Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement") made as of this 1st day of June, 1999 (the
"Effective Date"), by and between MG Acquisition Corp., a Delaware corporation
(hereinafter "Employer"), and Xxxxxx X. Xxxxx III (hereinafter "Executive").
Employer is a wholly-owned subsidiary of Cybershop International, Inc. ("CYSP")
which has guaranteed the performance of all obligations of Employer hereunder.
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:
23. Effective Date and Duties. Commencing as of the Effective Date,
and throughout the Term, as herein defined, Employer employs Executive as Chief
Operating Officer to perform the duties normally incident to such position.
Subject to the approval of the Chairman of the Board of Employer, who initially
is Xxxxxxx X. Xxxxxx, during the Term Executive shall have and shall be entitled
to exercise the complete authority, functions, duties, powers and
responsibilities of the Chief Executive Officer of the Employer and in such
capacity (i) to engage the services of and to determine the principal terms of
employment of, and
compensation payable to the employees of the Employer; (ii) to establish and
implement Employer's policies and practices, consistent with an approved budget,
selection and pricing, choice of advertising media and terms of insertion,
production of advertising illustrations and copy, and ancillary activities
related thereto; (iii) to develop and implement budgets for the operations of
the Employer; and (iv) to engage professional services on behalf of the Employer
including legal counsel and accountants.
24. Responsibilities. Executive agrees to devote all of Executive's
business time, efforts, skills and attention to fulfill Executive's duties and
responsibilities hereunder faithfully and diligently. Notwithstanding the
foregoing, the Executive shall be permitted to engage in not-for-profit
activities which do not interfere with the performance of his duties hereunder.
In the event that Xxx X. Xxxxxxxx is no longer a director of CYSP and Executive
is then employed by Employer, Executive shall be appointed to the Board of CYSP
to serve so long as he shall remain an employee of Employer.
25. Term. The term of this Agreement shall commence on the Effective
Date and shall expire two (2) years thereafter, unless sooner terminated as
hereinafter provided.
26. Place of Employment. Executive shall render his services
hereunder at the principal executive offices of Employer, 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxx, or such other location of Employer within a 20 mile
radius thereof.
27. Compensation. 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 Two Hundred Twenty-Five Thousand
($225,000) Dollars per annum which will be paid during normal pay periods.
Such salary is hereinafter referred to as the Base Salary.
(b) Executive shall be eligible for bonuses consistent with the
bonus plans offered to other senior executives of Employer and CYSP, at
such time and in such amounts as shall be determined at the discretion of
the Board of Directors 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 as are
currently in effect or as modified during the term of this Agreement
consistent with the health benefits offered to other senior executives of
Employer and CYSP. 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, 401(k) plan
or other fringe benefits which are currently offered or may hereafter be
offered to other
senior executives of Employer and CYSP during the term of this Agreement.
28. Termination on Death. 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 plus (i)
unreimbursed business expenses, (ii) a portion of the bonus or incentive
compensation program then in effect, prorated through the end of the month of
death, (iii) any insurance benefits to which Executive (or his estate) is
entitled and (iv) all Earnout amounts provided in the Agreement and Plan of
Merger ("APM") dated the date hereof. Such later payments to be made at the time
and in the manner set forth in the APM. Such termination on death shall not
affect any vested benefits which Executive shall have at the time of his death.
29. Termination on Disability. 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 an aggregate of more than 90 days during any six (6) month period, Employer
shall have the right, on thirty (30) days' notice to Executive, given after such
period, to terminate this Agreement. In the event of any such termination
Employer shall be obligated to pay to Executive the Base Salary which would
otherwise be due to Executive until the expiration of the month of employment
during which the termination occurred plus (i) three (3) additional months of
the Base Salary for the three months following the
month in which Executive was terminated (or such lesser time to the End of the
Term), (ii) a portion of the bonus or incentive compensation program then in
effect, prorated through the end of the month of disability, (iii) any insurance
benefits to which Executive is entitled and (iv) all Earnout amounts provided in
the APM. Such later payments to be made at the time and in the manner set forth
in the APM. If, prior to the date specified on such notice, 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 of Directors (the "Board") of Employer 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. Any dispute as to
disability shall be resolved by the decision of a medical doctor designated by
Employer and reasonably acceptable to Executive.
30. Termination for Cause. If Employer shall terminate Executive's
employment hereunder for Cause 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 plus unreimbursed expenses. Executive shall
continue to be entitled to receive Earnout Payments under the APM as earned.
Cause shall mean (i) conviction of any crime (whether or not involving Employer
constituting a felony in the jurisdiction involved; (ii) gross misconduct in the
performance of Executive's duties hereunder which results in demonstrable
material
injury to Employer; (iii) continuous failure or refusal to perform any material
obligation of Executive set forth in this agreement (provided that performance
of such obligation (a) is reasonably capable of being performed by Executive,
(b) would not result in a violation of law and (c) is not contrary to a written
direction of the Board); (iv) material breach of any provision of this Agreement
by Executive, or (v) the voluntary termination by Executive of his employment,
Termination for Cause must be effected by written notice delivered to Executive
with specific description of the alleged breach. With respect to termination for
Cause based upon Executive's continuous failure or refusal to perform or for his
material breach, Executive shall have 20 days to cure such breach commencing on
the date that such notice thereof is delivered.
