EMPLOYMENT AGREEMENT
BETWEEN iTURF INC.
AND
XXXXXXX X. XXXX
DATED AS OF APRIL 5, 1999
iTurf Inc. (the "Company"), a Delaware corporation, and Xxxxxxx X.Xxxx
(the "Executive") agree as follows:
1. Employment and Duties
(a) The Company shall employ the Executive, and the Executive shall serve
the Company, as the chief executive officer and president of the Company for the
Employment Period (as defined below) as the Company's board of directors (the
"Board") may from time to time direct. The Executive shall use his best efforts
to promote the interests of the Company, and shall perform his duties faithfully
and diligently, consistent with sound business practices.
(b) The Executive shall devote substantially his full business time to the
performance of his duties for the Company.
(c) For purposes of this Agreement, "Affiliate" shall mean any corporation
or other entity of which the Company (or any corporation or entity controlling
the Company) has at least a 49% equity or voting interest.
2. Compensation
(a) As compensation for all services to be rendered by the Executive
during his employment under this agreement, the Executive shall be entitled to a
base salary at the rate of $100,000 a year (payable in equal installments at
least twice a month), subject to increases as provided in section 2(b).
(b) The Company may, in the sole and absolute discretion of the board of
directors, from time to time increase the Executive's base salary and award the
Executive such bonuses as it considers appropriate.
3. Term. (a) The "Employment Period" shall commence on the date of the
completion of the Company's initial public offering and continue until the third
anniversary thereof; provided that the Employment Period shall terminate
earlier: (i) upon Executive's resignation, death or permanent disability or
incapacity (if in the good faith determination of the Company's board of
directors, such disability or incapacity has prevented the Executive from
substantially performing his duties and obligations under this Agreement during
any period of nine consecutive calendar months and the Company gives notice to
the Executive not earlier than 30 days and not later than 90 days after the
expiration of the nine months (in which case the Executive's employment under
this Agreement shall terminate when that notice is given) ("Disability"); (ii)
in accordance with subparagraph (c) below; or (iii) upon written notice to
Executive, at any time, for Cause, as defined in subparagraph (b) below.
(b) For purposes of this Agreement, "Cause" shall mean (i) a
material breach of this Agreement by Executive that, if capable of being
remedied, Executive fails to remedy within 30 days after written notice, (ii)
any breach of Executive's duty of loyalty to the Company or any of its
affiliates or act of fraud or intentional dishonesty with respect to the Company
or any of its Affiliates, which, with respect to any of the foregoing, causes
material harm to the Company's business, (iii) the commission by Executive of a
felony or crime involving moral turpitude or other wrongful act or omission
causing
material harm to the standing and reputation of the Company and its Affiliates,
(iv) failure by the Executive to report for work for ten (10) consecutive
business days other than for reasonable personal excuses, which failure
Executive fails to cure after written notice, or (vi) willful misconduct or
gross negligence in the performance of Executive's duties to the Company, which
conduct is material and demonstrably injurious to the Company and, if capable of
being remedied, is not remedied within 30 days.
(c) Executive may, at any time during the Employment Period by
written notice to the Company, terminate the Employment Period for "Good Reason"
effective upon such notice. "Good Reason" means (i) a material breach by the
Company of any material provision of this Agreement that the Company fails to
remedy or cease within 30 days after written notice thereof to the Company; or
(ii) a relocation by the Company of the Executive's offices to a geographic
location outside the metropolitan New York area.
4. Separation Payments.
(a) In the event of termination of the Employment Period upon
Executive's resignation (other than for Good Reason), death or Disability, the
Company shall promptly pay to Executive all sums accrued and unpaid to the date
of termination (including unused vacation in accordance with the policies of the
Company with respect to its executive officers then in effect) and Executive
shall not be entitled to receive his Base Salary, any severance pay or any
fringe benefits or bonuses for periods after such termination of the Employment
Period.
