EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of July 13, 1998, by and
between Pivot Rules, Inc., a New York corporation (the "Company") and Xxxxxxx
Xxxxx ("Xxxxx").
RECITALS
1. The Company desires to retain the services of Xxxxx as the Chief
Financial Officer and Executive Vice President of Operations of the Company in
accordance with the terms and conditions of this Agreement.
2. Xxxxx will serve the Company as its Chief Financial Officer and
Executive Vice President of Operations 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. TERM
The Company hereby agrees to employ Xxxxx as the Chief Financial
Officer and Executive Vice President of Operations of the Company, and Xxxxx
hereby agrees to serve in such capacity, for a term commencing as of the date
hereof and ending July 13, 2002, upon the terms and subject to the conditions
contained in this Agreement.
2. DUTIES
During the term of this Agreement, Xxxxx shall serve as the Chief
Financial Officer and Executive Vice President of Operations of the Company,
and shall be responsible for the duties attendant to such office and such other
managerial duties and responsibilities with the Company as may be assigned from
time to time by the Chief Executive Officer and/or the Board of Directors of
the Company.
The principal location of Barry's employment shall be in the New York
City vicinity, although Xxxxx understands and agrees that he will be required
to travel frequently for business reasons. Xxxxx shall diligently and
faithfully perform his obligations under the Agreement and shall devote his
full professional and business time and best efforts to the performance of his
duties as the Chief Financial Officer and Executive Vice President of
Operations of the Company during the term of this Agreement. Xxxxx shall not,
directly or indirectly, render services to any other person or entity, without
the consent of the Company's Board of Directors; provided, however, that
notwithstanding the foregoing between the date hereof and September 15, 1998
Xxxxx shall be permitted to devote up to five (5) hours per week working on
matters for Audible,
Inc. in order to facilitate his transition from such company.
3. BASE SALARY
For services rendered by Xxxxx to the Company during the term
of this Agreement, the Company shall pay him a base salary of $128,000 per
year, payable in accordance with the standard payroll practices of the Company,
subject to annual increases in the sole discretion of the Chief Executive
Officer and the Company's Board of Directors, taking into account the financial
and operating performance of the Company's business and divisions and a
qualitative assessment of Barry's performance during such year.
4. BONUS/OPTIONS
a. During the term of this Agreement, Xxxxx shall be eligible
to receive a bonus set by the Board of Directors in its sole discretion and
based on such factors as the Board of Directors deems appropriate.
b. The Company hereby agrees to cause the issuance to Xxxxx
of options ("Options") to purchase 55,100 shares of the Company's common stock,
$.01 par value ("Common Stock"). The Options shall be issued pursuant to, and
in accordance with, the Company's 1997 Stock Option Plan (the "Plan"). The
Options shall be Incentive Stock Options (as defined in the Plan) to the
maximum extent permitted under the Internal Revenue Code of 1986, as amended,
and shall be exercisable at a price equal to the Fair Market Value (as defined
in the Plan) of the Common Stock on the date hereof. The Options shall vest
over a forty-eight (48) month period as follows: (i) 12.50% of the Options
shall vest on the six month anniversary of the date of grant and (ii) 2.083% of
the Options shall vest each month thereafter until all such Options shall have
vested, but subject to shareholder approval to the extent there are then
insufficient shares available for grant provided that if shareholder approval
is not obtained, Xxxxx shall be entitled to the cash equivalent of the Options,
which shall be negotiated in good faith. The term of each Option shall be 10
years from the date of grant. In the event of the termination of Barry's
employment for any reason, he shall have 30 days within which to exercise any
vested Options and any unissued Options shall be forfeited. During the term of
this Agreement, Xxxxx shall be eligible to participate in the Company's future
stock option grants as determined appropriate by the Committee in its sole
discretion.
5. EXPENSE REIMBURSEMENT AND PERQUISITES
a. During the term of this Agreement, Xxxxx shall be entitled
to reimbursement of all reasonable and actual out-of-pocket expenses incurred
by him in the performance of his services to the Company consistent with
corporate policies, if any, provided that the expenses are properly accounted
for.
b. During each calendar year of the term of this Agreement,
Xxxxx shall be entitled to reasonable vacation with full pay; provided,
however, that Xxxxx shall schedule such
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vacations at times convenient to the Company.
c. During the term of this Agreement, the Company shall
provide Xxxxx with major medical insurance coverage as determined by the
Company in its sole discretion, and Xxxxx shall be entitled to participate in
all dental insurance and disability plans and other employee benefit plans
instituted by the Company from time to time on the same terms and conditions as
other employees of the Company, to the extent permitted by law.
