EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made this 18th day of September 1996, by and between
RAZORFISH, INC., a New York corporation (the "COMPANY"), and XXXXXXX X. XXXXXX
(the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, entering into this Agreement is a condition of closing under
a certain Stock Purchase Agreement dated the date hereof (the "PURCHASE
AGREEMENT") pursuant to which JWL Associates Corp. ("JWL"), a wholly-owned
subsidiary of Omnicom Group Inc. ("OMNICOM") acquired a 40% equity interest in
the Company and, under certain conditions, an option to increase this to an 80%
equity interest; and
WHEREAS, the Executive was employed by the Company, and JWL and the
Company wish to ensure the continued employment of the Executive with the
Company and the Executive wishes to accept such employment upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT
----------
The Company agrees to employ the Executive during the Term specified
in paragraph 2, and the Executive agrees to accept such employment, upon the
terms and conditions hereinafter set forth.
2. TERM
----
Subject to Section 6 below and the other terms and conditions of this
Agreement, the Executive's employment by the Company shall be for a term
commencing on the date hereof
and expiring on the close of business on December 31, 2001 (the "INITIAL TERM");
provided, however, the term of the Executive's employment by the Company shall
continue thereafter unless and until either party shall give to the other six
month's advance written notice ("NOTICE OF TERMINATION") of expiration of the
term (the Initial Term and the period, if any, thereafter, during which the
Executive's employment shall continue are collectively referred to as the
"TERM"). Any Notice of Termination given under this paragraph 2, shall specify
the date of expiration (which may not be earlier than the close of business on
December 31, 2001) and may be given at any time on or after June 30, 2001. The
Company shall have the right at any time during any such six month notice period
which commences on or after June 30, 2001 to relieve the Executive of his
offices, duties and responsibilities and to place him on a paid leave-of-absence
status, provided that during such notice period the Executive shall remain a
full-time employee of the Company and shall continue to receive his salary
compensation and other benefits as provided in this Agreement. The effective
date of the termination of the Executive's employment with the Company,
regardless of the reason therefor, is referred to in this Agreement as the "DATE
OF TERMINATION".
3. DUTIES AND RESPONSIBILITIES
---------------------------
(a) During the Term, the Executive shall have the positions of
President/Chief Executive Officer/Director of Marketing, Finance and Operations.
The Executive shall report to the Board of Directors of the Company (the
"BOARD") and in addition, after the Company is a majority-owned subsidiary of
Omnicom, the President of Omnicom and/or his designee, at such times and in such
detail as he or they, as the case may be, shall reasonably require. In addition,
during the Term, the Executive shall serve as a Director of the Company without
additional compensation.
(b) The Executive shall have all of the powers, duties and
responsibilities customary to his offices as are reasonably necessary to the
operations of the Company and as may be assigned to him from time to time by or
under authority of the Board and/or after the
2
Company is a majority-owned subsidiary of Omnicom, the President of Omnicom,
consistent with his position as designated in paragraph 3(a) above.
(c) The Executive shall use his best efforts to ensure that the
Company and its subsidiaries, if any, comply on a timely basis with all
budgetary and reporting requirements reasonably requested by the Board. In no
event will the Executive without the approval of the Board incur obligations on
behalf of the Company other than in the ordinary course of business or enter
into any transaction on behalf of the Company not in the ordinary course of
business. In addition, as long as the provisions of Section 3.3 to the
Shareholders Agreement of even date herewith by and among JWL, the Company, the
Executive and others are operative, the Executive will not cause the Company to
take any of the actions listed in Section 3.3 without such action having
received the written approval of JWL.
