EXHIBIT 10.15
xxx.x0xxxxxx.xxx K2 Design, Inc. A FULL SERVICE INTERACTIVE AGENCY
February 11, 1999
Xx. Xxxx Xxxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxxx 00X
Xxx Xxxx, X.X. 00000
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of February 1, 1999 between
K2 Design, Inc., a Delaware corporation (the "Company"), and Xxxx
Xxxxxxxx (the "Executive").
ARTICLE
EMPLOYMENT
The Company hereby employs the Executive, and the Executive accepts
employment with the Company, upon the following terms and conditions:
Employment. The Company hereby employs the Executive, and the Executive
agrees to serve, as the Chief Financial Officer of the Company and its
subsidiaries (the "Subsidiaries") during the term of this Agreement. Subject to
the direction of the Board of Directors and senior executive officers of the
Company and the Board of Directors and senior executive officers of each
Subsidiary, the Executive shall actively manage, and have responsibility for and
supervision over, the financial activities and affairs of the Company and the
Subsidiaries, and he shall manage, supervise and direct its and their employees
and agents with respect to the finances of the Company and the Subsidiaries. The
Executive agrees to devote his full business time and attention and best efforts
to the affairs of the Company and the Subsidiaries during the term of this
Agreement.
Term. The Employment of the Executive by the Company under the terms and
conditions of this Agreement will commence as of February 1, 1999 and continue
until January 31, 2000 (the "Term") unless terminated sooner in accordance with
the provisions of Article IV. This Agreement shall automatically renew for
successive one year terms (each a "Renewal Term") unless either party hereto
provides the other with written notice of non-renewal at least 60 days prior to
the expiration of the Term or any Renewal Term. Such notice of non-renewal shall
not give rise to any severance payments pursuant to Article IV herein.
ARTICLE
COMPENSATION
Annual Salary. During the Term the Company shall pay to the
Executive an annual salary of $125,000 (the "Base Salary") payable in
equal installments every two weeks or otherwise in conformity to the
Company's payroll practices for employees generally. The Board of
Directors shall review the performance of the Executive annually and
thereafter, at the sole discretion of the Board of Directors, determine
whether the Executive is entitled to an increase in the Base Salary.
Stock Options. The Executive will be eligible to receive grants of
stock options under the Company's Stock Incentive Plan as the Board of
Directors in its sole discretion shall determine.
Reimbursement of Expenses. The Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred by the
Executive in performing services hereunder, including all expenses of
travel, entertainment and living expenses while away from the Company on
business at the request of, or in the
service of, the Company or any Subsidiary, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures and
approved operating budget established by the Company.
Benefits. The Executive shall be entitled to participate in and be
covered by all health, insurance, pension and other employee plans and benefits
established by the Company (collectively referred to herein as the "Company
Benefit Plans") for its executive employees generally, subject to meeting
applicable eligibility requirements.
Vacations and Holidays. During the Term and any Renewal Term, the
executive shall be entitled to an annual vacation leave of a minimum of three
weeks at full pay. Such vacation leave shall not be cumulative and Executive
shall have no right to receive cash for unused leave. The Executive shall also
be entitled to such holidays as are established by the Company for all employees
and such other religious holidays as is customary pursuant to the Executive's
religious practice.
ARTICLE
CONFIDENTIALITY AND NONDISCLOSURE
Confidentiality. The Executive will not during his employment by the
Company or thereafter at any time disclose, directly or indirectly, to any
person or entity or use, or permit the use of, any trade secrets or confidential
information relating to the Company or any Subsidiary (the "Confidential
Information") except as required by law. "Confidential Information" shall
include, but shall not be limited to, the existence of or terms of any agreement
involving the Company, the terms of any license, marketing, sales or
distribution agreement relating to the Company or its business, trade secrets,
business plans, customer lists, proposals, budgets, reports, memoranda,
financial information, e-mail messages and all information denominated as
"Confidential" or made available only on a restricted basis; provided however,
that "Confidential Information" shall not include information which comes into
the public domain through no fault of the Executive or which the Executive
obtains after the termination of employment with the Company or otherwise from
a third party who, to the knowledge of the Executive, has the right to disclose
such information.
