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Global Sports - Key Employee Agreement
EXHIBIT 10.16
KEY EMPLOYEE AGREEMENT
To: Kathryn Bednarski
276 Forrest Lane
Boulder, Colorado, 80302
The undersigned, Ryka Inc., a Delaware corporation (the "Company"), with its principal place of business located at 555 S. Henderson Road, King of Prussia, Pennsylvania 19406, hereby agrees with you as follows:
1. Position and Responsibilities.
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1.1 You shall serve as President of the Company, (or in such other executive capacity as shall be designated by the Board of Directors or Executive Committee of the Company and reasonably acceptable to you) and shall perform the duties customarily associated with such capacity from time to time. In particular, you will have primary responsibility over worldwide product design, development, marketing, promotions and advertising. You shall report to the Chief Executive Officer. It is anticipated that the Company will change its name to Global Sports, Inc. ("Global") and will create a wholly owned subsidiary called Ryka Inc. ("Subsidiary"). At such time, your contract will be assumed by the Subsidiary, you will become president thereof and cease to be President of the Company. All of your duties set forth herein will apply to such Subsidiary and not the Company and all obligations of the Company herein shall be performed by the Subsidiary, except that any provisions relating to stock options shall refer to Global. In addition, it is expected that the Subsidiary will open a branch office in the Portland, Oregon area in July, 1997. You will be in charge of that office. It is presently expected that you will hire up to five people in that office in design, marketing and possibly product development.
1.2 You will devote your full time and your best efforts to the performance of your duties hereunder and the business and affairs of the Company. You agree to perform such executive duties as may be assigned to you by or on authority of the Company's Board of Directors or Executive Committee from time to time.
1.3 You will duly, punctually, and faithfully perform and observe any and all rules and regulations which the Company may or shall hereafter reasonably establish governing your conduct as an employee and the conduct of its business.
2. Term of Employment.
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2.1 The initial term of this Agreement shall be for the period of years set forth on Exhibit A annexed hereto commencing with the date hereof. Thereafter, this Agreement shall be automatically renewed for successive periods of one (1) year, unless you or the Company shall give the other party not less than four (4) months prior written notice of non-renewal. Your employment with the Company may be terminated as provided in Sections 2.2 or 2.3.
2.2 The Company shall have the right to terminate your employment at any time under this Agreement prior to the stated term in any of the following ways:
(a) on thirty (30) days prior written notice to you upon your disability
(disability shall be defined as your inability to perform duties under
this Agreement for an aggregate of ninety (90) days out of any one
hundred eighty (180) day period due to mental or physical disability);
(b) immediately without prior notice to you by the Company for "Cause", as
hereinafter defined;
(c) immediately without prior notice to you or in the event of the
liquidation or reorganization of the Company under the federal
Bankruptcy Code or any state insolvency or bankruptcy law;
(d) at any time without Cause;
(e) immediately upon your death.
2.3 "Cause" for the purpose of Section 2 of this Agreement shall mean: (i) the falseness or material inaccuracy of any of your warranties or representations herein; (ii) your willful failure or refusal to comply with explicit directives of the Board of Directors or Executive Committee or to render the services required herein; (iii) fraud or embezzlement involving assets of the Company, its customers, suppliers or affiliates or other misappropriation of the Company's assets or funds; (iv) your conviction of a criminal felony offense; (v) the willful breach or habitual neglect of your obligations under this Agreement or your duties as an employee of the Company; (vi) habitual use of drugs. The existence of Cause for termination of your employment by the Company shall be subject, upon the written election by you or the Company, to binding arbitration as provided in Section 9 hereof. The cost of arbitration, exclusive of the cost of each party's legal representation (which, except as hereinafter otherwise provided, shall be borne by the party
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incurring the expense), shall be borne by the instigating party; provided, however, that the arbitrators' award may require either party to reimburse the other for the reasonable cost of legal representation in the arbitration proceedings.
Further, any dispute, controversy, or claim arising out of, in connection with, or in relation to this definition of "Cause" shall be settled by arbitration as provided in Section 9 hereof. Any award or determination shall be final, binding, and conclusive upon the parties, and a judgment rendered may be entered in any court having jurisdiction thereof.
2.4 In the event of the termination of your employment, you shall be entitled to the following:
(a) If your employment is terminated because of your death or
disability, (i) all obligations of the Company hereunder shall cease,
except with respect to amounts and obligations accrued to you through the
thirtieth day after which your death or disability has occurred, and (ii)
you shall retain your vested options and any stock options that you would
otherwise be entitled to receive within one year of the effective date of
your termination and forfeit any unvested options due to vest later than
one year from the date of your termination. You may exercise your vested
options and those additional options due to vest within one year for a
period of one year from the date of the termination of your employment; and
(b) If your employment is terminated for "Cause" you shall not be
entitled to any further compensation or benefits, effective as of the date
of termination. In addition, you shall retain your vested options and
forfeit any unvested options. You may exercise your vested options for a
period of one year from the date of the termination of your employment; and
(c) If your employment is terminated without "Cause",the Company shall
be obligated to pay to you, as severance pay, an amount equal to six months
of your then current annual Base Salary, such sum to be payable monthly
over a six month period from the date of termination. In addition, the
Company will continue to make pay your medical insurance premiums for that
six month period. (the "Severance Payments").
