EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into as of
March 19, 2008, by and between Bluefly, Inc., a Delaware corporation (the
"Company"), and Kara Xxxxx ("Xxxxx").
RECITALS
--------
1. The Company currently employs Xxxxx pursuant to an Employment
Agreement dated as of March 1, 2002 (as amended to date, the "Previous
Agreement").
2. The parties wish to amend and restate the Previous Agreement in its
entirety pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxx agree
as follows:
1. TERM
----
The Company hereby agrees to employ Xxxxx as Chief Financial Officer of the
Company, and Xxxxx hereby agrees to serve in such capacity, for a term ending on
March 31, 2011 (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, Xxxxx shall serve as Chief Financial Officer 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 Jenny's employment shall be in the New York City
vicinity (i.e., within a 20 mile radius), although Xxxxx understands and agrees
that she will be required to travel from time to time for business reasons.
Xxxxx 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 Chief Financial Officer of the Company during the
Employment Term.
7
3. BASE SALARY
-----------
For services rendered by Xxxxx to the Company during the Employment Term,
the Company shall pay her a base salary of $250,000 per year, payable in
accordance with the standard payroll practices of the Company, subject to annual
increases in the sole discretion of the Compensation Committee of the Company's
Board of Directors (the "Compensation Committee"), taking into account the
financial and operating performance of the Company's business and divisions and
a qualitative assessment of Jenny's performance during such year.
4. BONUS; OPTION
-------------
a. During the Employment Term, Xxxxx shall be eligible to receive
a bonus set by the Compensation Committee in its sole discretion and based on
such factors as it deems appropriate. All bonuses shall be paid in accordance
with the Company's standard payroll practices, net of any applicable
withholding.
b. Concurrently with the execution of this Agreement, the Company
hereby agrees to cause the issuance to Xxxxx of options ("Options") to purchase
200,000 shares of the Company's common stock, $.01 par value ("Common Stock").
The Options shall be issued pursuant to, and in accordance with, the Company's
2005 Stock Incentive Plan (the "Plan"), and shall be issued as of March 31,
2008. The Options shall be Incentive Stock Options (as defined in the Plan) to
the extent allowed by law, and shall be exercisable at a price equal to the Fair
Market Value (as defined in the Plan) of the Common Stock on the date of
issuance. The Options shall vest over a thirty-six (36) month period as follows:
(i) 16.667% of the Options shall vest on the six month anniversary of the date
of grant and (ii) 2.778% of the Options shall vest each month thereafter until
all such Options shall have vested; provided, that, in the event that Jenny's
employment with the Company is terminated as a result of a Change of Control (as
hereinafter defined) at any time any unvested Options shall automatically vest
as of the date of such termination. The Term of each Option shall be 10 years
from the date of grant.
c. For purposes of this Agreement, "Change of Control" shall be
deemed to occur upon:
(1) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more (on a fully diluted basis) of either (A) the then
outstanding shares of common stock of the Company, taking into account as
outstanding for this purpose such common stock issuable upon the exercise of
options or warrants, the conversion of convertible stock or debt, and the
exercise of any similar right to acquire such common stock (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally
8
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this Agreement, the following
acquisitions shall not constitute a Change of Control: (I) any acquisition by
the Company or any "Affiliate" (as defined below), (II) any acquisition by any
employee benefit plan sponsored or maintained by the Company or any Affiliate,
(III) any acquisition by Quantum Industrial Partners LDC, Xxxxx Fund Management
LLC, and/or SFM Domestic Investments LLC and/or any of their affiliates
(collectively, "Xxxxx"), or (IV) any acquisition which complies with clauses
(A), (B) and (C) of sub-paragraph (a)(5) hereof;
(2) Individuals who, on the date hereof, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof, whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;
(3) the dissolution or liquidation of the Company;
(4) the sale of all or substantially all of the business or
assets of the Company; or
(5) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company
that requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (A) more
than fifty percent (50%) of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving Corporation"), or (y)
if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of sufficient voting securities eligible to elect a
majority of the directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the Outstanding Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which the Outstanding Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of the Company's Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no Person (other than Xxxxx
or any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of thirty percent (30% ) or more of the total voting
power of the outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
9
Surviving Corporation) and (C) at least a majority of the members of the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Board members at the time of the Board's approval of the
execution of the initial agreement providing for such Business Combination.
d. For purposes of this Agreement, the term "Affiliate" shall mean
any entity that directly or indirectly is controlled by, controls or is under
common control with the Company.
