EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement") made as of this 21st day of January 1998 (the "Effective
Date"), by and between CyberShop International, Inc., a Delaware corporation
(hereinafter "Employer"), and Xxxx Xxxxxx (hereinafter "Executive").
W I T N E S S E T H:
WHEREAS, Employer wishes Executive to serve as an officer and executive of
Employer; and
WHEREAS, Executive wishes to be so employed;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties hereto agree as follows:
1. Commencing as of the Effective Date, Employer employs Executive as Vice
President, Chief Financial Officer and Treasurer of Employer to perform the
duties normally incident to such positions. Executive shall at all times report
to the President of Employer.
2. Executive agrees to devote all of Executive's business time, efforts, skills
and attention to fulfill Executive's duties and responsibilities hereunder
faithfully, diligently and competently.
3. The term of this Agreement shall commence on the Effective Date and shall
terminate one (1) year thereafter, unless sooner terminated as hereinafter
provided, and shall be subject to automatic annual renewal thereafter unless at
least sixty (60)
days prior to the end of the term of this Agreement or any annual renewal period
Executive or Employer shall give written notice to the other that this Agreement
shall not be renewed.
4. Employer shall pay to Executive as compensation for all services to be
rendered by Executive hereunder the following:
(a) A salary at the rate of One Hundred Twenty Thousand and 00/100 ($120,000.00)
Dollars per annum. In the event that an initial public offering of Employer's
securities (the "Public Offering") is consummated, Executive's salary shall be
increased to the rate of One Hundred Forty Thousand and 00/100 ($140,000.00)
Dollars per annum commencing on the date of consummation of the Public Offering.
Such salary is hereinafter referred to as the Base Salary.
(b) Executive shall be eligible for bonuses, at such time and in such amounts as
shall be determined at the discretion of Employer's Board of Directors (the
"Board) based on its assessment of Executive's performance of Executive's duties
and on the financial performance of Employer.
(c) Employer will reimburse Executive for all reasonable travel and business
expenses incurred by Executive in connection with Executive's services hereunder
in accordance with the usual practices and policies of Employer in effect from
time to time, upon presentation of vouchers.
(d) Employer will make available to Executive health benefits currently offered
or during the term of this Agreement are
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offered to other executives of Employer. In addition, Executive will be eligible
for and will be offered participation in any and all group insurance, hospital,
dental, major medical and disability benefits and stock option plans or other
similar fringe benefits which are currently offered or during the term of this
Agreement are offered to other executives of Employer.
5. Subject to the adoption of Employer's 1998 Stock Option Plan (the "Plan") by
the Board, to the approval of the Plan by Employer's stockholders and to the
approval of the grant of options to Executive by the Board, Executive shall be
granted an option or options (the "Option") to purchase 65,000 shares of
Employer's common stock, $.001 par value per share (the "Common stock") from
Employer at an exercise price of $5.00 per share, provided that in the event
that the price per share of Common Stock sold in the Public Offering is less
than $5.00, the Board shall grant an additional number of options to Executive
so that the product of the total number of options granted and the exercise
price per share of Common Stock sold in the Public Offering is equal to 325,000,
the product of the 65,000 options and the $5.00 per share exercise price. In the
event that the Public Offering is not consummated on or prior to May 15, 1998,
the options granted pursuant to this Section 5 shall be canceled and new options
shall be granted to Executive to purchase 65,000 shares of Common Stock at an
exercise price per share equal to the fair market value of the Common Stock on
the May 15th 1998, as determined by the Board in its sole discretion. The Option
shall vest and be exercisable as follows: (i) 1/3 of the shares of
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Common Stock subject to the Option on the first anniversary of the Effective
Date, (ii) 1/3 of the shares of Common Stock subject to the Option on the second
anniversary of the Effective Date, and (iii) 1/3 of the shares of Common Stock
subject to the Option on the third anniversary of the Effective Date, subject to
termination as provided in the Plan, and further subject to termination in the
event that (x) Executive breaches any term hereof, (y) Executive's employment
hereunder is terminated for Cause (as hereinafter defined) or is terminated
without Cause, or (z) Executive voluntarily terminates Executive's employment
hereunder. The Option shall expire five (5) years from the date of vesting. The
terms of the Option shall otherwise be governed by the Plan, as well as the
applicable option agreement to be entered into pursuant to the terms of the
Plan.