31. Termination by Executive for Good Reason. If one or more of the
following events occur and is not cured as herein provided ("Good Reason") (i)
there is a material decrease in Executive's responsibility or authority or
Executive is assigned duties inconsistent with his office and title; (ii)
Executive is required to report to anyone other than the Chairman of Employer;
(iii) there is a reduction in Executive's Base Salary or in any employee benefit
(unless resulting from an Employer and CYSP-wide reduction affecting fringe
benefits of all senior executives); (iv) monies due to Executive under this
Agreement shall not have been paid when due; or (v) Executive is required to
relocate his office beyond a 20 mile radius of the existing office, or (vi)
Employer or CYSP shall default making the Earnout payments due under the APM.
Employer shall have 20 days after receipt
of written notice from Executive of the existence of any event, to cure such
breach. If such breach is not so cured, Executive shall have the right to
terminate the Agreement for Good Reason and Executive shall be entitled to
receive, as liquidated damages, Base Compensation through the balance of the
Term, payable in accordance with Employer's payroll practices then in effect
plus continuation (at Employer's expense) through the balance of the Term (and
without prejudice to COBRA rights thereafter) of all fringe benefits including
life insurance and medical health plans, unless Executive replaces them at a
comparable level at his subsequent employer. Executive shall not be required to
seek other employment to mitigate damages.
32. Confidentiality. 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 which Executive may
have acquired in the course of or as incident to Executive's employment or prior
dealings with Employer.
"Confidential Information" shall mean (a) all knowledge, information and
material concerning any of Employer's business or the business of any of its
affiliates or subsidiaries that shall become known to Executive as a consequence
of Executive's 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 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, customer lists (including, without limitation,
those relating to the acquired business of Employer), and other physical
embodiments of all such information.
33. Non-Competition. 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 Employer's 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 twenty-four months
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 to leave its
employment or solicit or divert or service any of the customers or clients that
Employer 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 business, in any businesses presently engaged in or to be engaged
in by Employer 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, 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 in any of the product
categories in which Employer currently sells or shall sell at any time during
the Term in any such geographic region. The non-competition restrictions
continued in this paragraph 11 shall also apply to any activities of CYSP in
which Executive engages on behalf of Employer or CYSP. Notwithstanding the
foregoing if Executive is terminated without cause or terminates his employment
for Good Reason, the non-competition provisions contained in this paragraph 11
shall terminate as of the effective date of such termination.
34. Remedies. 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 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 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.
35. Full Review. Executive has carefully read and considered the
provisions hereof, and having done so, agrees that restrictions and remedies 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.
36. Representation. 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 material misrepresentation or
material breach of this paragraph 14 by Executive.
37. Waiver. 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.
38. Notices. Any and all notices referred to herein shall be
sufficient if furnished in writing and sent by confirmed fax, by nationally
recognized overnight courier with delivery receipt confirmed, or 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.
To Executive:
Xxxxxx X. Xxxxx III
c/o The Magellan Group
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxx Major & Xxxxxxx LLP
Carnegie Towers
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Fax: 000-000-0000
To Employer:
c/o CyberShop International, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Chairman
Fax: (000) 000-0000
With copy to:
Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
39. Assignability. 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 duties hereunder shall be delegable. No
assignment by Employer shall be effective unless and until CYSP or its successor
specifically
agrees to guarantee the payment and performance of all obligations of Employer
or its assignee hereunder and a copy of such assumption has been received by
Executive.
40. Entire Agreement. 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.
41. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of New York.
42. Miscellaneous. To the extent that Executive performs his duties
for Employer in good faith and in a manner Executive reasonably believes to be
in or not opposed to be the best interests of Employer and not to contravention
of the terms of this Agreement, Employer agrees to promptly indemnify Executive
against expenses (including but not limited to final judgments and amounts paid
in settlement to which Employer has consented in writing, which consent shall
not be unreasonably withheld or delayed) in connection with litigation against
Executive arising out of the performance of his duties hereunder. Executive
shall provide the Employer with prompt notice of the commencement of any such
litigation and Employer will provide defense counsel selected by it absent the
existence of any conflict of interest. In the event that a party hereto
institutes any legal action (including any proceedings in a bankruptcy court) to
enforce his or its rights under,
or to recover damages for breach of, this Agreement, the prevailing party in
such an action shall be entitled, in addition to such relief as may be granted,
to recover from the other party any reasonable attorneys' fees and expenses
incurred by reason of or related to such action including any appeals thereof.
43. Counterparts. 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.
44. Severability. 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.
MG Acquisition Corp d/b/a
THE MAGELLAN GROUP, INC.
By:______________________________________
Xxxxxxx X. Xxxxxx
Chairman of the Board
_________________________________________
Xxxxxx X. Xxxxx III
CYSP as the sole owner of Employer and in order to induce Executive to enter
into the Agreement hereby guarantees the performance of all obligations of
Employer hereunder to Executive, including without limitation, the payment of
all compensation payable hereunder.
CYBERSHOP INTERNATIONAL, INC.
By:______________________________________
Xxxxxxx X. Xxxxxx
Chairman of the Board
