EMPLOYMENT AGREEMENT
AGREEMENT dated as of May 7, 1999 between IBS Interactive, Inc., a
Delaware corporation (the "Company") with its corporate offices at 0 Xxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxx Xxxxxx 00000, and Xxxxxx Xxxxxxx (the
"Executive"), 0000 Xxxxxxxxxxx Xxxxxx, #0X, Xxxxxxxxxx, Xxxxxxxx 00000.
RECITALS
WHEREAS, Company desires to employ Executive and Executive desires to
be employed by the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment; Term.
(a) Employment Subject to the terms and conditions set forth herein,
the Company agrees to employ and Executive agrees to serve as the Company's
Chief Financial Officer, to perform such services, including but not limited to
financial reporting, negotiating acquisitions and communications with financial
investors, research analysts and banks, and have such powers and authority as
are specified in the Company's Restated By-Laws, as in effect from time to time,
or as may be assigned to the Executive by the Company's Board of Directors,
provided, that, the same is not inconsistent with such position. Executive
agrees that he will use his full business time to promote the interests of the
Company and its affiliates and to fulfill his duties hereunder. Nothing in this
Agreement shall however preclude Executive from engaging, so long as, in the
reasonable determination of the Company's Board of Directors, such activities do
not interfere with the execution of his duties and responsibilities hereunder,
in charitable and community affairs, from managing any passive investment made
by Executive in publicly traded equity securities or other property (provided,
that, no such investment may exceed 5% of the equity of any entity (with the
exception of Medworks Corporation, IVF Technology Corporation, Edgewise Press
and Middleton's The Spindle Rail Company), without the prior approval of the
Company's Board of Directors) or from serving, subject to the prior approval of
the Company's Board of Directors, as a member of boards of directors or as a
trustee of any other corporation, association or entity. For purposes of the
preceding sentence, any approval of the Company's Board of Directors required
herein shall not be unreasonably withheld.
(b) Term. Unless sooner terminated pursuant to Section 3, the term of
Executive's employment pursuant to this Agreement shall commence on the date set
forth above (the "Effective Date") and shall continue thereafter for a period of
three years.
2. Compensation. During the employment term under this Agreement, the
Company shall compensate Executive as follows:
(a) Base Salary. Subject to adjustment as set forth below, the Company
will pay Executive an annual salary at a rate of One Hundred Fifteen Thousand
Dollars ($115,000) per year, payable in substantially equal monthly
installments, or more frequently in accordance with Company's usual payroll
policy. On each anniversary of the Effective Date, Executive's then existing
base salary will automatically increase at the rate of 10% per year and in the
discretion of the Compensation Committee (or Board of Directors, if at the time
there shall be no Compensation Committee) at such additional rate or amounts as
the Compensation Committee shall deem appropriate. Any such increases granted in
the discretion of the Compensation Committee will be retroactive to the
beginning of the then current fiscal year. The Company will review annually
Executive's performance and compensation.
(b) Performance Bonus. Executive shall be entitled to such bonus
compensation as the Compensation Committee deems appropriate. Such bonus
compensation shall be based, in part, on the achievement of performance criteria
established by the Compensation Committee, including criteria relating to the
profitability of the Company.
(c) Participation in Employee Stock Ownership Plan. The Company hereby
awards to Executive an option to purchase One Hundred Fifty Thousand (150,000)
shares of the Company's Common Stock at a price per share of $21.50 which
options shall vest ratably over a three (3) year period, pursuant to the terms
and conditions, including but not limited to those relating to the vesting of
such options, as set forth in the Company's 1999 Stock Ownership Plan and 1999
Stock Option Plan Agreement, copies of which are attached hereto and made a part
hereof as Exhibits A and B, respectively. In addition, during the period of
Executive's employment, Executive will be entitled to further participate in the
Company's 1999 Stock Option Plan (or such other successor plan), as the Board of
Directors, in its sole discretion, may determine.
(d) Benefits. Executive will be eligible to participate in all benefit
programs of the Company which are in effect for its senior executive personnel
and, to the extent available to executive personnel, its employees generally
from time to time.
(e) Vacation. Executive will be entitled each year to vacation for a
period or periods not inconsistent with the normal policy of Company in effect
from time to time, but in any event not less than twenty vacation days each year
and to such holidays as may be customarily afforded to its employees by the
Company, during which periods Executive's compensation shall be paid in full.
(f) Reimbursement of Expenses.
(i) All reasonable travel and entertainment expenses incurred by
Executive in the course of fulfilling this Agreement or otherwise promoting the
Company and its business shall be reimbursed by the Company. Such reimbursement
shall be made to Executive promptly following submission to the Company of
receipts and other documentation of such expenses reasonably satisfactory to the
Company.
