Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of this 1st day
of March, 2000, by and between Xxxxxx.xxx, Inc., a Delaware corporation (the
"COMPANY"), and Xxxxx Xxxxxx (the "EXECUTIVE").
RECITALS:
A. The Company is actively engaged in operating an e-commerce site
(Xxxxxx.xxx) which facilitates both the purchase and sending of liquor, wine,
and other alcoholic or non-alcholic beverage by businesses and individuals, for
gift delivery and personal consumption.
B. The Company is currently expanding its business by further utilizing
its existing network of affiliates in the alcholic beverage industry to reduce
the cost and increase the efficiency at each tier of the alcholic beverage
distribution system.
C. The Company desires to employ Executive to further its business and
Executive desires to be employed by the Company, subject to the terms,
conditions and covenants hereinafter set forth.
D. As a condition of the Company entering into this Agreement with the
Executive, Executive has agreed to execute and deliver the
Confidentiality/Invention and Non-Compete Agreement attached hereto as EXHIBIT A
(the "Confidentiality Agreement").
NOW, THEREFORE, in consideration of the foregoing and the agreements,
covenants and conditions set forth herein, the Executive and the Company hereby
agree as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby employs, engages and hires
Executive, and Executive hereby accepts employment, upon the terms and
conditions set forth in this Agreement. The Executive shall serve as the Chief
Executive Officer of the Company, reporting only to the Board of Directors of
the Company. Executive shall have and fully perform such duties and
responsibilities that are commensurate and consistent with his position, as may
be, from time to time, assigned to him by the Board of Directors of the Company.
As the Chief Executive Officer, Executive's duties shall include, but not be
limited to, participating with the Board of Directors in setting the strategic
plan of the Company, primary responsibility for implementing the Company's
strategic plan, and Executive shall have the authority to hire and fire all
operating employees of the Company. All executive officers of the Company shall
report to Executive.
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1.2 ACTIVITIES AND DUTIES DURING EMPLOYMENT. Except as provided below,
Executive represents and warrants to the Company that he is free to accept
employment with the Company, and that he has no prior or other commitments or
obligations of any kind to anyone else which would hinder or interfere with his
acceptance of his obligations under this Agreement, or the exercise of his best
efforts as an officer and employee of the Company. During the Employment Term
(as defined below), Executive agrees:
(a) to devote substantially all of his business, time, attention
and efforts to the faithful and diligent performance of his services to
the Company;
(b) to faithfully serve and further the interests of the Company in
every lawful way, giving honest, diligent, loyal and cooperative
service to the Company; and
(c) to comply with all lawful rules and policies which, from time
to time, may be adopted by the Company.
Notwithstanding the foregoing, the Executive shall be permitted to be a director
of xxxx.xxx and PCG, Inc., and to provide consulting services for his private
renumeration to xxxx.xxx and R3Media; PROVIDED, HOWEVER, in no event shall these
activities, individually or in the aggregate, interfere in any manner with the
performance of his duties for the Company.
ARTICLE II
TERM
2.1 TERM. The term of employment under this Agreement shall be one (1)
year (the "INITIAL TERM"), commencing on the date of the Agreement, which
Employment Term shall automatically renew for one year periods unless terminated
by either party by written notice not less than ninety (90) days prior to
expiration of the then-current term (such term of employment, as it may be
extended or terminated, is herein referred to as the "EMPLOYMENT TERM").
2.2 TERMINATION. The employment of Executive may be terminated as
follows:
(a) By either party upon at least ninety (90) days written notice
to the other party, in which event such termination shall be effective
upon expiration of the notice period. If Executive terminates his
employment pursuant to this SECTION 2.2(a), such termination is
hereinafter referred to as a "VOLUNTARY TERMINATION".
(b) By the Company immediately for "CAUSE." For the purpose of this
Agreement, "CAUSE" shall mean that the Board of Directors concludes, in
good faith and after reasonable investigation that (i) Executive
engaged in conduct amounting to fraud, embezzlement, or willful or
illegal misconduct in connection with Executive's duties under
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this Agreement; (ii) the Executive has been indicted or convicted by a
court of proper jurisdiction of (or his written, voluntary and freely
given confession to) a crime which constitutes a felony and/or results
in material injury to the Company's property, operation or reputation;
(iii) Executive materially breached the Confidentiality Agreement; or
(iv) the Executive has substantially and continually failed to perform
duties reasonably directed by the Board of Directors or Chief
Executive Officer after written notice from the Board of Directors and
a fifteen (15) day opportunity to cure.