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3. Compensation.
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You shall receive the compensation and benefits set forth on Exhibit A attached hereto ("Compensation") for all services to be rendered by you hereunder and for your transfer of property rights, if any, pursuant to an agreement relating to proprietary information and inventions of even date herewith attached hereto as Exhibit C between you and the Company (the "Proprietary Information and Inventions Agreement").
4. Other Activities During Employment.
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4.1 Except for any outside directorships currently held by you as listed on Exhibit B attached hereto, and except with the prior written consent of a disinterested majority of the Company's Board of Directors, which consent will not be unreasonably withheld, you will not, during the term of this Agreement, undertake or engage in any other employment, occupation or business enterprise other than one in which you are an inactive investor.
4.2 You hereby agree that, except as disclosed on Exhibit B attached hereto, during your employment hereunder, you will not, directly or indirectly, engage (i) individually, (ii) as an officer, (iii) as a director, (iv) as an employee, (v) as a consultant, (vi) as an advisor, (vii) as an agent (whether a salesperson or otherwise), (viii) as a broker, or (ix) as a partner, co- venturer, stockholder, or other proprietor owning directly or indirectly more than five percent (5%) interest in any firm, corporation, partnership, trust, association, or other organization which is engaged in the planning, research, development, production, manufacture, marketing, sales, or distribution of women's athletic footwear and clothing and related products and services or any other line of business engaged in or under demonstrable development by the Company (such firm, corporation, partnership, trust, association, or other organization being hereinafter referred to as a "Prohibited Enterprise"). Except as may be shown on Exhibit B attached hereto, you hereby represent that you are not engaged in any of the foregoing capacities (i) through (ix) in any Prohibited Enterprise.
5. Former Employers.
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5.1 You represent and warrant that your employment by the Company will not conflict with and will not be constrained by any prior or current employment, consulting agreement or relationship whether oral or written. You represent and warrant that you do not possess confidential information arising out of any such employment, consulting agreement or relationship which, in your
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best judgment, would be utilized in connection with your employment by the Company in the absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should find that confidential information belonging to any other person or entity might be usable in connection with the Company's business, you will not intentionally disclose to the Company or use on behalf of the Company any confidential information belonging to any of your former employers; but during your employment by the Company you will use in the performance of your duties all information which is generally known and used by persons with training and experience comparable to your own all information which is common knowledge in the industry or otherwise legally in the public domain.
6. Proprietary Information and Inventions.
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You agree to execute, deliver and be bound by the provisions of the Proprietary Information and Inventions Agreement attached hereto as Exhibit C.
7. Post-Employment Activities.
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7.1 Except as hereinafter provide, for a period of one (1) year after the termination or expiration, for any reason, of your employment with the Company hereunder, absent the Board of Directors' prior written approval, you will not directly or indirectly engage in activities similar to those described in Section 4.2, nor render services similar or reasonably related to those which you shall have rendered hereunder to, any person or entity whether now existing or hereafter established which directly or indirectly competes with (or proposes or plans to compete with) the Company ("Direct Competitor") in the sale of women's athletic footwear, apparel and related products and services. Nor shall you entice, induce or encourage any of the Company's other employees to engage in any activity which, were it done by you, would violate any provision of the Proprietary Information and nor shall you entice, induce or encourage any of the Company's other employees to engage in any activity which, were it done by you, would violate any provision of the Proprietary Information and Inventions Agreement or this Section 7. As used in this Agreement, the term "any line of business engaged in or under demonstrable development by the Company" shall be applied as at the date of termination of your employment, or, if later, as at the date of termination of any post-employment consultation.
7.2 No provision of this Agreement shall be construed to preclude you from performing the same services which the Company hereby retains you to perform for any person or entity which is not a Direct Competitor of the Company upon the expiration or
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termination of your employment (or any post-employment consultation) so long as you do not thereby violate any term of this Agreement or the Proprietary Information and Inventions Agreement.
7.3 Notwithstanding anything contained herein to the contrary, in the event that you voluntarily resign from the Company and are not terminated for Cause, we will advise you within sixty days of the effective date of your termination whether we will enforce the prohibition set forth above in Section 7.1 against your being involved with a Direct Competitor. if we elect to enforce such prohibitions, we will pay you your salary for a period of six (6) months from the date of our notification to you.
Further, you receive an offer from a Direct Competitor which you desire to accept, you may advise the Company of the position, including all reasonable details and the Company shall decide within fourteen days of receipt of your notice whether they intend to enforce the prohibition.
8. Remedies.
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Your obligations under the Proprietary Information and Inventions Agreement and the provisions of Sections 4.2, 7, 8, 9 and 11 of this Agreement (as modified by Section 14, if applicable) shall survive the expiration or termination of your employment (whether through your resignation or otherwise) with the Company. You acknowledge that a remedy at law for any reach or threatened breach by you of the provisions of the Proprietary Information and Inventions Agreement or Section 4 or 7 hereof would be inadequate and you therefore agree that the Company shall be entitled to such injunctive relief in case of any such breach or threatened breach.