Return of Company Material. The Executive shall promptly deliver to the
Company on termination of the Executive's employment with the Company, for
whatever the reason, or at any time the Company may so request, all Company or
Subsidiary memoranda, notes, records, reports, manuals, drawings, computer
software, and all documents containing Confidential Information relating to or
belonging to the Company (and all copies of the foregoing), including all copies
of such materials which the Executive may then possess or have under the
Executive's control irrespective of the format of such materials.
Non-Competition. During the Term and any Renewal Term (which shall
include any period of employment whether or not such employment is pursuant to a
written agreement) and for a six-month period thereafter (the "Restricted
Period") the Executive will not, directly or indirectly, without the consent of
the Board of Directors of the Company: own, manage, operate, join, control, or
participate in or be connected with, as an officer, employee, partner,
stockholder, director, adviser, consultant, or agent (whether paid or unpaid),
any business, which is at the time engaged in any activities which compete with
the business or proposed business (interactive marketing and communications
services to commercial organizations over the Internet and World Wide Web) of
the Company or any Subsidiary (a "Competitive Business"); the
foregoing provision being also intended to prohibit the Executive from
acquiring or holding in excess of 2% of any issue of stock or securities
of any Company which has any securities listed on a national securities
exchange or quoted in the daily listing of over-the-counter market
securities. The provisions of this Section 3.3 shall be automatically
operative and there shall be deemed to have been received by the
Executive valuable consideration under this Agreement; provided,
however, that in the event of termination of the valuable consideration under
this Agreement; provided, however, that in the event of termination of
the Executive's employment by the Company without Cause or by the
Executive for Good Reason (both as hereinafter defined), the provisions
of this Section 3.3 shall only be operative if, and for so long as the
Company, at its option (and without obligation), pays the Executive
monthly in advance an amount equal to one-twelfth of the annual Base
Salary for a maximum period of six months from the date of termination.
Non-Solicitation. During the Term and any Renewal Term (whether or
not the Executive continues to be employed by the Company during the
Term) and any additional period during which the Executive may be
employed by the Company (whether or not such employment shall be
pursuant to written agreement) and for a one year period thereafter,
Executive shall not without the express prior written approval of the
Board of Directors of the Company directly or indirectly, in one or a
series of transactions, recruit, solicit or otherwise induce or
influence any proprietor, partner, stockholder,lender, director,
officer, employee, sales agent, joint venturer, investor, lessor,
supplier, customer, consultant, agent, representative or any other
person which has a business relationship with the Company to
discontinue, reduce or modify such employment, agency or business
relationship with the Company, or induce or solicit to employ or cause
any Competitive Business or any other person or entity to induce or
solicit to employ any person or agent who is then (or was at any time
within one year prior to the date the Executive or the Competitive
Business employs or seeks to employ such person) engaged or retained by
the Company.
Right to Injunctive and Equitable Relief. As a result of the
Executive's position as an executive officer of the Company, the
Executive's obligations not to disclose or use Confidental Information
and to refrain from the activities described in this Article III are of
a special and unique character which gives them a peculiar value, and
which is supported by valuable consideration. The Company cannot be
reasonably or adequately compensated in damages in an action at law in
the event the Executive breaches such obligations. Therefore, the
Executive expressly agrees that the Company shall be entitled to
injunctive and other equitable relief wihtout bond or other security in
the event of such breach in addition to any other rights or remedies
which the Company may possess. Furthermore, the obligations of the
Executive and the rights and remedies of the Company under this Article
III are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation or theft of trade secrets or confidential information.
