EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 16th day of December, 1997 between K2 DESIGN,
INC., a Delaware corporation, with offices at The New York Information and
Technology Center, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Corporation"), and Xxxxxx X. Xxxxx (the "Executive");
In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is agreed as follows:
1. Duties. The Corporation hereby employs the Executive in the
executive capacity as Chief Operating Officer. The specific duties to be
performed by the Executive for the Corporation and each of its subsidiaries
shall principally be defining and implementing systems and controls, managing
the Corporation's finances and developing and implementing the Corporation's
strategic plan to expand worldwide via acquisitions. In addition, the Executive
shall perform such other reasonable executive, administrative and managerial
services consistent with his position, to the Corporation and each of its
subsidiaries as the Board of Directors of the Corporation (the "Board") may from
time to time prescribe. The Executive accepts such employment and agrees to
devote his full time and effort to the services of the Corporation. Without
Executive's prior written consent, Executive's base of operations shall not be
changed from New York City (where Executive's duties shall be principally
performed), although Executive may be required to travel outside of the New York
tri-state area for reasonable periods of time to perform his duties.
2. Term. The term of this Agreement shall commence as of October 21,
1997, and shall end on December 31, 2000, unless otherwise extended by mutual
agreement of the Executive and the Corporation.
3. Compensation and Benefits. (a) During the first year of the Term,
the Corporation shall pay to the Executive a base salary of $200,000 in
accordance with the Corporation's normal payroll policies. In each succeeding
year during the Term, Executive's base salary shall be increased by 10% above
Executive's base salary during the prior year.
(b) In addition, upon the commencement date of the term,
Executive and the Corporation shall enter into the Stock Option Agreements
attached hereto as Exhibit A, pursuant to which
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Executive shall be granted options to acquire 100,000 shares of the
Corporation's common stock, par value $.01 per share ("Common Stock") at
exercise prices of $1.625 and $1.75 per share.
(c) In addition to the foregoing payments, Executive shall:
(i) be eligible to participate in all fringe
benefits, bonus and any pension and/or profit sharing plans that may be provided
by the Corporation or any subsidiary for its key executive employees in
accordance with the provisions of any such programs or plans;
(ii) be eligible to participate in any life or
other similar insurance plans, medical and health plans or other employee
welfare benefit plans that may be provided by the Corporation or any subsidiary
for its key executive employees in accordance with the provisions of any such
plans. The Corporation shall also bear the cost of premiums of (X) the
Executive's whole life insurance policy now in effect, up to a maximum of $2,000
per year and (Y) an individual disability policy, selected by Executive. The
aggregate monthly benefit of this additional policy and the Corporation's
existing disability insurance shall be not less than $12,500. The Corporation
shall also use its reasonable efforts to cause its health and its dental
insurers to provide health and dental insurance to Executive and his family
commencing on the first day of the Term through the end of the Term. The
Corporation shall bear the cost of all such health and dental insurance
premiums;
(iii) be entitled to three weeks paid vacation during
the first year of the Term and four weeks paid vacation during each of the
second and third years of the Term; provided, that without the consent of the
Corporation's Chief Executive Officer, Chief Operating Officer or President,
Executive shall not take more than two consecutive vacation weeks;
(iv) be entitled to sick leave and sick pay in
accordance with the policy of the Corporation or any subsidiary that may be
applicable to key executive employees;
(v) be entitled to such other bonuses as the Board
may award from time to time in its discretion (it being understood that although
the Board is not obligated to award any bonuses, it shall in good faith consider
whether to grant bonuses to Executive not less frequently than annually);
(vi) be entitled to reimbursement of all ordinary and
necessary business expenses against presentation of invoices or receipts and
otherwise in accordance with the Corporation's
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policies in effect from time to time applicable to senior executives of the
Corporation; and
(vii) be entitled to a car allowance of $450 per
month.
4. Conflict of Interest. The Executive agrees that during his
employment with the Corporation, the Executive will not, directly or indirectly,
engage in or have a substantial interest in any business which at the time shall
be in whole or substantial part competitive with any substantial part of the
business carried on by the Corporation now or at the time until this Agreement
shall be terminated, either for the Executive's own benefit or for or with any
person, firm or corporation whatsoever other than the Corporation.