6. NON-COMPETITION; NON-SOLICITATION
a. In consideration of the offer of employment, severance
benefits and Options to be granted to Xxxxx hereunder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, during the term of this Agreement and for a period equal to two
years thereafter, Xxxxx shall not, without the prior written consent of the
Company, anywhere in the world, directly or indirectly, (i) enter into the
employ of or render any services to any Competitive Business; (ii) engage in
any Competitive Business for his own account; (iii) become associated with or
interested in any Competitive Business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee, consultant,
advisor or in any other relationship or capacity; (iv) employ or retain, or
have or cause any other person or entity to employ or retain, any person who
was employed or retained by the Company while Xxxxx was employed by the
Company; or (v) solicit, interfere with, or endeavor to entice away from the
Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship. For
purposes of this Agreement, a "Competitive Business" shall mean any person,
corporation, partnership, firm or other entity which sells or has plans to sell
apparel, fashion accessories, or home furnishings via the Internet or otherwise
engages in any business which now or at the time has material operations which
are competitive (directly or indirectly) with the business of the Company.
However, nothing in this Agreement shall preclude Xxxxx from investing his
personal assets in the securities of any corporation or other business entity
which is engaged in a Competitive Business if such securities are traded on a
national stock exchange or in the over-the-counter market and if such
investment does not result in his beneficially owning, at any time, more than
three percent (3%) of the publicly-traded equity securities of such Competitive
Business.
x. Xxxxx and the Company agree that the covenants of
non-competition and non-solicitation contained in this paragraph 6 are
reasonable covenants under the circumstances, and further agree that if, in the
opinion of any court of competent jurisdiction, such covenants are not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of these covenants as to the
court shall appear not reasonable and to enforce the remainder of these
covenants as so amended. Xxxxx agrees that any breach of the covenants
contained in this paragraph 6 would irreparably injure the Company.
Accordingly, Xxxxx agrees that the Company, in addition to pursuing any other
remedies it may have in law or in equity, may obtain an injunction against
Xxxxx from any court having jurisdiction over the matter, restraining any
further violation of this paragraph 6.
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7. TERMINATION
a. This Agreement, the employment of Xxxxx, and Xxxxx'x
position as Chief Financial Officer and Executive Vice President of Operations
of the Company shall terminate upon the first to occur of:
(i) his death;
(ii) his "permanent disability," due to injury or
sickness for a continuous period of four (4) months,
or a total of eight months in a twenty-four month
period (vacation time excluded), during which time
Xxxxx is unable to attend to his ordinary and
regular duties;
(iii) a "Constructive Termination" by the Company, which,
for purposes of this Agreement, shall be deemed to
have occurred upon (A) the removal of Xxxxx from
both his positions as Chief Financial Officer and
Executive Vice President of Operations of the
Company, or (B) the material breach by the Company
of this Agreement; provided that no such breach
shall be considered a Constructive Termination
unless Xxxxx has provided the Company with at least
sixty (60) days' prior written notice of such breach
and the Company has failed to cure such breach
within such sixty (60) day period;
(iv) the termination of this Agreement at any time
without cause by the Company;
(v) non-renewal of this Agreement by the Company and/or
the Board of Directors;
(vi) the termination of this Agreement 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, or (2) Xxxxx has willfully and
materially failed to perform his duties hereunder,
or (3) Xxxxx has 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 policies of conduct including
with respect to trading in securities; or
(vii) the termination of this Agreement by Xxxxx, which
shall occur on not less than 60 days prior written
notice from Xxxxx.
b. In the event that this Agreement is terminated, other than
as a result of a Constructive Termination or by the Company without cause, the
Company shall pay Xxxxx his
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base salary only through the date of termination. In the event that this
Agreement is terminated without cause by the Company pursuant to paragraph
7(a)(iv) or through a Constructive Termination pursuant to paragraph 7(a)(iii),
the Company shall pay Xxxxx, in lieu of all salary, compensation payments and
perquisites set forth in paragraphs 3, 4 and 5 (including bonus payments and
option grants), severance payments (the "Severance Payments") as follows:
(i) the then-current base salary for a period of ninety
(90) days, if Xxxxx is terminated during the first
year of the term of this Agreement;
(ii) the then-current base salary for a period of
one-hundred twenty (120) days, if Xxxxx is
terminated during the second year of the term of
this Agreement; or
(iii) the then-current base salary for a period of
one-hundred fifty (150) days, if Xxxxx is terminated
during the third year of the term of this Agreement
or any time during the term of this Agreement
thereafter.
The Severance Payments shall be payable in periodic installments in accordance
with the Company's standard payroll practices.
