Exhibit 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
XXXXXXX.XXX, INC.
DJ & J SOFTWARE CORPORATION
XXXXXX X. XXXXX
Dated as of September 20, 1999
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") between Xxxxxxx.xxx,
Inc. ("Egghead"), a Washington corporation, DJ & J Software Corporation ("DJ&
J"), a Washington corporation, and Xxxxxx X. Xxxxx ("Executive") is dated and
entered into as of September 20, 1999. Egghead and DJ& J are hereinafter
referred to collectively as the "Company".
In consideration of the mutual covenants and promises contained herein, the
Company and the Executive agree as follows:
1. Employment
The Company will continue to employ the Executive and the Executive will
continue to serve as its Chairman and Chief Executive Officer, with duties and
responsibilities customarily associated with such position. The Executive will
perform such additional duties as may be assigned from time to time by the Board
of Directors of the Company which relate to the business of the Company, its
subsidiaries or any business ventures in which the Company or its subsidiaries
may participate. Subject to and consistent with the Company's Articles of
Incorporation and Bylaws and subject to and consistent with its responsibilities
under law, the Board of Directors of the Company, during the Term, will include
the Executive as a part of the appropriate slate of directors for whom it
solicits proxies in connection with the annual meeting of shareholders.
2. Attention and Effort
The Executive will devote his full business time, attention and effort to
the Company's business and will use his skills and render services to the best
of his ability to serve the interests of the Company.
3. Term
The Executive's term of employment under this Agreement shall commence on
the date hereof and shall continue until terminated pursuant to Section 6 of
this Agreement (the "Term").
4. Compensation
4.1 Base Salary
The Executive's compensation shall consist, in part, of an annual base
salary of $300,000 before all customary payroll deductions (the "Base Salary").
The Base Salary shall be paid in substantially equal installments at the same
intervals as other officers of the Company are paid.
5. Benefits and Expenses
5.1 Expenses
The Company shall promptly reimburse the Executive for all reasonable and
necessary business expenses incurred and advanced by him in carrying out his
duties under this Agreement. The Executive shall present to the Company from
time to time an itemized account of such expenses in such form as may be
required by the Company.
5.2 Benefits
During the term of employment hereunder, the Executive shall be entitled to
participate fully in any benefit plans, programs, policies and any fringe
benefits which may be made available to the senior executives of the Company
generally (except incentive and other bonus plans other than as specifically
contemplated in this Agreement), including but not limited to medical, dental,
disability, pension and retirement benefits, life insurance and other death
benefits.
6. Termination
Employment of the Executive pursuant to this Agreement may be terminated as
follows but in any case, the provisions of Sections 9 and 10 shall survive the
termination of the Executive's employment
6.1 By the Company
With or without Cause (as defined below), the Board of Directors may
terminate the employment of the Executive at any time during the Term upon
giving Notice of Termination (as defined below).
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6.2 By the Executive
The Executive may terminate his employment at any time during the Term for
any reason upon giving Notice of Termination. Executive shall be deemed to have
Good Reason for termination if any of the following should occur:
(a) a material adverse change in Executive's position causing it to be of
materially less stature or responsibility, including but not limited to a
material change in job title or job responsibilities, without Executive's
written consent, provided, however, the anticipated change in Executive's job
title and job responsibilities in connection with the pending merger with
Onsale, Inc. shall not constitute such a material change;
(b) a reduction in Executive's salary without his written consent;
(c) a relocation of the Executive's principal place of employment away from
the greater Portland, Oregon/Vancouver, Washington metropolitan area
6.3 Automatic Termination
Employment shall terminate automatically upon death or total disability of
the Executive. The term "total disability" as used herein, shall mean an
inability to perform the duties set forth in Section 1 because of illness or
physical or mental disability for a period equal to the waiting period for
Executive to be eligible for coverage under the Company's long term disability
insurance, unless the Executive is granted a leave of absence by the Board of
Directors of the Company. Executive and the Company hereby acknowledge that the
Executive's ability to perform the duties specified in Section 1 is of the
essence of this Agreement. Termination hereunder shall be deemed to be
effective immediately upon the Executive's death or 30 days following a Notice
of Termination based upon a determination by the Board of Directors of the
Company of the Executive's total disability, as defined herein.
6.4 Notice
The term "Notice of Termination" shall mean written notice of termination
of the Executive's employment. At the election of the Company, as set forth in
the Notice of Termination, the Executive's employment and performance of
services may continue for a period of 30 days following the Notice of
Termination. Otherwise the Executive's employment shall terminate effective
upon receipt of the Notice of Termination, provided that the Executive shall be
entitled to termination payments in accordance with Section 7.
