Exhibit 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into on January 28, 2008 (the
("Effective Date"), by and between Bluefly, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxx ("Xxxxx").
RECITALS
--------
WHEREAS, Xxxxx and the Company have previously entered into an employment
agreement as of June 1, 2006 (the "Prior Employment Agreement"), which the
parties have agreed to terminate;
WHEREAS, the Company desires to provide for the continued retention of the
services of Xxxxx as a non-executive employee of the Company during the
Transition Period (as defined below) in accordance with the terms and conditions
of this Agreement.
WHEREAS, Xxxxx desires to serve the Company as a non-executive employee of
the Company in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxx agree as
follows:
1. PRIOR AGREEMENT
---------------
The Company and Xxxxx hereby acknowledge and agree that the Prior Employment
Agreement shall terminate and be of no further force and effect as of the
Effective Date; provided however, that Section 5(a) (EXPENSE REIMBURSEMENT);
Section 6 (NON-COMPETITION; NON-SOLICITATION); Section 9 (CONFIDENTIALITY;
INVENTIONS); Section 11 (GOVERNING LAW; ARBITRATION); Section 12
(INDEMNIFICATION) and Section 18 (NO DUTY TO MITIGATE) shall survive this
termination of the Prior Employment Agreement and shall be deemed to be
incorporated into this Agreement by reference.
2. TERM
----
The Company hereby agrees to continue to employ Xxxxx as a non-executive
employee of the Company performing the duties as set forth in Section 3, and
Xxxxx hereby agrees to serve in such capacity, for a term commencing on the
Effective Date and, subject to earlier termination under Section 5, ending May
2, 2008 (the "Transition Period"), upon the terms and subject to the conditions
contained in this Agreement; provided, however, that the Company and Xxxxx shall
xxxxxx on or prior to April 20, 2008 to determine if the Transition Period shall
be extended. Notwithstanding the foregoing, the Transition Period shall not be
so extended unless both parties agree as to the duration of such extension (and
the scope of Barry's duties during such extension).
3. DUTIES
------
During the Transition Period, Xxxxx shall serve as a non-executive employee
of the Company reporting to the President of the Company and shall perform such
duties supporting and aiding in the management transition of various departments
of the Company, including without limitation, Fulfillment, Customer Service,
Finance, Human Resources, Technology and Legal/Administration, as are reasonably
assigned to him by the President and the Board of Directors of the Company (the
"Board").
The principal location of Barry's employment shall be at the Company's
principal office which shall be located in the New York City vicinity, although
Xxxxx understands and agrees that he may be required to travel from time to time
for business reasons. Xxxxx shall devote substantially all of his business time
to the performance of the duties set forth in this Section from the Effective
Date until March 12 and Xxxxx agrees to devote his full attention for not less
than 3 days per week during normal business hours from March 13 until the end of
the Transition Period. The parties agree that during the latter period, Xxxxx
will be on call as needed; provided that the Company will take Barry's other
commitments into consideration with respect to any such on call request.
4. COMPENSATION
------------
For services rendered by Xxxxx to the Company during the Transition Period,
the Company shall pay him a annualized portion of a base salary of three hundred
fifty thousand dollars ($350,000) per year ("Base Salary"), payable in
accordance with the standard payroll practices of the Company and shall continue
to provide Xxxxx with benefits (other than equity grants) comparable in the
aggregate to the benefits, which Xxxxx received from the Company as of the date
of this Agreement, including without limitation, that during the Transition
Period the Company shall provide Xxxxx with a monthly prorated portion of the
supplemental life and disability allowance ($1,458.33 per month) as formerly
provided under the Prior Employment Agreement.
5. TERMINATION
-----------
x. Xxxxx'x employment under this Agreement shall terminate upon the
first to occur of:
(i) his death;
(ii) the termination of his employment at any time without Cause (as
defined below) by the Company;
(iii) the termination of his employment for "Cause", which, for
purposes of this Agreement, shall mean that (1) Xxxxx has been
convicted of a felony or any serious crime involving moral
turpitude, or engaged in materially fraudulent or materially
dishonest actions in connection with the performance of his
duties hereunder, (2) Xxxxx has willfully and materially failed
to perform his reasonably assigned duties hereunder, (3) Xxxxx
has
- 2 -
breached the terms and provisions of this Agreement in any
material respect, or (4) Xxxxx has failed to comply in any
material respect with the Company's written policies of conduct
of which he had actual notice, including with respect to
trading in securities; provided that the Company shall not have
any right to terminate this Agreement for Cause pursuant to
clauses (2), (3) or (4) of this sub-paragraph (iii) as a result
of a breach unless the Company has provided Xxxxx with written
notice of such breach and Xxxxx has failed to cure such breach
within the twenty day period following his receipt of such
notice;
(iv) the expiration of the Transition Period, unless such is
extended or further extended in accordance with Section 2
hereof; or
(v) the termination of his employment by Xxxxx, which shall occur
on not less than thirty (30) days prior written notice from
Xxxxx.
b. In the event that Barry's employment is terminated (i) by Barry's
voluntary resignation prior to May 2, 2008 or (ii) by the Company for Cause, the
Company shall pay Xxxxx his accrued but unpaid Base Salary and unreimbursed
business expenses as of the date of his termination of employment and shall make
no other payments or provide any other benefits under this Agreement except
that, unless Barry's employment is terminated for Cause, (i) any other vested
stock options shall be exercisable for a period equal to the lesser of (y) one
year from the date of Barry's termination or (z) the remaining term of the
applicable vested stock option and (ii) any vested deferred stock units shall be
distributable on the first day which is at least six (6) months after the date
of Barry's "Separation from Service" as set forth in Section 409A(2)(A)(i) of
the Internal Revenue Code of 1986, as amended. All deferred stock units which
are unvested as of the expiration of the Transition Period shall be forfeited.