(ii) In addition to the expenses reimbursable pursuant to paragraph (i)
above, the Company shall also pay to Executive a monthly allowance of $400 for
automobile expenses, provided, however, that the Company shall be entitled to
withhold from such allowance, any amounts required to be withheld by applicable
federal, state or local tax laws.
3. Termination.
(a) Death and Legal Incapacity. Executive's employment hereunder shall
terminate upon Executive's death or legal incapacity.
(b) Disability. Executive's employment hereunder may be terminated by
the Company in the event of Executive's physical or mental incapacity or
inability to perform his duties as contemplated under this Agreement for a
period of at least one hundred twenty (120) consecutive days.
(c) For Cause. Executive's employment hereunder may be terminated after
the expiration of the respective time periods set forth below by the Company for
cause ("Cause") upon the occurrence of any of the following events:
(i) Executive's intentional breach of any provision hereof, which
breach shall not have been cured within 20 days after written notice thereof
from the Company (or cure commenced within said 20 day period if said breach is
not curable within said 20 day period) which breach has a material adverse
effect on the Company;
(ii) Executive's intentional violation of any other duty or obligation
owed by Executive to the Company which violation shall not have been cured
within 20 days after written notice thereof from the Company (or cure commenced
within said 20 day period if said violation is not curable within said 20 day
period) which violation has a material adverse effect on the Company.
(iii) Executive is convicted or pleads guilty or nolo contendre to any
felony (other than traffic violation) or any crime involving fraud, dishonesty
or misappropriation;
(iv) Executive willfully fails to perform and discharge his duties
hereunder in a competent manner and such failure shall continue for a period in
excess of 20 days after written notice thereof specifying the failures is given
by the Company to Executive.
(v) Executive willfully engages in misconduct that causes material harm
to the Company and such misconduct shall continue for a period in excess of 20
days after written notice thereof specifying such misconduct and the resulting
harm is given by the Company to Executive.
(d) Consent of Directors. Termination of this Agreement by the Company
for reasons other than: (i) for Cause or (ii) Executive's death, legal capacity
or disability must be approved by a vote of 2/3 of the members of the Company's
Board of Directors.
(e) For Good Reason. Executive may immediately terminate his employment
hereunder for good reason ("Good Reason") in the event:
(i) The Company assigns to Executive any duties or responsibilities
inconsistent with Section 1, which assignment is not withdrawn within 20
business days after Executive's notice to the Company of his reasonable
objection thereto; or
(ii) The Company breaches any material provision of this Agreement and
such breach and the effects thereof are not remedied by the Company within 20
business days after Executive's notice to the Company of the existence of such
breach.
(f) Effect of Termination.
(i) If the Company terminates Executive's employment for reasons other
than for Cause, or Executive's death, legal incapacity or disability or
Executive terminates this Agreement for Good Reason, the obligations of
Executive under this Agreement will terminate except that the covenants
contained in Section 4(a) shall continue indefinitely. In such event, for a
period of one (1) year after the date of Executive's termination, the Company
shall pay Executive, in accordance with customary payroll procedures,
Executive's base salary as then in effect. Additionally, any and all options,
warrants or other securities awarded to Executive pursuant to the Company's 1998
Stock Option Plan or any other similar plan shall, as of the date of Executive's
termination, immediately vest and become exercisable and all such options,
warrants or other securities shall remain exercisable by Executive for the
duration of the period during which the options, warrants or other securities
would have remained exercisable if Executive had remained employed by the
Company.
(ii) Except as otherwise provided herein, if Executive terminates his
employment for any reason other than Good Reason or Executive's employment is
terminated due to Executive's death, legal incapacity or disability, the
obligations of Executive and the Company under this Agreement will terminate
except that the covenants of Executive contained in Section 4(a) shall continue
indefinitely and the covenants of Executive contained in Section 4(d) shall
continue until the first anniversary of the date of Executive's termination. In
such event, Executive shall be entitled to receive only the compensation
hereunder accrued and unpaid as of the date of Executive's termination.
(iii) No amount payable to Executive pursuant to this Agreement shall
be subject to mitigation due to Executive's acceptance or availability of other
employment.