(c) Upon the death of Executive.
(d) By either party upon the Total Disability of the Executive. The
Executive shall be considered to have a Total Disability for purposes
of this Agreement if he is unable by reason of accident or illness to
substantially perform his employment duties, and is expected to be in
such condition for periods totaling four (4) months (whether or not
consecutive) during any consecutive period of twelve (12) months.
During a period of disability prior to termination hereunder, Executive
shall continue to receive his base salary.
(e) By the Executive upon five (5) business days notice to the
Company for Good Reason, which notice shall state the reason for
termination. For the purpose of this Agreement, "GOOD REASON" shall
mean:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status,
offices and titles, office facilities, staff support and reporting
requirements), authority, duties or responsibilities as
contemplated by ARTICLE I of this Agreement, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities without prior written consent
of the Executive, excluding for this purpose an isolated action not
taken in bad faith and which is remedied by the Company within five
(5) business days after receipt of written notice thereof given by
the Executive;
(ii) any material failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated failure
not occurring in bad faith and which is remedied by the Company
within five (5) business days after receipt of written notice
thereof given by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(iv) requiring Executive to report to work as his principal
place of business to a location outside of the greater metropolitan
area of New York City.
If there is any dispute between the parties as to whether Cause, Good Reason, or
Total Disability exists, either party may submit the dispute to binding
arbitration. Any such arbitration proceeding
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will be conducted in New York, New York and except as otherwise provided in this
Agreement, will be conducted under the auspices of JAMS/Endispute, in accordance
with the then current Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator(s) shall allow such discovery as the arbitrator(s)
determines appropriate under the circumstances. The arbitrator(s) shall
determine which party, if either, prevailed and shall award the prevailing party
its costs and attorneys fees. The award and decision of the arbitrator shall be
conclusive and binding on all parties to this Agreement and judgment on the
award may be entered in any court of competent jurisdiction. The parties
acknowledge and agree that any arbitration award may be enforced against either
or both of them in a court of competent jurisdiction and each waives any right
to contest the validity or enfor ceability of such award. The parties further
agree to be bound by the provisions of any statute of limitations which would be
applicable in a court of law to the controversy or claim which is the subject of
any arbitration proceeding initiated under this Agreement. The parties further
agree that they are entitled in any arbitration proceeding to the entry of an
order, by a court of competent jurisdiction pursuant to an opinion of the
arbitrator, for specific performance of any of the requirements of this
Agreement.
2.3 CESSATION OF RIGHTS AND OBLIGATIONS: SURVIVAL OF CERTAIN
PROVISIONS. On the date of expiration or earlier termination of the Employment
Term for any reason, all of the respective rights, duties, obligations and
covenants of the parties, as set forth herein, shall, except as specifically
provided herein to the contrary, cease and become of no further force or effect
as of the date of said termination, and shall only survive as expressly provided
for herein.
2.4 TREATMENT OF EXECUTIVE UPON TERMINATION OF EMPLOYMENT. In lieu of
any severance under any severance plan that the Company may then have in effect,
the Company shall pay to the Executive, and the Executive shall be entitled to
receive in one lump sum payment, the following amounts within thirty (30) days
of the date of a termination of the Employment Term:
(a) VOLUNTARY TERMINATION OR FOR CAUSE. Upon a Voluntary
Termination of the Employment Term by the Executive, the expiration of
the Employment Term because the Executive elects not to extend the
Employment Term, or a termination of the Employment Term for Cause by
the Company, the Executive shall be entitled to receive his current
Base Salary (as defined herein) and expense reimbursement through the
date of termination.