(d) The Executive's employment by the Company shall be full-time and
exclusive, and during the Term, the Executive agrees that he will (i) devote
substantially all of his business time and attention, his best efforts, and all
his skill and ability to promote the interests of the Company and its
subsidiaries; (ii) carry out his duties in a competent and professional manner;
(iii) work with other employees of the Company and its subsidiaries in a
competent and professional manner; and (iv) generally promote the interests of
the Company and its subsidiaries. Notwithstanding the foregoing, the Executive
shall be permitted to engage in other business or charitable activities (as an
active participant or a passive investor), provided that such activities are not
rendered for a company which transacts business with the Company or engages in
business competitive with that conducted by the Company (or, if such company
does transact business with the Company or does engage in a competitive
business, it is a publicly held corporation and the Executive's participation is
limited to owning less than 1/4 of 1% of its outstanding shares) and further
provided that such activities (individually or collectively) do not materially
interfere with the performance of his duties or responsibilities under this
Agreement.
4. COMPENSATION
------------
3
As compensation for his services hereunder and in consideration of his
agreement not to compete as set forth in paragraph 8 below, during the Term, the
Company shall pay the Executive, in accordance with its normal payroll
practices, direct salary compensation at an annual rate of $104,000. The
Executive's annual rate of salary compensation may be increased (but not
decreased) by or under the authority of the Board in accordance with the salary
review policy and budgeting procedures of the Company.
5. EXPENSES; FRINGE BENEFITS
--------------------------
(a) In addition to the compensation provided for under paragraph 4,
the Company agrees to pay or to reimburse the Executive during the Term for all
reasonable, ordinary and necessary vouchered business or entertainment expenses
incurred in the performance of his services hereunder in accordance with the
policy of the Company as from time to time in effect. The Executive, as a
condition precedent to obtaining such payment or reimbursement, shall provide to
the Company any and all statements, bills or receipts evidencing the travel or
out-of-pocket expenses for which the Executive seeks payment or reimbursement,
and any other information or materials, as the Company may from time to time
reasonably require.
(b) During the Term, the Executive and, to the extent eligible, his
dependents, shall be entitled to participate in and receive all benefits under
any welfare benefit plans and programs provided by the Company (including
without limitation, medical, dental, disability, group life (including
accidental death and dismemberment) and business travel insurance plans and
programs) applicable generally to the employees of the Company.
(c) During the Term, the Executive shall be entitled to participate
in all retirement plans and programs (including without limitation any profit
sharing/401(k) plan) applicable generally to the employees of the Company,
subject, however, to generally applicable eligibility and other provisions of
the various plans and programs in effect from time to time. In addition, during
the Term, the Executive shall be entitled to receive fringe benefits and
4
perquisites in accordance with the plans, practices, programs and policies of
the Company from time to time in effect and available generally to the senior
executives of the Company.
(d) The Executive shall be entitled to four weeks paid vacation
during each calendar year of the Term, to be taken at such time(s) as shall not,
in the reasonable judgment of the Board, materially interfere with the
Executive's fulfillment of his duties hereunder, and shall be entitled to as
many holidays, sick days and personal days as are in accordance with the
Company's policy then in effect for its senior executives generally, upon such
terms as may be provided of general application to senior executives of the
Company.
(e) Notwithstanding anything to the contrary contained above, the
Company shall be entitled to terminate or reduce any employee benefit or
perquisite enjoyed by the Executive pursuant to the provisions of paragraph
5(b), (c) or (d) above if such reduction is part of an across-the-board
reduction applicable to all executive officers of the Company.
6. TERMINATION
-----------
The Company, by direction of the Board, shall be entitled to terminate
the Term and to discharge the Executive for "CAUSE" effective upon the giving of
written notice. The term "cause" shall be limited to the following grounds:
(i) The Executive's repeated failure or refusal to materially
perform his duties and responsibilities as set forth in paragraph 3
hereof, or the failure of the Executive to devote substantially all of
his business time and attention exclusively to the business and
affairs of the Company in accordance with the terms hereof, in each
case if such failure or refusal is not cured within 10 days after
written notice thereof to the Executive by the Company;
(ii) The willful misappropriation of the funds or property of the
Company;
5
(iii) Conviction in a court of law of, or entering a plea of
guilty or no contest to, any felony or any crime involving moral
turpitude, dishonesty or theft;
(iv) The commission by the Executive of any willful or
intentional act which injures or could reasonably be expected to
injure the reputation, business or business relationships of the
Company, including without limitation, a willful or intentional breach
of the provisions of Section 8 of this Agreement; and
(v) Any material breach (not covered by any of the clauses
(i) through (iv)) of any term, provision or condition of this
Agreement, if such breach is not cured within 30 days after written
notice thereof to the Executive by the Company.