4. Restrictive Covenants; Non-Competition.
Executive in consideration of his employment hereunder agrees as
follows:
(a) Except as otherwise permitted hereby, or by the Company's Board of
Directors, Executive shall treat as confidential and not communicate or divulge
to any other person or entity any information related to the Company or its
affiliates or the business, affairs, prospects, financial condition or ownership
of the Company or any of its affiliates (the "Information") acquired by
Executive from the Company or the Company's other employees or agents, except
(i) as may be required to comply with legal proceedings (provided, that, prior
to such disclosure in legal proceedings Executive notifies the Company and
reasonably cooperates with any efforts by the Company to limit the scope of such
disclosure or to obtain confidential treatment thereof by the court or tribunal
seeking such disclosure) or (ii) while employed by the Company, as Executive
reasonably believes necessary in performing his duties. Executive shall use the
Information only in connection with the performance of his duties hereunder, and
not otherwise for his benefit or the benefit of any other person or entity. For
the purposes of this Agreement, Information shall include, but not be limited
to, any confidential information concerning clients, subscribers, marketing,
business and operational methods of the Company or its affiliates and its and
its affiliates' clients, subscribers, contracts, financial or other data,
technical data or any other confidential or proprietary information possessed,
owned or used by the Company. Excluded from Executive's obligations of
confidentiality is any part of such Information that: (i) was in the public
domain prior to the date of commencement of Executive's employment with the
Company or (ii) enters the public domain other than as a result of Executive's
breach of this covenant. This Section (4)(a) shall survive the expiration or
termination of the other provisions of this Agreement.
(b) Executive shall fully disclose to the Company all discoveries,
concepts, and ideas, whether or not patentable, including, but not limited to,
processes, methods, formulas, and techniques, as well as improvements thereof or
know-how related thereto (collectively, "Inventions") concerning or relating to
the business conducted by the Company and concerning any present or prospective
activities of the Company which are published, made or conceived by Executive,
in whole or in part, during Executive's employment with the Company.
(c) Executive shall make applications in due form for United States
letters patent and foreign letters patent on such Inventions at the request of
the Company and at its expense, but without additional compensation to
Executive. Executive further agrees that any and all such Inventions shall be
the absolute property of Company or its designees. Executive shall assign to the
Company all of Executive's right, title and interest in any and all Inventions,
execute any and all instruments and do any and all acts necessary or desirable
in connection with any such application for letters patent or to establish and
perfect in the Company the entire right, title, and interest in such Inventions,
patent applications, or patents, and shall execute any instrument necessary or
desirable in connection with any continuations, renewals, or reissues thereof or
in the conduct of any related proceedings or litigation.
(d) During Executive's employment with the Company and for a period of
one (1) year after the earlier of the expiration date of this Agreement or the
termination of Executive's employment hereunder by the Company for Cause or by
Executive (other than for Good Reason) or subsequent to a Change in Control, as
hereinafter defined:
(i) Executive will not, in any geographical area within which the
Company is, at the time of Executive's termination or during the term of
Executive's employment, marketing its products or services or conducting other
business activities, directly or indirectly, engage in, own or control an
interest in (except as a passive investor in publicly held companies and except
for investments held at the date hereof) or act as an officer, director, or
employee of, or consultant or adviser to, any firm, corporation or institution
directly or indirectly that is in competition with the Company at the time of
Executive's termination or during the term of Executive's employment with the
Company; and
(ii) Executive will not recruit or hire any employee of the Company, or
otherwise induce such employee to leave the employment of the Company, to become
an employee of or otherwise be associated with Executive or any company or
business with which Executive is or may become associated.
5. Change of Control.
In the event of a Change of Control, the following provisions shall
apply:
(a) If, immediately upon a Change of Control or at any time within one
(1) year thereafter, Executive is no longer employed by the Company (or any
entity to which this Agreement may be assigned in connection with such Change of
Control) for any reason other than (i) for Cause or (ii) Executive's death,
legal incapacity or disability, Executive shall be entitled to receive, within
10 days after the termination date, a lump sum payment ("Change of Control
Payment") equal to the amount of Executive's annual base salary then in effect
plus any other amounts accrued and unpaid as of the date of termination.
Notwithstanding the foregoing, if Executive shall so request, any Change of
Control Payment may be paid to Executive in substantially equal monthly
installments, or more frequently in accordance with the Company's usual payroll
policy.