8. CONFIDENTIALITY
x. Xxxxx recognizes that the services to be performed by him
are special, unique and extraordinary in that, by reason of his employment
under this Agreement, he may acquire or has acquired confidential information
and trade secrets concerning the operation of the Company, its predecessors,
and/or its affiliates, the use or disclosure of which could cause the Company,
or its affiliates substantial loss and damages which could not be readily
calculated and for which no remedy at law would be adequate. Accordingly, Xxxxx
covenants and agrees with the Company that he will not at any time during the
term of this Agreement or thereafter, except in the performance of his
obligations to the Company or with the prior written consent of the Board of
Directors or as otherwise required by court order, subpoena or other government
process, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company. If Xxxxx shall be required to make such disclosure pursuant to
court order, subpoena or other government process, he shall notify the Company
of the same, by personal delivery or electronic means, confirmed by mail,
within twenty-four (24) hours of learning of such court order, subpoena or
other government process and, at the Company's expense, shall (i) take all
reasonably necessary and lawful steps required by the Company to defend against
the enforcement of such subpoena, court order or government process, and (ii)
permit the Company to intervene and participate with counsel of its choice in
any proceeding relating to the enforcement thereof. The term "confidential
information" includes, without limitation, information not in the public domain
and not previously disclosed to the public or to the trade by the Company's
management with respect to the Company's or its affiliates' facilities and
methods, trade secrets and other intellectual property, designs, manuals,
confidential reports, supplier names and pricing, customer names and prices
paid, financial information or
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business plans.
x. Xxxxx confirms that all confidential information is and
shall remain the exclusive property of the Company. All memoranda, notes,
reports, software, sketches, photographs, drawings, plans, business records,
papers or other documents or computer-stored or disk-stored information kept or
made by Xxxxx relating to the business of the Company shall be and will remain
the sole and exclusive property of the Company and shall be promptly delivered
and returned to the Company immediately upon the termination of his employment
with the Company.
x. Xxxxx shall make full and prompt disclosure to the Company
of all inventions, improvements, ideas, concepts, discoveries, methods,
developments, software and works of authorship, whether or not copyrightable,
trademarkable or licensable, which are created, made, conceived or reduced to
practice by Xxxxx during his services with the Company, whether or not during
normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments"). All Developments
shall be the sole property of the Company, and Xxxxx hereby assigns to the
Company, without further compensation, all of his rights, title and interests
in and to the Developments and any and all related patents, patent
applications, copyrights, copyright applications, trademarks and trade names in
the United States and elsewhere.
x. Xxxxx shall assist the Company in obtaining, maintaining
and enforcing patent, copyright and other forms of legal protection for
intellectual property in any country. Upon the request of the Company, Xxxxx
shall sign all applications, assignments, instruments and papers and perform
all acts necessary or desired by the Company in order to protect its rights and
interests in any Developments.
x. Xxxxx agrees that any breach of this paragraph 8 will
cause irreparable damage to the Company and that, in the event of such breach,
the Company will have, in addition to any and all remedies of law, including
rights which the Company may have to damages, the right to equitable relief
including, as appropriate, all injunctive relief or specific performance or
other equitable relief. Xxxxx understands and agrees that the rights and
obligations set forth in paragraph 8 shall survive the termination or
expiration of this Agreement.
9. ADVANCE
The Company agrees that Xxxxx shall have the right to receive
an advance (an "Advance") from the Company in the aggregate amount of up to
$15,000 against his future year end bonus, if any by providing written notice
to the Company on or before August 31, 1998. In the event that an Advance is
made, Xxxxx shall promptly execute and deliver to the Company a written
acknowledgement of his receipt of the Advance and his agreement to be bound by
all of the terms and conditions contained in this Section 9. In the event that
an Advance is made, such Advance shall be offset by the amount, if any, of
Barry's year end bonus. If no year end bonus is earned by Xxxxx for the first
year of the term of this Agreement, then the Advance shall be applied
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against his first future year end bonus, if any, for any year during the term
of this Agreement. Xxxxx agrees that in the event Barry's employment with the
Company is terminated for any reason he shall repay the Advance to the Company
within 30 days of the date of termination of his employment. The Company agrees
that in the event this Agreement is terminated without cause by the Company
pursuant to paragraph 7 (a)(iii) within six months of the date hereof, the
Company shall forfeit its right to recover the Advance from Xxxxx.
10. REPRESENTATIONS AND WARRANTIES
x. Xxxxx represents and warrants to the Company that he was
advised to consult with an attorney of Barry's own choosing concerning this
Agreement.
x. Xxxxx represents and warrants to the Company that, to the
best of his knowledge, the execution, delivery and performance of this
Agreement by Xxxxx complies with all laws applicable to Xxxxx or to which his
properties are subject and does not violate, breach or conflict with any
agreement by which he or his assets are bound or affected.
11. GOVERNING LAW
This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of New
York, without giving effect to its conflict of law provisions.
12. ENTIRE AGREEMENT
This Agreement contains all of the understandings between Xxxxx and
the Company pertaining to Barry's employment with the Company, and it
supersedes all undertakings and agreements, whether oral or in writing,
previously entered into between them.
13. 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.
14. 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:
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If to the Company, to:
Pivot Rules, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: E. Xxxxxxx Xxxxx
With a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
If to Xxxxx, to:
Xxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
15. 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.
16. 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 paragraphs.
17. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
PIVOT RULES, INC.
By: /s/ E. Xxxxxxx Xxxxx
---------------------
E. Xxxxxxx Xxxxx
President
EMPLOYEE
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