(b) If the Employment Period is terminated by the Company without
Cause or by the Executive for Good Reason in accordance with Section 3(c), the
Company (i) shall continue to pay the Executive the Base Salary (determined
pursuant to Section 3) in effect at the time of termination for the remainder of
the Employment Period had it not been so terminated, and (ii) shall pay to
Executive within ten days thereof all sums accrued and unpaid to the date of
termination. The provisions of this Section 4(b) shall constitute Executive's
sole and exclusive remedy in connection with termination of the Employment
Period by the Company without Cause or by the Executive for Good Reason in
accordance with Section 3(c).
5. Expenses; Fringe Benefits
During the Employment Period:
(a) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(b) The Executive shall be entitled to six weeks vacation each year.
(c) Except to the extent xXXxX*s Inc. ("xXXxX*s") provides comparable
benefits to the Executive, the Company shall provide the Executive with medical
insurance, disability insurance and life insurance under policies no less
favorable to the Executive than the ones (i) currently in effect and (ii)
offered from time to time to the Company's other executive officers. In
addition, the Company may obtain key-man term life insurance on the life of the
Executive, and the Company shall be the beneficiary under such policy.
(d) The Company shall provide the Executive with an automobile of at
least the same quality as the one he currently uses, and shall pay all expenses
reasonably incurred in connection with his use of that automobile.
(e) The Company shall provide the Executive with an annual allowance of
$20,000 to be applied, in the Executive's discretion, in any combination to one
or more of the following: tax return preparation, financial consulting, estate
planning and/or life/disability insurance premiums or similar professional
services.
6. Non-Competition
(a) Executive agrees that during the Employment Period and for a
period of two years from the termination thereof (the "Non-Competition Period"),
he will not directly, either for his own account or for the benefit of any
person, firm or corporation, engage in any business activity directly
competitive with the Company (a "Competing Business Activity"), provided,
however, that a business activity shall not be deemed to be a Competing Business
Activity if Executive did not have direct or indirect involvement in the
particular competing activity engaged in by the Company.
(b) Executive agrees that during the Non-Competition Period,
Executive shall not discuss or accept any relationship, whether as a consultant,
representative, employee, executive, officer, director, manager or otherwise,
with any person, firm or corporation which is engaged in a Competing Business
Activity.
(c) During the Non-Competition Period, Executive shall not directly
or indirectly own or be a stockholder, partner of, or otherwise participate in
any company that is engaged in a Competing Business Activity. Notwithstanding
the above, Executive may hold up to a one percent (1%) interest in any publicly
held or traded company and shall have an unlimited right to invest in any mutual
fund which is publicly traded or managed by a major financial institution.
(d) During the Non-Competition Period, Executive shall not directly
or indirectly through another person or entity (i) induce or attempt to induce
any employee of the Company or any Affiliate to leave the employ of the Company
or such Affiliate, or in any way interfere with the relationship between the
Company or any Affiliate and any employee thereof, (ii) hire any person who was
an employee of the Company or any Affiliate at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee, consultant or other business relation of the Company or
Affiliate to cease doing business with the Company or such Affiliate, or in any
way interfere with the relationship between any such customer, supplier,
licensee, consultant or business relation and the Company or any Affiliate
(including, without limitation, making any negative statements or communications
about the Company or its Affiliates). Notwithstanding anything to the contrary
contained herein, Executive's obligation under clause (ii) of the preceding
sentence shall terminate six months after an acquisition of the Company by an
unrelated third party.
(e) During the Non-Competition Period, Executive shall inform any
prospective new employer or associate prior to accepting any employment or any
business relationship of the existence of this Agreement and provide such
employer or associate with a copy of this Agreement.
(f) In the event any covenant made in this Agreement shall be more
restrictive than permitted by applicable law, it shall be limited to the extent
which is so permitted. Nothing in this Agreement shall be construed as to
prevent the Company from pursuing any and all remedies available to it for the
breach or threatened breach of covenants made in this Agreement, including
recovery of money damages or temporary or permanent injunctive relief.