9. Arbitration.
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Any dispute concerning this Agreement including, but not limited to, its existence, validity, interpretation, performance or non-performance, arising before or after termination or expiration of this Agreement, shall be settled by a single arbitrator in Philadelphia, Pennsylvania, in accordance with the expedited procedures of the commercial rules then in effect of the American Arbitration Association. Judgment upon any award may be entered in the highest court, state or federal, having jurisdiction. The cost of such arbitration shall be borne equally between the parties thereto unless otherwise determined by such arbitration panel.
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10. Assignment.
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This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of any successor or successors of the Company by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties, but, except as to any such successor or assignee of the Company, neither this Agreement nor any rights or benefits hereunder may be assigned by the Company or by you, except by operation of law or by a further written agreement by the parties hereto.
11. Interpretation.
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IT IS THE INTENT OF THE PARTIES THAT in case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. MOREOVER, IT IS THE INTENT OF THE PARTIES THAT if any one or more of the provisions contained in this Agreement is or becomes or is deemed invalid, illegal or unenforceable or in case any shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be construed by amending, limiting and/or reducing it to conform to applicable laws so as to be valid and enforceable or, if it cannot be so amended without materially altering the intention of the parties, it shall be stricken and the remainder of this Agreement shall remain in full force and effect.
12. Notices.
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Any notice which the Company is required to or may desire to give you shall be given by registered or certified mail, return receipt requested, addressed to you at your address of record with the Company, or at such other place as you may from time to time designate in writing. Any notice which you are required or may desire to give to the Company hereunder shall be given by registered or certified mail, return receipt requested, or by recognized overnight courier, addressed to the Company at its principal office, or at such other office as the Company may from time to time designate in writing with a copy to David S. Mandel, Esquire, Astor Weiss Kaplan & Rosenblum, The Bellevue, Sixth Floor, 200 South Broad Street, Philadelphia, Pennsylvania 19102.
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13. Waivers.
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No waiver of any right under this Agreement shall be deemed effective unless contained in a writing signed by the party charged with such waiver, and no waiver of any right arising from any reach or failure to perform shall be deemed to be a waiver of any future such right or of any other right arising under this Agreement.
14. Complete Agreement; Amendments.
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The foregoing, including Exhibits A, B and C attached hereto, is the entire agreement of the parties with respect to the subject matter hereof, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof. This Agreement may be amended or modified or certain provisions waived only by a written instrument signed by the parties hereto, upon authorization of the Company's Board of Directors.
15. Headings.
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The headings of the Sections contained in this Agreement are inserted for convenience and reference only and in no way define, limit, extend or describe the scope of this Agreement, the intent of any provisions hereof, and shall not be deemed to constitute a part hereof nor to affect the meaning of this Agreement in any way.
16. Counterparts.
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This Agreement may be signed in two counterparts, each of which shall be deemed an original and both of which shall together constitute one agreement.
17. Governing Law.
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This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. If you are in agreement with the foregoing, please sign your name below and also at the bottom of the Proprietary Information and Inventions Agreement, whereupon both Agreements shall become binding in accordance with their terms. Please then return this Agreement to the Company. (You may retain for your records the accompanying counterpart of this Agreement enclosed herewith).
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18. Definition of "Company".
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Whenever, the word "Company" is used in this Agreement, it shall be deemed to include the Company, its affiliates and subsidiaries.
Very truly yours,
RYKA INC.
By: /s/ Michael Rubin
________________________________
Accepted and Agreed:
/s/ Kathryn Bednarski _______________________ Kathryn Bednarski
4/11/97 - DATE - ------------
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EXHIBIT "A"
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EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF
KATHRYN BEDNARSKI
PRESIDENT - RYKA INC.
1. Term.
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The term of this Agreement to which this Exhibit "A" is annexed and
incorporated shall be for five (5) years, commencing April 1, 1997, unless
renewed in accordance with Section 2.1 of the agreement or terminated prior
thereto in accordance with Section 2.2 or 2.3 of the Agreement.
2. Compensation.
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a. Base Salary. Your initial annual Base Salary shall be one hundred and
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fifty thousand ($150,000.00) dollars. After the first year of your
employment agreement, the Board of Directors, in its sole and absolute
discretion, may increase your annual Base Salary.
b. Management Incentive Compensation Program ("MIP").
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The Company has established an MIP in which you shall be entitled to
receive five per cent of the total funds available for distribution to the
participants ("MIP Bonus Pool"). The MIP contains certain minimum company
guidelines and we will agree upon certain personal guidelines which must be
satisfied in order for the MIP to become effective.
c. Bonus based upon gross sales of the Company.
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You shall be entitled to receive a bonus equal to one half of one per cent
of the Company's gross annual sales in excess of $25,000,000.00 provided
that the gross profit on such...
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