5. Confidentiality. The Executive agrees that the Executive will not,
at any time during or after the termination of employment with the Corporation,
reveal, divulge or make known to any person, firm, corporation, or other
business organization (other than the Corporation), or use for its account, any
information that relates to the Corporation's existing or reasonably foreseeable
business which is not readily disclosed by inspection of the Corporation's
products, including, but not limited to, ideas, inventions, discoveries, trade
secrets, confidential information, good will, improvements, information
contained in or relating to the Corporation's product designs, manufacturing
processes and techniques, marketing plans or proposals, sources and prices of
inventory, equipment and all other business related items, financial
information, personnel information and customer information (collectively,
"Proprietary Information"). Proprietary Information includes any such
information, whether or not obtained by the Executive with the knowledge and
permission of the Corporation, whether or not developed, devised or otherwise
created in whole or in part by the Executive's efforts, and whether or not a
matter of public knowledge unless as a result of authorized disclosure. The
Executive further agrees to retain such knowledge and information which the
Executive acquires and develops during the Executive's employment respecting
such Proprietary Information in trust for the sole benefit of the Corporation
and its successors and assigns.
6. Non-Competition. (a) The Executive agrees to not (i) at any time
during employment with the Corporation, and (ii) if Executive's employment with
the Corporation is terminated pursuant to Section 7(a) or (b) or Executive
terminates his employment hereunder other than for Good Reason, then through
December 31, 2000 (the "Prohibited Period"), directly or indirectly enter into,
participate in or engage in any business, or the solicitation of any business,
which is competitive with
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the business of the Corporation within the territories in which the Corporation
now or during the Term conducts marketing or operational activities, whether as
an individual on the Executive's own account, as a partner or joint venturer, as
the owner of an interest in, or as a director or officer of, any entity, as an
executive, agent, salesman or consultant of any person or entity, or otherwise;
and (b) the Executive further agrees to not, at any time during or after the
termination of the Executive's employment with the Corporation (i) induce or
attempt to induce any employee of the Corporation to leave the Corporation's
employ, or (ii) interfere with the relationship of the Corporation with any
person or entity who or which at any time during his employment with the
Corporation was an employee or customer of, or in the habit of dealing with the
Corporation.
Anything to the contrary in this Agreement notwithstanding, upon
termination of his employment for any reason, Executive shall be permitted to
engage in the practice of law; provided, however, that during the Prohibited
Period, Executive shall not act as in-house counsel for a competitor (it being
understood that Executive may act as outside counsel for a competitor during the
Prohibited Period, so long as Executive complies with all applicable legal and
ethical obligations and does not violate Section 5 hereof in connection with
such representation).
7. Termination for Cause, Death or Disability. The Corporation shall
have the right to immediately terminate this Agreement by written notice to the
Executive (which notice shall specify the effective date of termination; the
"Termination Date"), and this Agreement shall terminate and the obligations and
covenants of the Corporation and the Executive hereunder (except those pursuant
to Sections 5 and 6, which shall survive termination of this Agreement, and
except as otherwise provided in this Agreement) shall be of no further force and
effect upon the Termination Date if any of the following occur: (a) the repeated
failure by the Executive to follow the reasonable written directives of the
Board of Directors of the Corporation that are not inconsistent with the
provisions of this Agreement; (b) the commission by the Executive of a (i)
felony, or (ii) fraud against the Corporation or any customer of, supplier to or
other person or entity which has regular dealings with, the Corporation; for
purposes of this (b), in the absence of a plea of guilty or nolo contendere by
the Executive, or a conviction (in the case of a felony) or a judgment (in the
case of a fraud) after the exhaustion of all available appeals, the Executive
will be conclusively presumed not to have committed any such felony or fraud;
and (c) the permanent disability of the Executive ("permanent disability" shall
mean the Executive's inability to perform the duties and responsibilities
hereunder by reason of physical or mental injury or illness for any 9 months in
any
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consecutive 12 month period). This Agreement shall terminate in the event of
Executive's death effective as of the date of death.
8. Other Termination. (a) Except as may otherwise be provided in the
Stock Option Agreements attached hereto as Exhibit A, if Executive dies, becomes
permanently disabled or terminates this Agreement other than for Good Reason,
the Corporation shall have no further liability to Executive for compensation or
benefits, except as may otherwise be provided in the applicable benefit plan or
as may otherwise be required by law (e.g., COBRA) and that Executive shall be
paid accrued salary upon termination of this Agreement.