5. EXPENSE REIMBURSEMENT AND PERQUISITES
-------------------------------------
a. During the Term of this Agreement, Xxxxx 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, Xxxxx shall
be entitled to reasonable vacation with full pay in accordance with the
Company's then-current vacation policies; provided, however, that Xxxxx shall
schedule such vacations at times convenient to the Company.
c. During the term of this Agreement, the Company shall provide an
annual allowance of ten thousand dollars ($10,000) for the purchase of term life
insurance by the Company for the benefit of Xxxxx (which shall be in lieu of any
other life insurance benefit) and the purchase of a supplemental disability
insurance policy. Xxxxx shall be entitled to participate in all health
insurance, dental insurance, long-term disability insurance and other employee
benefit plans instituted by the 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 Options to be granted to Xxxxx hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
during the Non-Competition Term, Xxxxx shall not, without the prior written
consent of the Company, anywhere in the world, directly or indirectly, (i) enter
into the employ of or render any services to any Competitive Business; (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 while Xxxxx was employed by
the Company; 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
10
"Competitive Business" shall mean any person, corporation, partnership, firm or
other entity which sells or has plans to sell ten (10) or more brands of luxury
or high-end designer apparel and/or fashion accessories at prices that are
consistently discounted to manufacturer's suggested retail prices. However,
nothing in this Agreement shall preclude Xxxxx 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 her beneficially owning, at any time, more than three percent
(3%) of the publicly-traded equity securities of such Competitive Business. 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 two
(2) year anniversary of the end of the Employment Term.
b. Xxxxx and the Company agree that the covenants of
non-competition and non-solicitation contained in this paragraph 6 are
reasonable covenants under the circumstances, and further agree that if, in the
opinion of any court of competent jurisdiction, such covenants are not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of these covenants as to the
court shall appear not reasonable and to enforce the remainder of these
covenants as so amended. Xxxxx agrees that any breach of the covenants contained
in this paragraph 6 would irreparably injure the Company. Accordingly, Xxxxx
agrees that the Company, in addition to pursuing any other remedies it may have
in law or in equity, may obtain an injunction against Xxxxx from any court
having jurisdiction over the matter, restraining any further violation of this
paragraph 6.
7. TERMINATION
-----------
a. This Agreement, the employment of Xxxxx, and Jenny's position
as Chief Financial Officer 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 Xxxxx is unable perform her
ordinary and regular duties, provided that the Company shall
give Xxxxx 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
Xxxxx without her consent from her position as Chief
Financial Officer 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
Xxxxx has provided the Company with at least thirty (30)
days' prior written notice of such
11
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) Xxxxx has
been convicted of a felony or any serious crime involving
moral turpitude, or engaged in materially fraudulent or
materially dishonest actions in connection with the
performance of her duties hereunder, or (2) Xxxxx has
willfully and materially failed to perform her duties
hereunder, provided that the Company shall provide Xxxxx
with at least ten (10) business days' prior written notice
of any such failure to perform and an opportunity to cure
such failure, to the extent curable or (3) Xxxxx has
willfully or negligently breached the terms and provisions
of this Agreement in any material respect, provided that the
Company shall provide Xxxxx 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) Xxxxx 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 Xxxxx
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 Xxxxx, which shall
occur on not less than thirty (30) days prior written notice
from Xxxxx.