ARTICLE
TERMINATION
Termination by the Company. The Board of Directors may terminate
the Executive's employment hereunder as follows:
Upon the death of the Executive, whereupon this
Agreement shall immediately terminate;
Upon a determination of Permanent Disability; "Permanent
Disability" shall mean a physical or mental incapacity as a
result of which the Executive becomes totally unable to
continue the performance of his duties hereunder for a
period of 90 consecutive days or an aggregate
of 120 days in any 12 month period. A determination of Permanent Disability
shall be subject to the certification of a qualified medical doctor
agreed to by the Company and the Executive or, in the event of the
Executive's incapacity to designate a doctor, the Executive's legal
representative. In the absence of agreement between the Company and the
Executive, each party shall nominate a qualified medical doctor and the
two doctors so nominated shall select a third doctor, who shall make the
determination as to the occurrence and continuance of a Permanent
Disability; or
For cause. "Cause" shall mean only the following:
the willful failure by the Executive to follow the reasonable
directions of the Board not inconsistent with this Agreement (other
than such failure resulting from the Executive's incapacity due to
physical or mental illness);
willful misconduct by the Executive that adversely affects the
Company; indictment relating to a commission of a felony or the
entry of a guilty plea or plea of nolo contendre to a crime or
offense other than misdemeanors or minor traffic violations;
willful theft from the Company;
a willful violation of any law, rule or regulation, or the
imposition of a final order issued by any regulatory authority
against the Executive or the Company, which, in any event, prohibits
the Executive from holding an executive position with the Company
or any Subsidiary;
the Executive's habitual drunkenness or use of illegal substances;
or
the Executive fails to perform or breaches any term or provision of
this Agreement in any material part.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive in bad faith and without a
reasonable belief that such action or omission by the Executive was
in the best interests of the Company, and no termination by the
Company for "Cause" shall be effective unless the Executive shall
have been given written notice of the breaches of this Section
4.1(c) and a period of 10 days within which to cure any such breach
provided that such curative period shall be permitted only once in any
12 month period, or if not curable, the Executive shall be given,
within 10 days after the giving of such notice of breach of this Section
4.1(c) by the Company, an opportunity to make a presentation to the
Board at a meeting of the Board. Following such meeting, the Board shall
determine whether to terminate the Executive's services for "Cause"
pursuant to this Section 4.1(c) and shall notify the Executive of its
decision.
Termination by Executive for Good Reason. The Executive may terminate
his employment hereunder for Good Reason. For purposes of this
Agreement, the term "Good Reason" shall mean and shall be deemed to
exist if, without the prior written consent or written waiver of the
Executive, the Executive is asked by the Company to take actions that
are inconsistent in any material respect with this Agreement or the
Executive's obligations to the public stockholders or regulatory
agencies or in violation of applicable law, the Company fails to
substantially perform any material term or
provision of this Agreement, the Executive's office location
is relocated to one that is more than fifty (50) miles from
the location at which the Executive was based immediately
prior to the relocation, or the Company fails to obtain the
full assumption of this Agreement by a successor entity
(whether as a result of merger, reorganization or
otherwise). Termination by the Executive pursuant to this
Section 4.2 shall be effective on the date that is 30 days
after the Executive first provides written notice to the
Board of the events specified in this Section 4.2(i-iv),
unless earlier cured by the Company.
Severance Payments.
Termination for Cause. In the event of termination pursuant
to Section 4.1(c), the Executive shall receive no severance,
and shall be entitled to receive, in lieu of any other
payments or benefits, his accrued but unpaid salary at the
rate provided in Section 2.1 (as increased from time to time
by the Board), plus any amounts earned but unpaid for any
prior completed fiscal or calendar year and any reimbursable
expenses incurred prior to the date of termination
(collectively, the "Accrued Obligations"). In addition, all
stock options, whether or not vested, shall be deemed
terminated as of the date of termination of employment.
Termination as a Result of Death. In the event of
termination pursuant to Section 4.1(a), the Executive's
estate or beneficiaries, as the case may be, shall be
entitled to receive, in addition to any other payments or
benefits hereunder, (i) the proceeds from any insurance
policies paid for by the Company in favor of the Executive's
estate or beneficiaries, and (ii) any Accrued Obligations.
Such amounts shall be paid promptly in a lump sum in cash.
In addition, all options that are unvested at the date of
termination shall vest, and the restriction on any options
or stock held by the Executive shall terminate.