(b) DEATH, TOTAL DISABILITY, GOOD REASON AND WITHOUT CAUSE. Upon
the termination of the Employment Term by reason of the Death or Total
Disability of the Executive, by the Executive for Good Reason, by the
Company without Cause (before and after a Change in Control (as defined
in the Option Agreement)), or the expiration of the Employment Term
because the Company did not elect to extend the Employment Term, the
Executive shall be entitled to receive (i) Base Salary and expense
reimbursement through the date of termination, (ii) any Performance
Bonus or other bonus earned through the date of termination, (iii) an
amount equal to Executive's pro-rated bonus for the 180 day period
following the date of termination calculated as if the Executive had
met the greater of (A)
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the actual percentage of target achieved by Executive by the date of
termination, or (B) fifty percent (50%) of the target, and (iv) an
amount equal to one year of his current Base Salary.
In addition, the Executive shall be entitled to continue to receive, at the
Company's sole expense, all health and disability benefits for a period of one
year after the termination date if Executive's Employment Term was terminated
for any reason set forth in SECTION 2.4(b) above (except death).
2.5 NO MITIGATION OF DAMAGES DEFENSE. The Company shall not be entitled
to interpose in any forum or proceedings whatsoever the defense of "mitigation
of damages," notwithstanding that the Executive shall have entered into or could
have entered into any other employment.
ARTICLE III
COMPENSATION OF BENEFITS
3.1 COMPENSATION.
(a) During the Employment Term, the Company shall pay Executive a
base salary ("BASE SALARY") of Two Hundred Twenty-Five Thousand Dollars
($225,000) per year. The Base Salary will be reviewed annually by the
Board of Directors with a view to increasing it. The Company shall not
be permitted to reduce the Base Salary.
(b) The Company shall, in addition to Executive's Base Salary, pay
Executive an annual performance bonus (the "PERFORMANCE BONUS") in an
amount based on the Company obtaining certain targeted financial goals,
each as established by the Board of Directors of the Company, after
consultation with the Executive. Initially, the Executive shall be
entitled to earn the following Performance Bonuses:
(i) The Company will pay Executive $25,000 upon the Company
reaching $8.0 million dollars in gross revenue, calculated on a
rolling twelve month period (the "$8.0 Million Target").
(ii) The Company will pay Executive $100,000 upon the Company
reaching $10.0 million dollars in gross revenue, calculated on a
rolling twelve month period.
(iii) The Company will pay Executive incremental cash bonuses
in amounts determined by the Board of Directors of the Company
after consultation with Executive, upon the Company reaching gross
revenue targets (as also determined by the Board of Directors)
between $10.1 million and $11.9 million dollars, calculated on a
rolling twelve month period. The Company and Executive
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shall endeavor to determine the incremental bonus amounts within
ninety (90) days of the date hereof.
(iv) The Company will pay Executive $100,000 upon the Company
reaching gross revenues of $12 million dollars, calculated on a
rolling twelve month period.
The Executive shall remain eligible to earn the foregoing Performance Bonuses
for the period beginning on the date hereof and ending on the date that is
twelve months after a Financing Event. For purposes of this Agreement, a
"Financing Event" shall mean the earlier to occur of: (i) the closing of an
initial public offering of the Company's shares of common stock that raises a
minimum of $20 million dollars ("IPO"), and (ii) the closing of a financing
(equity and/or debt) raising at least $20 million dollars. As used herein,
"gross revenue" shall be calculated using the same accounting concepts, rules
and procedures as used in calculating gross revenue on the Company's income
statement for the year ending December 31, 1999. All Performance Bonuses earned
hereunder shall be payable within fourteen (14) days of the date the revenue
target was achieved by the Company.
(c) The Company shall pay Executive a bonus of $50,000 within
fourteen (14) days of a Financing Event.
(d) The Company may pay to the Executive such additional bonuses as
the Board of Directors of the Company may deem appropriate.
3.2 PAYMENT. All compensation shall be payable in intervals in
accordance with the general payroll payment practice of the Company. The
compensation shall be subject to such withholdings and deductions by the Company
as are required by law.
3.3 OPTIONS. Concurrently with the commencement of Executive's
employment, the Company shall grant to the Executive stock options to purchase
up to seven percent (7%) of the number of outstanding shares of the Company's
common stock, calculated on a fully diluted basis (exclusive of Executive's
Option) which shall be protected against dilution through a Financing Event
(including any warrants issued in connection with an IPO). The options will have
an exercise price of $3.52 per share and will be subject to vesting and have
such other terms as provided in the form of the Option Agreement attached hereto
as EXHIBIT B.