7. DISABILITY: DEATH
-----------------
In the event the Executive shall be unable to perform his duties
hereunder by virtue of illness or physical or mental incapacity or disability
(from any cause or causes whatsoever) in substantially the manner and to the
extent required hereunder prior to the commencement of such disability (all such
causes being herein referred to as "DISABILITY") and the Executive shall fail to
perform such duties for periods aggregating 180 days, whether or not continuous,
in any continuous period of 270 days, the Company shall have the right to
terminate the Executive's employment hereunder as at the end of any calendar
month during the continuance of such disability upon at least 30 days' prior
written notice to him. In the event of the Executive's death, the Date of
Termination shall be the date of such death.
8. NON-COMPETITION AND PROTECTION OF CONFIDENTIAL INFORMATION
----------------------------------------------------------
(a) The Executive agrees that his services hereunder are of a
special, unique, extraordinary and intellectual character, and his position with
the Company places him in a position of confidence and trust with the clients
and employees of the Company. The Executive acknowledges that the rendering of
services to the clients of the Company necessarily requires the disclosure to
the Executive of confidential information and trade secrets of the Company
6
(such as without limitation, proprietary software programs, marketing plans,
media plans, budgets, corporate policies, client preferences and policies, and
identity of appropriate personnel of clients with sufficient authority to
influence a shift in suppliers). The parties hereto agree that in the course of
the Executive's employment with the Company, the Executive has and will continue
to develop a personal relationship with the Company's clients and a knowledge of
those clients' affairs and requirements, and that the relationship of the
Company with its established clientele will therefore be placed in the
Executive's hands in confidence and trust. The Executive consequently agrees
that it is reasonable and necessary for the protection of the trade secrets,
goodwill and business of the Company that the Executive make the covenants
contained herein. Accordingly, the Executive agrees that while he is in the
employ of the Company and for a one year period after the Date of Termination,
he shall not except on behalf of the Company, directly or indirectly, and
regardless of the reason for his ceasing to be employed by the Company:
(i) attempt in any manner to solicit from any client business
of the type performed by the Company or to persuade any client to
cease to do business or to reduce the amount of business which any
such client has customarily done or is reasonably expected to do with
the Company, whether or not the relationship between the Company and
such client was originally established in whole or in part through his
efforts; or
(ii) employ as an employee or retain as an exclusive consultant
any person who is then or at any time during the preceding twelve
months was an employee of or exclusive consultant to the Company, or
persuade or attempt to persuade any employee of or exclusive
consultant to the Company to leave the employ of the Company or to
become employed as an employee or retained as a consultant by anyone
other than the Company; or
(iii) render to or for any client any services of the type
rendered by the Company.
7
As used in this paragraph 8, the noun "COMPANY" shall include subsidiaries of
the Company and the term "CLIENT" shall mean (1) anyone who is a client of the
Company on the Date of Termination or, if the Executive's employment shall not
have terminated, at the time of the alleged prohibited conduct (the
"DETERMINATION DATE"); (2) anyone who was a client of the Company at any time
during the two year period immediately preceding the Determination Date; and (3)
any prospective clients to whom the Company had made a new business presentation
at any time during the one year period immediately preceding the Determination
Date.