6. In the event of Executive's death during the term of this Agreement, this
Agreement shall terminate immediately, provided, however, that Executive's legal
representatives shall be entitled to receive the Base Salary which would
otherwise have been due Executive had he worked through the end of the month in
which Executive died.
7. If during the term of this Agreement, Executive is unable to perform
Executive's duties hereunder on account of illness or other incapacity, and such
illness or other incapacity shall continue for a period of more than three (3)
consecutive months during any twelve (12) month period Employer shall have the
right, on thirty (30) days' notice to Executive, given after such three (3)
month period, to terminate this Agreement. In the
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event of any such termination Employer shall be obligated to pay to Executive
the Base Salary which would otherwise be due Executive until the expiration of
the month of employment during which the termination occurred plus three (3)
additional months of the Base Salary for the year in which Executive was
terminated. If, prior to the date specified on such notice, Executive's illness
or incapacity shall have terminated and Executive shall have taken up the
performance of Executive's duties thereunder, Executive shall be entitled to
resume Executive's employment hereunder as though such notice had not been
given. The Board shall determine in good faith, upon consideration of medical
evidence satisfactory to it, whether Executive by reason of physical or mental
disability shall be unable to perform the services required of Executive
hereunder.
8. If Employer shall terminate Executive's employment hereunder for Cause, or if
Executive shall voluntarily leave Executive's employment hereunder, this
Agreement shall terminate immediately and Employer shall pay to Executive an
amount equal to the Base Salary hereunder through the date of such termination.
Cause shall mean (i) any conviction of any crime (whether or not involving
Employer) constituting a felony in the jurisdiction involved, (ii) engaging in
any substantiated act involving moral turpitude, (iii) engaging in any act
which, in each case, subjects, or if generally known would subject, Employer to
public ridicule or embarrassment, (iv) gross misconduct in the performance of
Executive's duties hereunder, (v) willful failure or refusal to perform such
duties as may be relegated to
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Executive commensurate with Executive's position, or (vi) breach of any
provision of this Agreement by Executive.
9. If Executive's employment is terminated by Employer without Cause, this
Agreement shall terminate immediately, provided, however, that Employer shall be
obligated to pay Executive the Base Salary through the date of such termination.
In addition if termination occurs during the first twelve (12) months of this
Agreement the Executive shall be paid an amount equal to six (6) months of Base
Salary as severance.
10. Executive covenants and agrees with Employer that Executive will not, during
the term of this Agreement and thereafter directly or indirectly use,
communicate, disclose or disseminate to anyone (except to the extent reasonably
necessary for Executive to perform Executive's duties hereunder, except as
required by law or except if generally available to the public otherwise than
through use, communication, disclosure or dissemination by Executive) any
Confidential Information (as hereinafter defined) concerning the businesses or
affairs of Employer or of any of its affiliates or subsidiaries which Executive
may have acquired in the course of or as incident to Executive's employment or
prior dealings with Employer or with any of its affiliates or subsidiaries.
"Confidential Information" shall mean (a) all knowledge, information and
material concerning Employer or its business or the business of any of its
affiliates or subsidiaries that shall become known to Executive as a consequence
of Executive's
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relationship with Employer, (b) all information that has been disclosed to
Employer by any third party under an agreement or circumstances requiring such
information to be kept confidential, and (c) all knowledge, information or
material concerning Inventions that are, under this Agreement, owned by Employer
or assigned by Executive to Employer; provided, that Confidential Information
shall not include knowledge, information or material that is or becomes
generally known or available to others in businesses engaged in by Employer or
to the public (other than through unauthorized disclosure). Confidential
Information shall include without limitation (a) information of a technical
nature, such as information regarding past, present and future research,
financial data, product information, marketing plans, computer programs (whether
in source or object code form or other form and whether contained on program
listings, magnetic tape, magnetic disks, CD ROMs or other media), logic, flow
charts, specifications, documentation and ideas relating to the activities of
Employer, (b) information of a business nature, such as information regarding
past, present and future client development, strategies, procurement
specifications, cost and financial data, contracts, quotations and names of
actual and prospective clients or customers, and (c) all documents, drawings,
reports, client lists, and other physical embodiments of all such information.
"Inventions" shall mean each of the following, but only to the extent they
relate to the business of commerce conducted over the Internet: all inventions,
discoveries, developments, ideas,
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works, improvements, enhancements, works of authorship, products and computer
software, whether or not patentable, and anything else that is subject to or
potentially subject to the patent, copyright or trade secret laws of any
jurisdiction.