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 Xxxxx her base salary 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 Xxxxx, in lieu of all salary, compensation payments and perquisites set
forth in paragraphs 3, 4 and 5 (including bonus payments and unvested option
grants, but excluding vested option 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 one hundred and
eighty (180) days; and
(b) the Company shall maintain in effect, or reimburse Xxxxx for the
cost of maintaining, the medical and dental insurance and hospitalization plans
of the Company, as well as any Company sponsored life insurance policy in which
Xxxxx participates as of the date of such termination, for a period of one year
from the date of termination.
12
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 Xxxxx executing a full
release of any claims against the Company, in a form reasonably satisfactory to
the Company, as well as her continued compliance with the terms of this
Agreement.
c. Notwithstanding anything herein to the contrary, if any
payments due under this Agreement (including, but not limited to any payments
related to the Options) would subject Xxxxx to any tax imposed under Section
409A of the Code if such payments were made at the time otherwise provided
herein, then the payments that cause such taxation shall be payable in a single
lump sum on the first day which is at least six (6) months after the date of
Jenny's "separation from service" as set forth in Code Section 409A(2)(A)(i) and
the official guidance issued thereunder.
8. CONFIDENTIALITY
---------------
a. Xxxxx 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 Company, its predecessors, and/or
its affiliates, the use or disclosure of which could cause the Company, or its
affiliates substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly, Xxxxx covenants
and agrees with the Company that 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 Xxxxx
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 Xxxxx), 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.
13
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
Xxxxx;
(ii) becomes publicly known and made generally available after
disclosure by the Company to Xxxxx through no action of
Xxxxx; or
(iii) was known to Xxxxx prior to its disclosure by the Company or
is obtained by Xxxxx from a third party without a breach of
such third party's obligations of confidentiality.
b. Xxxxx confirms that all confidential information is and shall
remain the exclusive property of the Company. All memoranda, notes, reports,
software, sketches, photographs, drawings, plans, business records, papers or
other documents or computer-stored or disk-stored information kept or made by
Xxxxx relating to the business of the Company shall be and will remain the sole
and exclusive property of the Company and 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.
c. Xxxxx shall make full and prompt disclosure to the Company of
all inventions, improvements, ideas, concepts, discoveries, methods,
developments, software and works of authorship, whether or not copyrightable,
trademarkable or licensable, which are created, made, conceived or reduced to
practice by Xxxxx 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 Xxxxx 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, Xxxxx shall assist the Company in
obtaining, maintaining and enforcing patent, copyright and other forms of legal
protection for intellectual property in any country. Upon the request of the
Company and at its expense, Xxxxx shall sign all applications, assignments,
instruments and papers and perform all acts necessary or desired by the Company
in order to protect its rights and interests in any Developments.
e. Xxxxx 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
14
damages, the right to equitable relief including, as appropriate, all injunctive
relief or specific performance or other equitable relief. Xxxxx understands and
agrees that the rights and obligations set forth in paragraph 8 shall survive
the termination or expiration of this Agreement.
9. REPRESENTATIONS AND WARRANTIES
------------------------------
a. Xxxxx represents and warrants to the Company that she was
advised to consult with an attorney of Jenny's own choosing concerning this
Agreement.
b. Xxxxx represents and warrants to the Company that, to the
best of her knowledge, the execution, delivery and performance of this Agreement
by Xxxxx complies with all laws applicable to Xxxxx or to which her properties
are subject and does not violate, breach or conflict with any agreement by which
she or her assets are bound or affected.
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
----------------
This Agreement contains all of the understandings between Xxxxx and the
Company pertaining to Jenny's employment with the Company, and it supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
between them, including (without limitation) the Previous Agreement.
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 Xxxxx and by an
officer of the Company duly authorized to do so. Except as otherwise
specifically provided in this Agreement, no waiver by either party of any breach
by the other party of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior or subsequent time.
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
15
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 Xxxxx, 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
------
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.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
BLUEFLY, INC.
By: /s/ Xxxxx Xxxxx
-------------------------
Xxxxx Xxxxx
President and Chief Operating Officer
EMPLOYEE
/s/ Kara Xxxxx
----------------------------------
Kara Xxxxx
17