(b) The Executive also agrees that he will not at any time (whether
during the Term or after termination of this Agreement), disclose to anyone any
confidential information or trade secret of the Company, or any client of the
Company, or utilize such confidential information or trade secret for his own
benefit, or for the benefit of third parties and all memoranda, notes, records
or other documents compiled by him or made available to him during the Term
pertaining to the business of the Company or its respective clients shall be the
property of the Company and shall be delivered to the Company on the termination
of his employment or at any other time, upon request. The term "confidential
information or trade secret" does not include information which (i) becomes
generally available to the public other than by breach of this provision or (ii)
the Executive learns from a third party who is not under an obligation of
confidence to the Company. In the event that the Executive becomes legally
required to disclose any confidential information or trade secret, he will
provide the Company with prompt notice thereof so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this paragraph 8(b). In the event that such protective order or
other remedy is not obtained, or that the Company waives compliance with the
provisions of this paragraph 8(b), the Executive will furnish only that portion
of the confidential information or trade secret which is legally required and
will exercise his best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the confidential
information or trade secret.
(c) If the Executive commits a breach, or is about to commit a
breach, of any of the provisions of paragraphs 8(a) or (b) above, the Company
shall have the right to have the
8
provisions of this Agreement specifically enforced by any court having equity
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company. In addition, the Company may take all such other
actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
(d) The parties acknowledge that the type and periods of restriction
imposed in the provisions of paragraphs 8(a) and (b) above are fair and
reasonable and are reasonably required for the protection of the Company and the
goodwill associated with the business of the Company (including without
limitation the business acquired pursuant to the Purchase Agreement); and that
the time, scope, geographic area and other provisions of this paragraph 8 have
been specifically negotiated by sophisticated commercial parties and are given
as an integral part of the transactions contemplated by the Purchase Agreement,
it being understood that the clients of the Company may be serviced from any
location and accordingly it is reasonable that the restrictive covenants set
forth herein are not limited by narrow geographic area but generally by the
location of such clients and potential clients. The Executive specifically
acknowledges that his being restricted from servicing clients and prospective
clients as contemplated by this Agreement will not prevent him from being
employed or earning a livelihood in the type of business conducted by the
Company. If any of the covenants in paragraphs 8(a) or (b) above, or any part
thereof, is hereafter construed to be invalid or unenforceable, the same shall
not affect the remainder of the covenant or covenants, which shall be given full
effect, without regard to the invalid portions. If any of the covenants
contained in paragraphs 8(a) or (b), or any part thereof, is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or areas of such provision and, in its
reduced form, such provision shall then be enforceable. The parties hereto
intend to and hereby confer jurisdiction to enforce the covenants contained in
paragraphs 8(a) and (b) above
9
upon the courts of any state or other jurisdiction within the geographical scope
of such covenants in which a breach or alleged breach of a covenant contained in
paragraph 8(a) or (b) has been alleged to have occurred. In the event that the
courts of any one or more of such states or other jurisdictions shall hold such
covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the right of the Company to the relief provided above
in the courts of any other states or other jurisdictions within the geographical
scope of such covenants, as to breaches of such covenants in such other
respective states or other jurisdictions, the above covenants as they relate to
each state or other jurisdiction being, for this purpose, severable into diverse
and independent covenants.
9. INTELLECTUAL PROPERTY
---------------------
During the Term, the Executive will disclose to the Company all ideas,
inventions and business plans developed by him during such period which relate
directly or indirectly to the business of the Company, including without
limitation, any design, logo, slogan or campaign or any process, operation,
product or improvement which may be patentable or copyrightable. The Executive
agrees that all patents, licenses, copyrights, tradenames, trademarks, service
marks, advertising campaigns, promotional campaigns, designs, logos, slogans and
business plans developed or created by the Executive in the course of his
employment hereunder, either individually or in collaboration with others, will
be deemed works for hire and the sole and absolute property of the Company. The
Executive agrees, that at the Company's request, he will take all steps
necessary to secure the rights thereto to the Company by patent, copyright or
otherwise.
10. ENFORCEABILITY
--------------
The failure of any party at any time to require performance by another
party of any provision hereunder shall in no way affect the right of that party
thereafter to enforce the same, nor shall it affect any other party's right to
enforce the same, or to enforce any of the other provisions in this Agreement;
nor shall the waiver by any party of the breach of any provision
10
hereof be taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.