Termination Without Cause or For Good Reason. In the event
of termination by the Company without Cause or by the
Executive for Good Reason, the Executive shall be entitled
to receive (i) any Accrued Obligations plus (ii) an amount
equal to the greater of (A) the remaining annual Base Salary
during the Term or any Renewal Term, as the case may be or
(B) $100,000 (each of the amounts in subclauses (i) and (ii)
payable, at the election of Executive, either (x) in a lump
sum in cash within 30 days after the date of termination)
or (y) over a period of six months in accordance with the
regular payroll practices of the Company, (iii)
continuation, at the Company's expense, if allowable by law,
of any group health plan (which may be provided by payment
of COBRA continuation coverage premiums), in effect on the
Executive's date of termination for a period of twelve
months following such date of termination (unless covered
under any health plan of a spouse or subsequent employer)
and (iv) all options held by the Executive shall
automatically vest, and the restriction on any options or
stock held by the Executive shall terminate.
Voluntary Termination. If the Executive shall voluntarily
resign for other than Good Reason, he shall be entitled only
to Accrued Obligations through the effective date of such
resignation or voluntary termination, and that any such
amounts shall be promptly paid in a lump sum in cash. In
addition, all stock options not vested shall be deemed
terminated as of the date of termination of employment.
Termination due to Permanent Disability. If the Executive's
employment hereunder is terminated as a result of Permanent
Disability, in lieu of any other payments or benefits (other
than any such disability benefits he may receive), he shall
be paid a single lump sum in cash within thirty (30) days of
the date of his termination, an amount equal to (i) all
Accrued Obligations, plus (ii) all unpaid salary, whether or
not accrued, remaining through the Term or Renewal Term, as
the case may be. In addition the unvested
portion of any options held by the Executive on such date
shall vest, and any restrictions on any options or stock
held by the Executive shall terminate.
General Release. Prior to the Executive's receipt of any
severance payment under this Section 4.3, the Executive (or
his estate or legal representative) shall issue a general
release to the Company in such form as the Company may
reasonably require, which shall extinguish all actual or
potential claims or causes of action he has, may have had,
or thereafter may have against the Company.
Other Payments Upon Termination. If notice of termination of
the Executive is given by the Executive or the Company, the
Executive shall continue to receive his Base Salary (as
increased from time to time by the Board) and benefits as
provided in Article II until the date of termination, and
shall also be entitled to reimbursement for reimbursable
expenses as set forth in Section 2.3.
Company's Option to Terminate Executive after Notice of
Termination. The Company, or, if notice is given by the
Company, the Executive, may, at any time during the period
after notice of termination by the Executive or the Company
and before the date of termination specified in the notice
given in accordance with Section 4.1 or Section 4.2, as the
case may be (the "Notice Period"), elect to terminate this
Agreement and the Executive's employment hereunder
immediately. In such event the Company shall pay the
Executive an amount equal to all Accrued Obligations he
would have received or been entitled to for the duration of
the Notice Period at the rate provided in Article II. Such
amounts shall be paid within thirty (30) days after the
election pursuant to this Section 4.3(h). Nothing contained
in this Section 4.3(h) shall be deemed to reduce in any way
amounts due to the Executive pursuant to any other term or
provision of this Article IV.
ARTICLE
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
Merger etc.; Change of Control
In the event of a future disposition of the properties and
business of the Company substantially as an entirety by
merger, consolidation, sale of assets, tender offer,
reorganization or otherwise (each a "Change of Control
Event"), then the Company may elect:
to assign this Agreement and all of its rights and
obligations hereunder to the acquiring, surviving or
reorganized entity; provided that such entity shall assume
in writing all of the obligations of the Company hereunder;
and provided further, that the Company (in the event and so
long as it remains in existence) shall remain liable for the
performance of its obligations hereunder in the event of a
breach of this Agreement by the acquiring, surviving or
reorganized entity; or in addition to its other rights of
termination, to terminate this Agreement upon at least 30
days' written notice and by paying the Executive, upon the
Executive's execution of a general release of claims, an
amount equal to (A) all Accrued Obligations plus (B) the
greater of (1) the remaining annual Base Salary during the
Term or a Renewal term, as the case may be, or (2) $100,000;
all such amounts pursuant to subclauses (A) and (B) shall be
payable, at the option of Executive, either (x) in a single
lump sum within 30 days after the date of termination or (y)
over a period of six months in accordance with the regular
payroll practices of the Company. In addition, upon the date
of termination hereunder, (A) all options which the
Executive then holds which are not vested shall immediately
vest, (B) the restrictions on any stock held by the
Executive shall terminate, (C) the Executive, at the
Company's expense, if allowable by law, shall continue to be
a participant in the Company's group health plan (which may
be provided by payment of the COBRA continuation coverage
premiums) maintained by the Company at the level in effect
on the Executive's date of termination for a period of
twelve months following his date of termination (unless
covered under any health plan of a spouse or subsequent
employer).