3.4 BUSINESS EXPENSES.
(a) REIMBURSEMENT. The Company shall reimburse the Executive for
all reasonable business expenses incurred by him in connection with the
performance of his duties hereunder, including, but not limited to,
reasonable telephone, travel expenses and entertainment expenses.
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(b) ACCOUNTING. The Executive shall provide the Company with an
accounting of his expenses, which accounting shall clearly reflect
which expenses are reimbursable by the Company. The Executive shall
provide the Company with such other supporting documentation and other
substantiation of reimbursable expenses as will conform to Internal
Revenue Service or other requirements. All such reimbursements shall be
payable by the Company to the Executive within a reasonable time after
receipt by the Company of appropriate documentation therefor.
3.5 OTHER BENEFITS. Executive shall be entitled to participate in any
retirement, pension, profit-sharing, stock option, health plan, incentive
compensation and welfare or any other benefit plan or plans of the Company which
may now or hereafter be in effect for executive officers of the Company. Until
such time as the Company establishes a group health benefit plan for its
executive officers, the Company shall pay Executive's insurance premiums for his
current medical benefits. In addition, during the Employment Term, the Company
will pay the premiums on a [20] year term life insurance policy in the amount of
$1.0 million dollars. The Company shall secure director and officer insurance
for the benefit of Executive and all of the other executive officers and
directors of the Company.
ARTICLE IV
MISCELLANEOUS
4.1 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received
(a) when delivered, if delivered personally, (b) four days after mailing, when
sent by registered or certified mail, return receipt requested and postage
prepaid, (c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service,
and (d) on the date of delivery if delivered by telecopy, receipt confirmed,
provided that a confirmation copy is sent on the next business day by first
class mail, postage prepaid, in each case addressed as follows:
To Executive at his home address.
With a copy to: Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx
City Place II, 10th Floor
Hartford, Connecticut 06103
Attn: Xxxxxxx Xxxxxxxx
To Company at: Xxxxxx.xxx, Inc.
0000 X. Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: Board of Directors
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Ph:
Fax:
With a copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
4.2 ENTIRE AGREEMENT; AMENDMENTS, ETC. This Agreement and the
Agreements referred to herein contain the entire agreement and understanding of
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter thereof including that certain letter agreement
between Executive and the Company dated March 14, 2000. No modification,
amendment, waiver or alteration of this Agreement or any provision or term
hereof shall in any event be effective unless the same shall be in writing,
executed by both parties hereto, and any waiver so given shall be effective only
in the specific instance and for the specific purpose for which given.
4.3 BENEFIT. This Agreement shall be binding upon, and inure to the
benefit of, and shall be enforceable by, the heirs, successors, legal
representatives and permitted assignees of Executive and the successors,
assignees and transferees of the Company. This Agreement or any right or
interest hereunder may not be assigned by Executive or the Company without the
prior written consent of the other party.
4.4 NO WAIVER. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder or pursuant hereto shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or pursuant thereto.
4.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but, if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. If any part of any
covenant or other provision in this Agreement is determined by a court of law to
be overly broad thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that the court shall substitute a judicially
enforceable limitation in its place, and that as so modified the covenant shall
be binding upon the parties as if originally set forth herein.
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4.6 COMPLIANCE AND HEADINGS. Time is of the essence of this Agreement.
The headings in this Agreement are intended to be for convenience and reference
only, and shall not define or limit the scope, extent or intent or otherwise
affect the meaning of any portion hereof.
4.7 GOVERNING LAW. The parties agree that this Agreement shall be
governed by, interpreted and construed in accordance with the laws of the State
of New York, and the parties agree that subject to the arbitration provision set
forth in SECTION 2.2, any suit, action or proceeding with respect to this
Agreement shall be brought in the courts of the U.S. District Court for the
Southern District of New York. The parties hereto hereby accept the exclusive
jurisdiction of those courts for the purpose of any such suit, action or
proceeding. Venue for any such action, in addition to any other venue permitted
by statute, will be New York, New York.
4.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
4.9 RECITALS. The Recitals set forth above are hereby incorporated in
and made a part of this Agreement by this reference.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered as of the day and year first above
written.
XXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
EXECUTIVE:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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