generally available in
the public domain prior to the time of disclosure by
the Company to Clay;
(ii) becomes publicly known and made generally available
after disclosure by the Company to Clay through no
action of Clay; or
(iii) was known to Clay prior to its disclosure by the
Company or is obtained by Clay from a third party
without a breach of such third party's obligations of
confidentiality.
x. Xxxx 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 Clay 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. Xxxx 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 Clay while performing her services hereunder to 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 Clay hereby assigns to the
Company, without further compensation, all of her 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.
d. At the Company's expense, Clay 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 and at its expense, Clay 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. Xxxx 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. Clay 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
Clay represents and warrants to the Company that she was advised to
consult with an attorney of Clay's own choosing concerning this Agreement.
10. GOVERNING LAW
This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the internal laws of the State
of New York, without giving effect to its conflict of law provisions. Any
dispute arising hereunder shall be subject to the exclusive jurisdiction of the
federal and State courts located in New York, New York, and each of the parties
hereto hereby irrevocably submits to such jurisdiction and waives any objection
to such venue.
11. ENTIRE AGREEMENT
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This Agreement contains all of the understandings between Clay and the
Company pertaining to Clay's employment with the Company, and it supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
between them.
11. 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 Clay 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.
12. NOTICES
Any notice to be given hereunder shall be in writing and delivered
personally or sent by overnight delivery or 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: Chief Executive Officer
If to Clay, to:
at the address then on file in the Company's payroll system
Any such notice shall be deemed given upon receipt.
13. 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.
14. 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 paragraphs.
15. 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/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Chief Operating Officer and
Chief Financial Officer
EMPLOYEE
/s/ Xxxxxxx Xxxxxx Xxxx
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Xxxxxxx Xxxxxx Xxxx
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