11. Executive acknowledges that Executive's services and responsibilities are of
particular significance to Employer and that Executive's position with Employer
has given and will give Executive close knowledge of its policies and trade
secrets. Since Employer is in a creative and competitive business, Executive's
continued and exclusive service to Employer under this Agreement is of a high
degree of importance.
Executive covenants and agrees with Employer that Executive will not, during the
term of this Agreement and for a period of two years after the termination of
Executive's employment hereunder in any manner, directly or indirectly, (i)
induce or attempt to influence any present or future officer, employee, lessor,
lessee, licensor or licensee of Employer or its subsidiaries or its affiliates
to leave its respective employ or solicit or divert or service any of the
customers or clients that Employer or its subsidiaries or its affiliates has or
had in the one (1) year previous to the date of termination of this Agreement,
(ii) engage, in North America or any other territory in which Employer does or
contemplates to do business, in any businesses presently engaged in or to be
engaged in by Employer or its subsidiaries or affiliates during the term of this
Agreement, and (iii) except for ownership of no more than 1% of the capital
stock, be a stockholder of any corporation, or directly or indirectly own,
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manage, operate, conduct, control or participate in the ownership, management,
operation, conduct, control of, accept employment with, or be connected in any
other manner with, any business which engages in any direct competitive activity
including, without limitation, any business which engages in retail commerce
conducted over the Internet in any such geographic region.
12. Executive acknowledges that the remedy at law for any breach or threatened
breach by Executive of the covenants contained in paragraphs 10 and 11 would be
wholly inadequate, and therefore Employer or its subsidiaries or its affiliates
shall be entitled to preliminary and permanent injunctive relief and specific
performance thereof. Paragraphs 10 and 11 constitute independent and separable
covenants that shall be enforceable notwithstanding rights or remedies that
Employer or its subsidiaries or it affiliates may have under any other provision
of this Agreement, or otherwise. If any or all of the foregoing provisions of
paragraphs 10 and 11 are held to be unenforceable for any reason whatsoever, it
shall not in any way invalidate or affect the remainder or this Agreement which
shall remain in full force and effect. If the period of time or geographical
areas specified in paragraphs 10 and 11 are determined to be unreasonable in any
judicial proceeding, the period of time or areas of restriction shall be reduced
so that this Agreement may be enforced in such areas and during such period of
time as shall be determined to be reasonable.
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13. Executive has carefully read and considered the provisions hereof, and
having done so, agrees that restrictions set forth in paragraphs 10, 11, and 12
(including, but not limited to, the time periods of restrictions) are fair and
reasonable and are reasonably required for the protection of the interests of
Employer.
14. Executive represents and warrants to Employer that Executive is not now
under any obligation of a contractual or other nature to any person, firm or
corporation which is inconsistent or in conflict with this Agreement, or which
would prevent, limit or impair in any way the execution of this Agreement or the
performance by Executive of Executive's obligations hereunder and Executive will
indemnify and hold harmless Employer, its directors, officers and employees
against and in respect of all liability, loss, damage, expense or deficiency
resulting from any misrepresentation, or breach of any warranty or agreement
made by Executive in connection with Executive's employment hereunder.
15. The waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed as a waiver of any subsequent breach
thereof.
16. Any and all notices referred to herein shall be sufficient if furnished in
writing and sent by certified mail, return receipt requested, to the respective
parties at the addresses set forth below, or such other address as either party
may from time to time designate in writing.
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To Executive: To Employer:
Xxxx Xxxxxx CyberShop International, Inc.
0 Xxxxxxxx Xxxxxx 130 Madison Avenue
Scotch Plains, New Jersey New York, New York 10016
07076 Attention: Chairman of the Board
With copies in each case to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
17. This Agreement shall be binding upon, and shall inure to the benefit of,
Employer and its successors and assigns, and Executive and Executive's legal
representatives, heirs, legatees and distributees, but neither this Agreement
nor any rights hereunder shall be assignable, encumbered or pledged by
Executive.
18. This Agreement supersedes any and all prior written or oral agreements
between Employer and Executive and constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and no modification,
amendment or waiver of any of the provisions of this Agreement shall be
effective unless in writing and signed by both parties hereto.
19. This Agreement shall be construed and enforced in accordance with the laws
of the State of New York.
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20. This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same agreement.
21. If any provision or part of any provision of this Agreement is held for any
reason to be unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
CYBERSHOP INTERNATIONAL, INC.
By:
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Title:
Date:
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Xxxx Xxxxxx
Date:
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