(b) In the event Executive's employment is terminated by the
Corporation other than pursuant to Section 7(a) or 7(b), or the Executive
initiates the termination for Good Reason, the Corporation will pay severance
(in addition to the amounts outlined in Section 8(a) of this Agreement) to the
Executive (or to Executive's surviving spouse, or if Executive has no surviving
spouse, then to Executive's estate) as follows: (i) the salary for the unexpired
Term of this Agreement; (ii) if equity-based incentives are held by the
Executive or otherwise accrue to him but the Corporation's stock is not publicly
traded, Executive shall receive in cash the fair market value of such
equity-based incentives, which shall be determined in good faith by the
Corporation on the basis of such considerations as it reasonably deems
appropriate; and (iii) all benefits as described in Section 3(c)(ii) for which
Executive would otherwise have been eligible to receive as of the effective date
of Executive's termination of employment for the unexpired Term of this
Agreement. Notwithstanding the foregoing, if Executive becomes employed during
the unexpired Term, (X) there shall be credited against the amount payable by
the Corporation pursuant to clause (b)(i) of this Section 8, the amount paid to
Executive during such period in salary and fixed bonus not based on performance
and (Y) the Corporation's obligations pursuant to clause (b)(iii) of this
Section 8 shall terminate, except as may otherwise be provided in the
Corporation's benefit plans or as may otherwise be required by law.
(c) For purposes of this Agreement, the term (i) "Good Reason"
shall mean (A) reduction in any component of compensation below that which is
required to be paid hereunder, (B) a material difference in benefits below the
level of other senior executives, (C) material diminution in status, office or
title, or assignment of inconsistent duties to be performed on a regular basis,
or (D) any material breach of any material provision of this Agreement,
including, without limitation, the last sentence of Section 1 hereof and (ii)
"Cause" shall mean the occurrence of the events described in clauses (a) and (b)
of Section 7.
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9. Arbitration. Any controversy or claim arising out of, or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in New
York, New York, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof.
10. Miscellaneous. (a) All notices, requests, offers, demands and other
communications hereunder shall be in writing and shall be effectively given or
made when mailed by registered or certified mail, return receipt requested, and
directed to the party at the address given herein or to such address as either
party may hereafter designate in writing; (b) this Agreement is being delivered
and executed in the State of New York and shall be construed in accordance with
and governed by its laws; (c) this Agreement shall be binding upon and inure to
the benefit of the parties hereto, their heirs, executors, successors and
assigns and the Corporation shall cause its obligations hereunder to be assumed
by any person, corporation or other entity (1) resulting from the
reorganization, merger or consolidation of the Corporation with any other
corporation or entity or (2) any corporation or other entity to which the
Corporation may sell all or substantially all of its assets (and in either case,
if requested by Executive should Executive reasonably deem himself insecure,
such corporation's or other entity's ultimate parent), (d) this Agreement shall
not be assignable by the Executive, (e) this Agreement constitutes the entire
understanding between the parties hereto and may not be modified, amended,
altered or changed except in writing signed by the parties. To the extent that
any provision of this Agreement conflicts with the Corporation's employee
handbook, the provisions of this Agreement shall govern; (f) if any provision of
this Agreement or the application thereof to any person(s) or circumstance(s)
shall be invalid or unenforceable to any extent, (1) the remainder of this
Agreement and the application of such provision to other person(s) or
circumstance(s) shall not be affected thereby, and (2) each such provision shall
be enforced to the greatest extent permitted by law; (g) no waiver or any breach
or failure to perform the terms, covenants and conditions of this Agreement
shall be binding upon the parties hereto unless the same shall be in writing and
any such waiver shall be for one time only and shall not be for any future
breach or failure to perform under the terms of this Agreement; (h) preparation
of this Agreement has been a joint effort of the parties and this Agreement
shall not be construed more severely against either party; and (i) it is
understood, agreed and acknowledged by the Executive and the Corporation that
any threatened or actual breach by the Executive of any of the agreements
contained in this Agreement may cause irreparable damage to the Corporation and
that the remedy at law therefor may be inadequate and that the Corporation shall
be entitled to injunctive and other equitable relief (as well as
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damages, if applicable) in the case of any threatened or actual breach thereof.
The Corporation may in its sole discretion apply for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of Section 5 and 6 of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
K2 DESIGN, INC.
By: /s/Xxxxxxx X. xx Xxxxx /s/ Xxxxxx X. Xxxxx
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President Executive
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