c. In the event that Barry's employment is terminated for any other
reason, including without limitation the expiration of the Transition Period as
of May 2, 2008, and subject to Barry's execution of a mutual release (including
an acknowledgement that the Company owes no other severance or other benefits to
Xxxxx except as provided under this Agreement) in the form of Exhibit A, the
Company shall pay Xxxxx his accrued but unpaid Base Salary and unreimbursed
business expenses as of the date of his termination of employment, as well as
the following payments as set forth below (the "Termination Benefits"):
(i) an amount equal to the then-current Base Salary for a period of
nine (9) months (the "Separation Payment"), which shall be
payable over a nine (9) month period, as follows: (X) the first
payment of one-half of the Separation Payment shall be paid on
the first payroll date which is at least six (6) months after
the date of Barry's Separation from Service and (Y) the
remaining portion of the Separation Payment shall be paid in
periodic installments in accordance with the Company's standard
payroll practices commencing on the second payroll date that is
at least six (6) months after the date of Barry's Separation
from Service and continuing for three (3) months until the
remainder of the Separation Payment is paid;
- 3 -
(ii) any unvested stock options that have been granted to Xxxxx
which are outstanding as of the date of such termination shall
be deemed to be fully vested as of that date and shall be
exercisable for a period equal to the lesser of (y) one year
from the date of Barry's termination or (z) the remaining term
of the applicable vested stock option.
(iii) All deferred stock units, which have vested immediately prior
to the end of the Transition Period shall be distributed to
Xxxxx on the first day which is at least six (6) months after
the date of Barry's Separation from Service. All deferred
stock units which are unvested as of the expiration of the
Transition Period shall be forfeited (Barry's termination of
employment under this Section 5(c) will not result in any
enhanced vesting under any applicable deferred stock unit
agreement between Xxxxx and the Company (collectively the "DSU
Agreements") because the parties agree that such termination
shall not be deemed to be a "Constructive Termination" or a
termination by the Company without "Cause" as such terms are
defined under any DSU Agreement).
(iv) an amount equal to the annual supplemental life and disability
allowance of $17,500 (the "Insurance Allowance"), which shall
be payable as follows: (X) the first payment of $8,750 shall
be paid on the first payroll date which is at least six (6)
months after the date of Barry's Separation from Service and
(Y) the remaining portion of the Insurance Allowance shall be
paid in periodic installments in accordance with the Company's
standard payroll practices commencing on the second payroll
date that is at least six (6) months after the date of Barry's
Separation from Service and continuing for six (6) months
until the remainder of the Insurance Allowance is paid.
(v) the Company shall maintain in effect, or reimburse Xxxxx for
the cost of maintaining, the medical and dental insurance and
disability and hospitalization plans of the Company as well as
any Company sponsored life insurance policy in which Xxxxx
participates as of the date of such termination for a period
of one year from the date of termination; provided that if any
reimbursement or payment under this Section would subject
Xxxxx to any tax imposed under Section 409A of the Code if
such payments were made at the time otherwise provided herein,
then the payments that cause such taxation shall be payable in
a single lump sum on the first day which is at least six (6)
months after the date of Barry's Separation from Service.
x. Xxxxx shall be responsible to fulfill any withholding tax
requirements on the deferred stock units as required by applicable law. Xxxxx
shall notify the Company no later than fifteen business days prior to a
distribution date, as to whether he intends to make a cash payment to the
Company for the withholding amount or would like the Company to make
arrangements for such payment. If he elects to have the Company make the
arrangements or fails
- 4 -
to provide the required notice, the Company shall satisfy such withholding tax
requirements, through withholding the distribution of a portion of the deferred
stock units equal to the withholding obligation; provided that if the Company's
Board of Directors determines that it would not be prudent to use the Company's
cash flow for such purpose, the Company shall advise Xxxxx, who can then arrange
to sell such portion of the shares underlying the deferred stock units for the
purpose of satisfying the withholding tax requirement prior to the distribution
of the applicable shares.
6. CHANGE OF CONTROL
-----------------
If, during the Transition Period, the Company undergoes a "Change of
Control" (as such term is defined in an applicable DSU Agreement), then the
deferred stock units underlying such DSU Agreement shall vest to the extent so
provided under the applicable DSU Agreement.
7. ENTIRE AGREEMENT
----------------
This Agreement together with any stock option agreements to which Xxxxx and
the Company are a party contain all of the understandings between Xxxxx and the
Company pertaining to Barry's employment with the Company and supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
between them (other than as specifically provided in Section 1 with respect to
the Prior Employment Agreement).
8. AMENDMENT OR MODIFICATION; WAIVER
---------------------------------
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing, signed by Xxxxx and by an
officer of the Company duly authorized to do so. Except as otherwise
specifically provided in this Agreement, no waiver by either party of any breach
by the other party of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior or subsequent time.
9. NOTICES.
--------
Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently designate by like notice:
If to the Company, to:
Bluefly, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chairman of Compensation Committee
With a copy to:
Dechert LLP
- 5 -
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
If to Xxxxx, to:
Xxxxxxx X. Xxxxx
c/o Bluefly, Inc.
00 Xxxx 00xx Xxxxxx, Xxxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
10. SEVERABILITY
------------
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
11. TITLES
------
Titles of the paragraphs of this Agreement are intended solely for
convenience of reference and no provision of this Agreement is to be construed
by reference to the title of any paragraph.
12. COUNTERPARTS
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.
- 6 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date written below.
BLUEFLY, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
DATED: January 28, 2008
- 7 -