11. ASSIGNMENT
----------
This Agreement is a personal contract and the Executive's rights and
obligations hereunder may not be sold, transferred, assigned, pledged or
hypothecated by the Executive. The rights and obligations of the Company
hereunder shall be binding upon and run in favor of the successors and assigns
of the Company; provided, however, the Company may not assign or transfer its
rights under this Agreement except in connection with a merger or consolidation
(whether or not the Company is the continuing entity), or the sale or
liquidation of all or substantially all the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company as contained in this Agreement, either contractually or as a matter of
law.
12. MODIFICATION
------------
This Agreement may not be orally canceled, changed, modified or
amended, and no cancellation, change, modification or amendment shall be
effective or binding, unless in writing and signed by the parties to this
Agreement and approved by the President of Omnicom.
13. SEVERABILITY: SURVIVAL
----------------------
In the event any provision or portion of this Agreement is determined
to be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement shall nevertheless be binding upon the
parties with the same effect as though the invalid or unenforceable part had
been severed and deleted. The respective rights and obligations of the parties
hereunder shall survive the termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and obligations.
14. LIFE INSURANCE
--------------
11
The Executive agrees that the Company shall have the right to obtain
life insurance on the Executive's life, at the sole expense of the Company, as
the case may be, and with the Company as the sole beneficiary thereof. The
Executive shall (a) cooperate fully in obtaining such life insurance, (b) sign
any necessary consents, applications and other related forms or documents and
(c) take any reasonably required medical examinations.
15. NOTICES
-------
Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party shall be in writing and shall be
deemed effective (a) upon personal delivery, if delivered by hand, or (b) three
days after the date of deposit in the mails, postage prepaid if mailed by
certified or registered mail, or (c) on the next business day, if sent by
facsimile transmission or prepaid overnight courier service, and in each case,
addressed as follows:
If to the Executive:
-------------------
Xx. Xxxxxxx X. Xxxxxx
c/o Razorfish, Inc.
000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Winthrop & Weinstine
0000 Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to the Company:
-----------------
Razorfish, Inc.
000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
12
Attention: Chairman
Fax: (000) 000-0000
and
Omnicom Group Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Diversified Agency Services Division
Fax: 000-000-0000
with a copy to:
Xxxxx & Xxxxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: 000-000-0000
Any party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.
16. APPLICABLE LAW
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without application of conflict of law
provisions applicable herein.
17. NO CONFLICT
-----------
The Executive represents and warrants that he is not subject to any
agreement, instrument, order, judgment or decree of any kind, or any other
restrictive agreement of any character, which would prevent him from entering
into this Agreement or which would be breached by the Executive upon his
performance of his duties pursuant to this Agreement.
18. ENTIRE AGREEMENT
----------------
This Agreement represents the entire agreement between the Company and
the Executive with respect to the subject matter hereof, and all prior
agreements, plans and
13
arrangements relating to the employment of the Executive by the Company are
nullified and superseded hereby, including but not limited to the Employment
Agreement dated May 30, 1996.
19. HEADINGS
--------
The headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement.
20. MISCELLANEOUS
-------------
(a) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(b) Following the date hereof and regardless of any dispute that may
arise in the future, the Executive will not, and will use his best efforts to
cause his business associates to not, disparage, criticize or make statements to
the detriment of the Company, Omnicom, or any of their affiliates; and the
Company will not, and will use their best efforts to cause their affiliated
companies to not, disparage, criticize or make statements to the detriment of
the Executive.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
RAZORFISH, INC.
BY: /S/ XXXXX X. XXXXXXXX
-------------------------------
NAME: XXXXX X. XXXXXXXX
TITLE: CHAIRMAN
/S/ XXXXXXX X. XXXXXX
-------------------------------
XXXXXXX X. XXXXXX
15