Notwithstanding the Company's election pursuant to Section
5.1(a) and in addition to any payments pursuant to such
Section 5.1(a), in the event of a Change of Control Event,
(i) so long as the Executive does not voluntarily resign his
employment with the Company or its successor for other than
Good Reason for a period of 30 days following the Change of
Control Event, the Executive shall receive $25,000 in a
single lump sum immediately following such 30 day period,
and (ii) so long as the Executive does not voluntarily
resign his employment with the Company or its successor for
other than Good Reason for a second period of 30 days
following the Change of Control Event (i.e., a total of 60
days), the Executive shall receive a second $25,000 in a
single lump sum immediately following such second 30 day
period. In the event that the Executive's employment with
the Company or its successor is terminated by the Company or
such successor for any reason or by the Executive for Good
Reason prior to the time either of the two payments set
forth above is made, or for any reason this Agreement is not
assumed by the Company's successor, then the entire amount
of such payments under this Section 5.1(b), to the extent
not already paid, shall be immediately due and payable.
For purposes of this Agreement, a "Change of Control Event"
does not include the sale of up to 50% of the voting equity
of the Company.
ARTICLE
GENERAL PROVISIONS
Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt required, postage prepaid, as follows:
If to the Company:
K2 Design, Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chairman, Compensation Committee of the Board of
Directors
If to Executive:
Xxxx Xxxxxxxx
00 Xxxxxxxxx Xxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
or such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
No waivers. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive
and the Company. No
waiver by either party hereto at any time or any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver or similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
No Mitigation. In the event of the termination of
Executive's employment for any reason, he shall be under no
obligation to seek other employment and there shall be no offset
against any amounts due the Executive hereunder on account of
any remuneration the Executive may obtain from any subsequent
employment.
Governing Law. This Agreement shall be deemed to have been
made a fully performed in the State of New York and shall be
governed by and construed in accordance with the laws of the
State of New York without regard to conflict of law rules
thereof. Any action, suit or proceeding arising out of, or in
connection with, this Agreement shall be adjudicated in a court
of competent jurisdiction located in New York County, state of
New York. The parties hereto unconditionally waive any objection
which either of them may now or hereafter have to the
establishment of venue as aforementioned or that any action, suit
or proceeding has been brought in an inconvenient forum.
Severability or Partial Invalidity. The invalidity or
unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same
instrument.
Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior written or oral
and all contemporaneous oral agreements, understanding, and
negotiations between the parties with respect to the subject
matter hereof. This Agreement is intended by the parties as the
final expression of their agreement with respect of such terms as
are included in this agreement and may not be contradicted by
evidence of any prior as contemporaneous agreement. The parties
further intend that this Agreement constitutes the complete and
exclusive statements of its terms and that no extrinsic evidence
may be introduced in any judicial proceeding involving this
Agreement.
Assignment. Subject to the provisions of Article V hereof,
this Agreement and the rights, duties and obligations hereunder
may not be assigned or delegated by any party without the prior
written consent of the other party. Any such assignment or
delegation without the prior written consent of the other party
shall be void and be of no effect. Notwithstanding the foregoing
provisions of this Section 6.8, the Company may assign or
delegate its rights, duties and obligations hereunder to any
person or entity which succeeds to all or substantially all of
the business of the Company through merger, consolidation,
reorganization, or other business combination or by acquisition
of all or substantially all of the assets of the Company or
otherwise; provided that such person assumes the Company's
obligations under this Agreement in accordance with Section 5.1.
Beneficial Interests. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive
should die while any amounts are still payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee, if there be no
such designee, to the Executive's estate.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
K2 DESIGN, INC.
A Delaware corporation
By: /s/ Xxxxxxx xx Xxxxx
-------------------------
Name: X. xx Xxxxx
Title: Chairman
EXECUTIVE
/s/Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx