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6.5 Cause
Wherever reference is made in this Agreement to termination being with or
without Cause, "Cause" means cause given by the Executive to the Company and is
limited to the following:
(i) Conviction of a felony or of a crime involving moral
turpitude;
(ii) Continued misuse of alcohol or controlled substances; or
(iii) The willful misconduct or gross negligence of the Executive
which results in a material adverse effect on the Company.
7. Termination Payments
In the event of termination of the employment of the Executive during the
Term, all compensation and benefits set forth in this Agreement shall terminate
except as specifically provided in this Section 7:
7.1 Termination by the Company
If the Board of Directors terminates the Executive's employment during the
Term, the Executive shall be entitled to receive (i) any unpaid Base Salary
which has accrued for services already performed as of the date termination of
the Executive's employment becomes effective, and (ii) one year annual base
salary of $300,000, payable in a lump sum within 30 days after termination;
provided, however, that if the Executive is terminated by the Board of Directors
for Cause, the Executive shall not be entitled to receive the benefits set forth
in clause (ii).
7.2 Termination by the Executive Other Than for Good Reason
If the Executive terminates his employment during the Term other than for
Good Reason, the Executive shall not be entitled to receive any payments
hereunder other than any unpaid Base Salary which has accrued for services
already performed as of the date termination of the Executive's employment
becomes effective.
7.3 Termination by the Executive for Good Reason
If the Executive terminates his employment during the Term for Good Reason,
as defined in Section 6.2, the Executive shall be entitled to receive (i) any
unpaid Base Salary which has accrued for services already performed as of the
date of termination,
and (ii) one year annual base salary of $300,000, payable in a lump sum within
30 days after termination
7.4 Termination Because of Death or Total Disability
Except as provided in section 8, in the event of a termination of the
Executive's employment during the Term because of his death or total disability,
the Executive or his personal representative shall not be entitled to receive
any payments under this Section 7 other than any unpaid Base Salary which has
accrued for services already performed as of the date termination of the
Executive's employment becomes effective.
7.5 Limitation on Termination Payments
It being the intent of the parties that Executive shall not receive both a
termination payment and the payment described in Section 8, Executive shall not
be entitled to receive any termination payments (other than unpaid Base Salary
for services already performed) under this Section 7 if he has become entitled
to or has been paid the payment described in Section 8 of this Agreement..
8. Retention Bonus
In order to induce Executive to remain employed through any sale or merger
of the Company and to assist the Company in connection with such sale or merger,
the Company agrees that if it enters into, or is party to, an agreement to
liquidate its business during the Term, either through the sale of substantially
all of its assets for cash, stock or other property, or through a merger or
other business combination in which the holders of voting stock of the company
before such transaction own less than 50% of the voting stock of the combined or
surviving company following such transaction, the Executive shall be entitled to
receive a retention bonus of $300,000.00, provided that the Executive continues
his employment and carries out his responsibilities under this Agreement in
connection with such liquidation, sale, merger or business combination, through
December 31, 1999. Such amount shall be paid in a lump sum within ten (10) (10)
days following December 31, 1999. In the event Executive should die or become
totally disabled following the execution of an agreement under which the Company
is to be sold, merged, combined or liquidated, but prior to December 31, 1999,
the Company will pay the $300,000 bonus described in this Section to Executive
in the event of total disability or to his estate within thirty (30) days of
December 31, 1999.
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9. Noncompetition and Nonsolicitation
9.1 Applicability
This Section 9 shall survive the termination of the Executive's employment
with the Company or the expiration of the term of this Agreement.
9.2 Scope of Competition
The Executive agrees that he will not, directly or indirectly, prior to the
date on which his employment with the Company terminates or August 31, 2000,
whichever is later, be employed by, own, manage, operate, join, control or
participate in the ownership, management, operation or control of or be
connected with, in any manner, any person or entity which derives more than
thirty percent (30%) of its revenues from computer hardware or software sales in
competition with the Company (including, without limitation, sale or resale
over, by or through the Internet or other electronic means) in the United
States, unless released from such obligation in writing by the Company's Board
of Directors. The Executive shall be deemed to be connected with such business
if such business is carried on by a partnership, corporation or association of
which he is an employee, member, consultant or agent; provided, however, that
nothing herein shall prevent the purchase or ownership by the Executive of
shares which constitute less than 2% of the outstanding equity securities of a
publicly or privately held corporation.
9.3 Scope of Nonsolicitation
The Executive shall not, in addition, directly or indirectly (i) solicit,
influence or entice any employee or consultant of the Company to cease his
relationship with the Company or (ii) solicit, entice or in any way divert any
customer or supplier of the Company to do business with an entity described
herein. This Section 9.3 shall apply during the time period and geographical
area described in Section 9.2 hereof.
9.4 Equitable Relief
The Executive acknowledges that the provisions of this Section 9 are
essential to the Company, that the Company would not enter into this Agreement
if it did not include covenants not to compete or solicit and that damages
sustained by the Company as a result of a breach of such covenants cannot be
adequately remedied by damages, and the Executive agrees that the Company,
notwithstanding any other provision of this Agreement, in addition to any other
remedy it may have under this Agreement or at law, shall be entitled to
injunctive and other equitable relief to prevent or curtail any breach of any
provision of this Agreement, including without
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limitation this Section 9. The Executive acknowledges that the covenants in this
Agreement are reasonable and that compliance with such covenants will not
prevent him from pursuing his livelihood.
9.5 Effect of Violation
The Executive and the Company agree that additional consideration has been
given for the Executive entering into the noncompetition and nonsolicitation
provisions of this Agreement and the Nondisclosure Agreement described in
Section 10, such additional consideration including, without limitation certain
provisions for termination payments pursuant to Section 7 and other payments
pursuant to Section 8 of this Agreement. Violation by the Executive of such
noncompetition and nonsolicitation provisions or the Nondisclosure Agreement
shall relieve the Company of any obligation it may have to make such termination
payments and other payments, but shall not relieve the Executive of his
obligation hereunder not to compete or solicit.
9.6 Definition of the Company
For purposes of Sections 9.2 and 9.3 hereof, "the Company" shall include
all subsidiaries of the Company, the Company's parent corporation and any
business ventures in which the Company, its subsidiaries or its parent
corporation may participate.
10. Nondisclosure
As a condition of his employment hereunder, the Executive has executed and
delivered to the Company an agreement addressing the nondisclosure of
confidential information (the "Nondisclosure Agreement") in the form attached
hereto as Exhibit A and incorporated herein by reference as if set forth in full
herein, which Nondisclosure Agreement shall survive the termination of the
Executive's employment.
11. Form of Notice
Every notice required by the terms of this Agreement shall be given in
writing by serving the same upon the party to whom it was addressed personally,
by courier, by facsimile transmission (with hard copy delivered by overnight
courier) or by registered or certified mail, return receipt requested, at the
address set forth below or at such other address as may hereafter be designated
by notice given in compliance with the terms hereof:
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If to the Executive: Xxxxxx X. Xxxxx
00 - 00xx Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
If to the Company: Xxxxxxx.xxx, Inc.
000 X. Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
ATTN: Chief Financial Officer
Copy to: Xxxxx X. XxXxxx
Xxxxxxx Coie
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
or such other address as shall be provided in accordance with the terms hereof.
Notice shall be effective upon personal delivery, delivery by courier, receipt
of facsimile transmission or three days after mailing.
12. Assignment
The Executive agrees that this Agreement may be transferred or assigned by
the Company to (a) any corporation resulting from any merger, consolidation or
other reorganization to which the Company is a party or (b) any corporation,
partnership, association or other person to which the Company may transfer all
or substantially all of the assets and business, and such assignee or transferee
shall succeed to the rights and obligations of the Company hereunder. This
Agreement is not assignable by the Executive.
13. Waiver
No waiver of any of the provisions hereof shall be valid unless in writing,
signed by the party against whom such claim or waiver is sought to be enforced,
nor shall failure to enforce any right hereunder constitute a continuing waiver
of the same or a waiver of any other right hereunder.
14. Amendments in Writing
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified,
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waived, terminated or discharged and signed by the Company and the Executive,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement, course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by the Company and the
Executive.
15. Applicable Law
This Agreement shall be governed by the substantive laws of the state of
Washington, without regard to its conflicts of laws provisions.
16. Severability
All provisions of this Agreement are severable, and the unenforceability or
invalidity of any single provision hereof shall not affect the remaining
provisions.
17. Headings
All headings or titles in this Agreement are for the purpose of reference
only and shall not in any way affect the interpretation or construction of this
Agreement.
18. Attorneys
In any action or proceeding brought by any party against the other arising
out of or relating in any way to this Agreement, the prevailing party shall, in
addition to other allowable costs, be entitled to an award of reasonable
attorneys' fees.
19. Previous Employment Agreement
This Agreement replaces and fully supersedes the Executive Employment
Agreement entered into between Egghead, Inc., the predecessor to the Company,
and Executive dated January 31, 1997. All provisions of such previous agreement
are void and no longer in effect.
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IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
EXECUTIVE:
/s/ XXXXXX X. XXXXX
--------------------------
Xxxxxx X. Xxxxx
COMPANY:
XXXXXXX.XXX, INC.
By /s/ XXXXX XXXXXX
----------------------
Xxxxx Xxxxxx
Its Vice President, Chief Financial Officer
and Secretary
DJ & J SOFTWARE CORPORATION
By /s/ XXXXX XXXXXX
----------------------
Xxxxx Xxxxxx
Its Vice President, Chief Financial Officer
and Secretary
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