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Exhibit 10.17
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of June 25, 1999,
between XXXxxx.xxx LLC, an Ohio limited liability company (together with its
successors and assigns permitted under this Agreement, the "Company"), and Xxxxx
X. Xxxxxx (the "Employee").
R E C I T A L S
A. In connection with the Contribution Agreement by and among KB
Online Holdings LLC, XxxxxXxxx.xxx, Inc., and XXXxxx.xxx LLC, dated as of May
18, 1999 (the "Contribution Agreement"), the Employee will become an employee of
the Company;
B. The Company and the Employee desire to enter into an employment
arrangement;
C. The Company has determined that it is in the best interests of
the Company and its equityholders to enter into this Agreement setting forth the
obligations and duties of both the Company and the Employee; and
D. The Company wishes to assure itself of the services of the
Employee for the period hereinafter provided, and the Employee is willing to be
employed by the Company for said period, upon the terms and conditions provided
in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Employee (individually, a
"Party" and together, the "Parties") agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Employee, and
the Employee hereby agrees to serve the Company, on the terms and conditions set
forth herein.
2. TERM. The term of this Employment Agreement shall begin on the
date hereof and shall continue until terminated as hereinafter provided (the
"Term of Employment").
3. POSITION AND DUTIES.
(a) The Employee shall serve as Vice President - Product
Development and Online Marketing of the Company, and in such other
capacity or capacities as the Chief Executive Officer ("CEO") or Board
of Managers (the "Board") of the Company shall reasonably determine,
without additional compensation therefor.
(b) The Employee shall devote his frill time and best efforts to
his employment and perform diligently such duties as the CEO or the
Board shall reasonably determine. The Employee shall devote his entire
working time and attention to the performance of his responsibilities
hereunder.
4. BASE SALARY. The Employee shall receive from the Company an
annual base salary, in accordance with the regular payroll practices of the
Company, of One Hundred Thirty
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Thousand Dollars ($130,000). During the Term of Employment, the Board shall
review the base salary no less often than annually for possible increase, any
such increase to be based on the performance of the Employee.
5. BONUS.
(a) ANNUAL. The Employee shall be eligible for an annual bonus as
set forth on EXHIBIT A. Any upward adjustment of the bonus amount or
reduction or waiver with respect to any established objectives during
the Term of Employment shall be at the sole discretion of the Board.
(b) FIRST ANNIVERSARY. The Employee shall be entitled to a
one-time lump sum cash bonus in the amount of Ten Thousand Dollars
($10,000) following the first anniversary of the date of this
Agreement; provided, however, that the Employee shall forfeit such
bonus in the event that the Employee terminates his employment with
the Company prior to the first anniversary date hereof.
6. EXPENSE REIMBURSEMENT. During the Term of Employment, the
Employee shall be entitled to prompt reimbursement by the Company for all
reasonable out-of-pocket expenses incurred by him in performing services under
this Agreement, upon submission of such accounts and records as may be required
under Company policy.
7. OTHER BENEFITS.
(a) GENERALLY. During the Term of Employment, the Employee will
be entitled to such medical, dental, life insurance, 401(k), option
plan and such other similar employment privileges and benefits as are
afforded generally from time to time by the Company and two (2) weeks
paid vacation time per year to be taken at times mutually acceptable
to the Company and the Employee. The Employee shall be awarded options
to acquire the number of Units in the Company set forth on Exhibit B
pursuant to a grant under the Company's 1999 Option Plan on terms and
conditions to be approved by the Board.
(b) RELOCATION COSTS. The Company shall promptly reimburse the
Employee for all reasonable out-of-pocket expenses incurred by him in
connection with his relocation from his current residence in San
Francisco, California to the Denver, Colorado area for the purpose of
performing services under this Agreement, upon submission of such
accounts and records as may be required under Company policy.
8. TERMINATION OF EMPLOYMENT. The Employee's employment may be
terminated under the following circumstances:
(a) DEATH. The Employee's employment is terminated upon his
death.
(b) DISABILITY. The Employee's employment may be terminated by
the Company, due to illness or other physical or mental disability of
the Employee, resulting in his inability
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to perform substantially his duties under this Agreement for a period
of one hundred eighty (180) or more consecutive days or for two
hundred seventy (270) days in the aggregate during any consecutive
twelve (12) month period ("Disability").
(c) NOTICE. The Employee's employment may be terminated by either
Party upon thirty (30) days written notice to the other Party.
(d) OTHER POSITIONS. Upon termination of this Agreement by the
Employee, the Employee shall be deemed to have resigned from all
offices and directorships, if applicable, held by the Employee with
the Company or any of its affiliates or subsidiaries.
9. COMPENSATION UPON TERMINATION.
(a) If the Employee's employment is terminated as a result of the
Employee's death or Disability, the Employee, or his estate, shall be
entitled to:
(i) any base salary earned but not yet paid, payable in
accordance with the regular payroll practices of the Company;
(ii) any bonus awarded pursuant to Section 5 of this
Agreement but not yet paid, payable in accordance with the
regular payroll practices of the Company;
(iii) reimbursement in accordance with this Agreement of any
business expense incurred by the Employee but not yet paid; and
(iv) other benefits accrued and earned by the Employee
through the date of his death or Disability in accordance with
the applicable plans and programs of the Company.
(b) If the Employee's employment is terminated by the Company or
by the Employee upon thirty (30) days written notice, the Employee
shall be entitled to:
(i) his base salary, at the rate in effect on the date of
his termination of employment, until the earlier of (A) the first
anniversary of the date of termination or (B) the date he begins
working for a subsequent employer not in violation of Section 10
of this Agreement (the "Severance Period"), payable in accordance
with the regular payroll practices of the Company;
(ii) any annual bonus awarded and any first anniversary
bonus earned pursuant to Section 5 of this Agreement but not yet
paid and all or a portion of any annual bonus that he would have
received pursuant to Section 5 for the year in which the
termination occurred (pro rata, according to the number of days
the Employee was employed by the Company during such year), in
each case payable in accordance with the regular payroll
practices of the Company;
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(iii) continued participation in all employee benefit plans
or programs in which he was participating on the date of his
termination of employment, until the end of the Severance Period;
(iv) reimbursement in accordance with this Agreement of any
business expenses incurred by the Employee but not yet paid to
him on the date of his termination of employment; and
(v) other benefits accrued and earned by the Employee
through the date of his termination in accordance with the
applicable plans and programs of the Company.
(c) Any amounts due under this Section 9 are in the nature of
severance payments or liquidated damages or both, and shall fully
compensate the Employee and his dependents or beneficiaries, as the
case may be, for any and all direct damages and consequential damages
that any of them may suffer as a result of termination of the
Employee's employment, and they are not in the nature of a penalty.
10. COVENANTS AND CONFIDENTIAL INFORMATION.
(a) The Employee agrees that so long as he is employed by the
Company and for a period of one (1) year thereafter and, as to
subsection 10(a)(v) below, at any time after the Term of Employment he
will not, directly or indirectly, do or suffer any of the following:
(i) Own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or
otherwise affiliated or associated as a consultant, independent
contractor or otherwise with, any other corporation, partnership,
proprietorship, firm, association or other business entity or
otherwise engage in any business that is engaged in any manner
In, or otherwise competes with, the business of the Company or
any of the Company's affiliates or subsidiaries (as conducted on
the date the Employee ceases to be employed by the Company in any
capacity, including as a consultant) in any state in the United
States or any foreign country in which the Company or such
affiliates or subsidiaries are then doing business and then only
with respect to the business of the Company, its affiliates or
subsidiaries then being conducted in such states or countries;
provided, however, that the ownership of not more than 1% of the
stock of any publicly traded corporation shall not be deemed a
violation of this covenant.
(ii) Employ, assist in employing, or otherwise associate in
business with any present or former or future employee, officer
or agent of the Company or any of the Company's affiliates or
subsidiaries.
(iii) Induce any person who is an employee, officer, agent,
customer or supplier of the Company or any of the Company's
affiliates or subsidiaries to terminate said relationship.
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(iv) Solicit or direct business of any current or
prospective customers of the Company, its affiliates or
subsidiaries, who are current or prospective customers during the
Term of Employment, either for himself or for any other
individual or entity or advise any person or entity with respect
thereto. As used herein, "customer" means any customer of the
Company or its affiliates or subsidiaries whose identity the
Employee learned through his employment with the Company or with
whom the Employee and/or the Company had business contact during
the twelve (12) month period immediately before the Employee's
employment with the Company terminated.
(v) Disclose, divulge, discuss, copy or otherwise use or
suffer to be used in any manner in competition with' or contrary
to the interests of; the Company or any of the Company's
affiliates or subsidiaries, the customer lists, product research
or engineering data, requirements, prices or other trade secrets
of the Company or any of the Company's affiliates or
subsidiaries, it being acknowledged by the Employee that all such
information regarding the business of the Company and the
Company's affiliates or subsidiaries, compiled or obtained by, or
furnished to, the Employee while the Employee shall have been
employed by or associated with the Company is confidential
information and the Company's exclusive property; provided,
however, that this prohibition will not apply to any item of
confidential information which is otherwise publicly available or
becomes so other than as a result of the Employee's violation of
this Agreement. Upon termination of this Agreement, Employee
shall promptly return to the Company all books, manuals, reports,
client and customer lists, keys and other materials referred to
above and any other materials that belong to the Company.
(b) All business ideas, concepts, inventions, improvements and
developments made or conceived by the Employee during the Term of
Employment and relating to the business of the Company or to any
business or product the Company is considering entering or developing,
shall become and remain the exclusive property of the Company, its
successors and assigns. The Employee will promptly disclose in writing
to the Company all such ideas, concepts, inventions, improvements and
developments, and will cooperate fully in confirming, protecting and
obtaining legal protection of the Company's ownership rights.
(c) The Employee expressly agrees and understands that the remedy
at law for any breach by him of this Section 10 will be inadequate and
that the damages flowing from such breach are not readily susceptible
of being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of the Employee's violation of any legally
enforceable provision of this Section 10, the Company shall be
entitled to seek immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing
in this Section 10 shall be deemed to limit the Company's remedies at
law or in equity for any breach by the Employee of any of the
provisions of this Section 10 that may be pursued or availed of by the
Company.
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(d) In the event that the Employee shall violate any legally
enforceable provision of this Section 10 as to which there is a
specific time period during which he is prohibited from taking certain
actions or from engaging in certain activities, as set forth in such
provision, then such violation shall toll the running of that time
period from the date of its commencement until the date of its
cessation.
(e) The Employee has carefully considered the nature and extent
of the restrictions upon him and the rights and remedies conferred
upon the Company under this Section 10, and hereby acknowledges and
agrees that the same are reasonable in time and territory, are
designed to eliminate competition that would otherwise be unfair to
the Company, do not stifle the inherent skill and experience of the
Employee, would not operate as a bar to the Employee's sole means of
support, are fully required to protect the legitimate interests of the
- Company and do not confer a benefit upon the Company
disproportionate to the detriment to the Employee.
11. WITHHOLDING TAXES. All payments to the Employee or his
beneficiary shall be subject to withholding on account of federal, state and
local taxes as required by law. if any payment hereunder is insufficient to
provide the amount of such taxes required to be withheld, the Company may
withhold such taxes from any other payment due the Employee or his beneficiary.
In the event all cash payments due the Employee are insufficient to provide the
required amount of such withholding taxes, the Employee or his beneficiary,
within five days after written notice from the Company, shall pay to the Company
the amount of such withholding taxes in excess of all cash payments due the
Employee or his beneficiary.
12. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Employee) and assigns. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to (a) a merger or consolidation in which the Company is not the continuing
entity or (b) a sale or liquidation of all or substantially all of the assets
of the Company, provided that the assignee or transferee is the successor to all
or substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it will use its best efforts to cause such
assignee or transferee expressly to assume the liabilities, obligations and
duties of the Company hereunder. No obligations of the Employee under this
Agreement may be assigned or transferred by the Employee.
13. ENTIRE AGREEMENT. Except to the extent otherwise provided herein,
this Agreement contains the entire understanding and agreement between the
Parties concerning the subject matter hereof and supersedes any prior
agreements, whether written or oral, between the Parties concerning the subject
matter hereof.
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14. AMENDMENT OR WAIVER. No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by both the
Employee and an authorized officer of the Company. No waiver by either Party of
any breach by the other Party of any condition or provision contained in this
Agreement to be performed by such other Party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by the Employee or an
authorized officer of the Company, as the case may be.
15. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
16. SURVIVORSHIP. The respective rights and obligations of the
Parties hereunder shall survive any termination of the Employee's employment
with the Company to the extent necessary to the intended preservation of such
rights and obligations as described in this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws.
18. NOTICES. Any notice given to either Party shall be in writing
and shall be deemed to have been given when delivered personally or one (1) day
after having been sent by overnight courier service or three (3) days alter
having been sent by certified or registered mall, postage prepaid, return
receipt requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently give
such notice of:
If to the Company or the Board: XXXxxx.xxx LLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
If to the Employee: Xxxxx X. Xxxxxx
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19. HEADINGS. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
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20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year first above written.
XXXXXX.XXX LLC
By: /s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
Chief Executive Officer
EMPLOYEE
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Vice President - Product Development
and Online Marketing
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EXHIBIT A
The Employee's annual bonus for the first year of this Agreement shall be an
amount equal to .06% of the "Net Revenues" of XXXxxx.xxx LLC for such fiscal
year. Thereafter, the Employee's annual bonus shall be determined by the Board.
The "Net Revenues" shall mean the revenues received during the applicable fiscal
year less returns, rebates and discounts for such fiscal year. The annual bonus
shall be awarded by the Company within thirty (30) days of the determination by
the Company of the "Net Revenues" for the applicable fiscal year.
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EXHIBIT B
The Employee shall be awarded options to acquire 200,000 Units in the Company.
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