Accordingly, Executive acknowledges that the
remedy at law for breach of the provisions of this Agreement may be inadequate
and that, in addition to any other remedy the Company may have, it shall be
entitled to an injunction restraining any breach or threatened breach, without
any bond or other security being required and without the necessity of showing
actual damages.
(g) Notwithstanding anything to the contrary contained in this
Section 6, (i) nothing contained in this Section 6 shall be construed so as to
prohibit the Executive from being employed by a company or entity that engages
in a Competing Business Activity so long as Executive is not responsible for,
does not report to or have any involvement, whether direct or indirect, with any
division or unit of said company engaged in such Competing Business Activity,
and (ii) this Section 6 shall be of no force or effect in the event the
Employment Period is terminated by the Company without Cause.
7. Confidentiality
Executive acknowledges that the information, trade secrets,
observations, confidential knowledge and data obtained by him while employed by
the Company concerning the business, new, planned or existing products and
services, or affairs of the Company, its customers or any affiliate of the
Company ("Confidential Information") are the property of the Company or such
affiliate. Therefore, the Executive agrees that he shall not, at any time during
or after his employment under this Agreement, disclose to any third party except
in the performance of his duties hereunder or as may be required by law, any
Confidential Information except for such information which has become publicly
available other than by an act or omission of the Executive. Executive shall
deliver to the Company at the termination of the Employment Period, or at any
other time the Company may request, all memoranda, notes, plans, records,
reports, computer files, printouts and software and other documents and data
(and all copies thereof) relating to the Confidential Information, work product
or the business of the Company or any affiliate which he may then possess or
have under his control.
8. Relationship with xXXxX*s.
The parties acknowledge that the Executive is the Chief Executive Officer
and Chairman of the Board of Directors of xXXxX*s and that he will allocate his
time and efforts between the Company and xXXxX*s as he sees fit in his good
faith business judgment. Subject to the foregoing, during the term, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the term it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions, (C) manage personal
investments, and (D) serve as Chief Executive Officer and Chairman of the Board
of Directors of xXXxX*s (and in any other positions with xXXxX*s and its
affiliates as Executive deems appropriate) so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement. The Company
shall continue to nominate the Executive as a director of the Company during the
term hereof consistent with the Company's By-Laws.
9. Executive's Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity, and
(iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms. Executive hereby acknowledges and
represents that he has been given the opportunity to consult with independent
legal counsel regarding his rights and obligations under this Agreement and that
he fully understands the terms and conditions contained herein.
10. Miscellaneous
(a) The failure of a party to this agreement to insist on any occasion
upon strict adherence to any term of this agreement shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this agreement. Any waiver must be
in writing. No waiver of any term or condition of this Agreement shall be deemed
to be a waiver of any subsequent breach of that term or condition or any breach
of any other term or condition of this Agreement.
(b) All notices and other communications under this agreement shall be
in writing and shall be deemed given when delivered personally or mailed by
registered mail, return receipt requested, to a party at his or its address as
follows (or at such other address as a party may designate in any notice under
this agreement):
If to the Executive:
If to the Company:
iTurf Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Legal Department
(c) This agreement shall be assigned to and shall inure to the benefit
of any successor to substantially all the assets and business of the Company as
a going concern, whether by merger, consolidation, liquidation or sale of
substantially all the assets of the Company or otherwise, and the Company shall
cause any such successor to assume the Company's obligations under this
agreement (but no such assignment shall relieve the Company of its obligations
under this agreement).
(d) This agreement constitutes the entire understanding of the parties
with respect to the subject matter of this agreement, cannot be changed or
terminated except by a written agreement executed by the parties and shall be
governed by the law of the State of New York applicable to agreements made and
to be performed therein.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same Agreement.
(f) At the election of either party, any controversy or claim arising
out of or relating to this contract, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes, and judgment upon the
award rendered by the arbitrator(s) may be entered by any court having
jurisdiction thereof.
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[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
ITURF INC.
By:/s/ Xxxx X. Xxxxxxx
--------------------------
Its Authorized Signatory
XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxx
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