(b) For purposes of this Section 5, a "Change of Control" shall mean
(i) any transaction or series of transactions (including, without limitation, a
tender offer, merger or consolidation) the result of which is that any "person"
or "group" (within the meaning of Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), other than the Principals and their
Related Parties (as such terms are defined herein) or an entity controlled by
each of the Principals and their Related Parties, becomes the "beneficial owner"
(as defined in Rule 13(d)(3) under the Exchange Act) of more than 50 % of the
total aggregate voting power of all classes of the Company's outstanding voting
stock and/or warrants or options to acquire such voting stock, calculated on a
fully diluted basis or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Company's Board
of Directors (together with any new directors whose election by stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors then in office unless such majority of
the directors then in office has been elected or nominated for election by the
Principals or their Related Parties or any entity controlled by each of the
Principals or their Related Parties. For purposes hereof, (x) "Principals" means
each of Xxxxxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxx, Xx.;
and (y) "Related Party" with respect to any Principal means (A) the spouse or
immediate family member of such Principal or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or persons beneficially holding an 80% or more controlling interest of which
consists of such Principal and/or such other persons referred to in the
immediately preceding clause (A).
0.Xx Violation.
Executive warrants that the execution and delivery of this Agreement
and the performance of his duties hereunder will not violate the terms of any
other agreement to which he is a party or by which he is bound. Additionally,
Executive warrants that Executive has not brought and will not bring to the
Company or use in the performance of Executive's responsibilities at the Company
any materials or documents of a former employer that are not generally available
to the public, unless Executive has obtained express written authorization from
the former employer for their possession and use. Executive represents that he
is not and, since the commencement of Executive's employment with the Company
has not been a party to any employment, proprietary information,
confidentiality, or noncompetition agreement with any of Executive's former
employers which remains in effect as the date hereof. The warranties set forth
in this Section 6 shall survive the expiration or termination of the other
provisions of this Agreement.
7. Breach by Executive.
Both parties recognize that the services to be rendered under this
Agreement by Executive are special, unique and extraordinary in character, and
that in the event of the breach by Executive of the terms and conditions of this
Agreement to be performed by him or in the event Executive performs services for
any person, firm or corporation engaged in a competing line of business with
Company, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, whether in law or
in equity, to, by way of illustration and not limitation, obtain damages for any
breach of this Agreement, or to enforce the specific performance thereof by
Executive, or to enjoin Executive from competing with the Company or, performing
services for himself or any such other person, firm or corporation. The Company
may obtain an injunction restraining any such breach by Executive and no bond or
other security shall be required in connection therewith. The Company and
Executive each consent to the jurisdiction of the Superior Court of the State of
New Jersey, located in Hackensack, New Jersey, and the United States Federal
District Court for the District of New Jersey.
8. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, its successors, and assigns and may not be assigned by Executive.
(b) This Agreement contains the entire agreement of the parties hereto
and supersedes all prior or concurrent agreements, whether oral or written,
relating to the subject matter hereof. This Agreement may be amended only by a
writing signed by the party against whom enforcement is sought.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey without regard to its conflicts of
laws, rules or principles.
(d) Any notices or other communications required or permitted hereunder
shall be in writing and shall be deemed effective when delivered in person or,
if mailed, on the date of deposit in the mails, postage prepaid, to the other
party at the respective address of such party set forth herein or to such other
address as shall have been specified in writing by either party to the other in
accordance herewith.
(e) The provisions of Sections 4(a), 4(d) and 6 and the other
provisions of this Agreement which by their terms contemplate survival of the
termination of this Agreement, shall survive termination of this Agreement and
be deemed to be independent covenants.
(f) If any term or provision of this Agreement or its application to
any person or circumstance is to any extent invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision shall
be valid and enforced to the fullest extent permitted by law.
(g) No delay or omission to exercise any right, power or remedy
accruing to any party hereto shall impair any such right, power or remedy or
shall be construed to be a waiver of or an acquiescence to any breach hereof. No
waiver of any breach of this Agreement shall be deemed to be a waiver of any
other breach of this Agreement theretofore or thereafter occurring. Any waiver
of any provision hereof shall be effective only to the extent specifically set
forth in the applicable writing. All remedies afforded under this Agreement to
any party hereto, by law or otherwise, shall be cumulative and not alternative
and shall not preclude assertion by any party hereto of any other rights or the
seeking of any other rights or remedies against any other party hereto.
9.Indemnification.
The Company agrees to indemnify Executive to the fullest extent
permitted by applicable law, as such law may be hereafter amended, modified or
supplemented and to the fullest extent permitted by each of the Company's
Restated Certificate of Incorporation and the Company's Restated By-Laws, as
from time to time amended, modified or supplemented. The Company further agrees
that Executive is entitled to the benefits of any directors and officers
liability insurance policy, in accordance with the terms and conditions of that
policy, if such a policy is maintained by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
COMPANY
IBS INTERACTIVE, INC.
By:/s/ Xxxxxxxx X. Xxxxxxxx, Xx.
Xxxxxxxx X. Xxxxxxxx, Xx.
President and CEO
EXECUTIVE
/S/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
