EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement") made as of this _____ day of February (the
"Effective Date"), by and between CyberShop International, Inc., a Delaware
corporation (hereinafter "Employer"), and Xxxxxxx X'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 and Chief Information Officer of Employer to perform
the duties normally incident to such positions. Executive shall at all times
report to the President of Employer. Executive agrees that he will relocate to
the New York/New Jersey metropolitan area on or before September 1, 1998. It is
agreed that pending such relocation Executive shall be permitted to perform his
services from his home in Iowa provided that Executive is reasonably available
(every other week) to perform his services at the principal offices of Employer.
Executive shall be reimbursed for airfare and lodging associated with this
travel consistent with the presentation of documentation in accordance with
Company procedures.
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 Ninety Six Thousand and 00/100
($96,000) 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 One Hundred
Twenty-Five Thousand Dollars ($125,000.00) 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 such health
benefits as are currently offered or hereafter will be offered during the term
such of this Agreement 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 are
hereafter offered during the term of this Agreement to other executives of
Employer.
5. Subject to the adoption of Employer's 1998 Stock Option Plan
(the "Plan") by the Board, the approval of the Plan by Employer's stockholders
and the approval of the grant of options to Executive by the Board as provided
herein, Executive shall be granted an option (the "Option") to purchase 64,000
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
$320,000 (the product of the 64,000 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 64,000 shares of
Common Stock at an exercise price per share equal to the fair market value of
the Common Stock on the May 15, 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 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 Options 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.
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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 and provided that Executive's legal
representatives shall have the right to exercise Options vested at the time of
death for a period of three (3) months thereafter.
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 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 in 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 material duties as may be delegated to Executive commensurate with
Executive's position, or (vi) breach of any material 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 any time after four (4)
months in employment with the Company 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
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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 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, 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
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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, 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 ll 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.
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.
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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.
To Executive: To Employer:
Xxxxxxx X'Xxxxxx CyberShop International, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxx Xxxx 000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman of the Board
With copies in each case to:
RubinBaum 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 here under 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.
20. This Agreement may be executed in any number of counter parts,
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.
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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:
--------------------------
Title:
Date:
-----------------------------
Xxxxxxx X'Xxxxxx
Date:
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