Skip to main content
Find a Lawyer

Employment Agreement - Inc. and Marc Sherman

                              EMPLOYMENT AGREEMENT

         THIS  AGREEMENT  ("Agreement")  made and entered  into this 17th day of
June,  1999,  by and  between  INTELLESALE.COM,  INC.,  a  Delaware  corporation
("Company") and MARC SHERMAN ("Employee").


         Employee is employed by Company as its  president  and chief  executive
officer. The parties desire to enter into a formal employment agreement covering
the terms and conditions of such employment.


         Employment.  Company  hereby  employs  Employee,  and  Employee  hereby
accepts such employment by Company, on the terms and conditions set forth below.

         Capacity.  Employee  shall  serve  as  Company's  president  and  chief
executive officer. Employee shall perform such services for Company as Company's
board of directors  ("Board") shall direct from time to time.  However,  no such
services  shall be of a nature  which  are not  commensurate  with,  and/or  are
beneath the dignity of, Employee's  position  described in the first sentence of
this paragraph or are not of an executive or managerial nature.

         Term.  Company's  employment of Employee under this Agreement  shall be
for an initial term of five years  commencing on July 1, 1999 and ending on June
30,  2004.  The  term  of  Employee's  employment  under  this  Agreement  shall
automatically  be  renewed  for  successive  additional  one year  terms on each
anniversary of the  commencement of Employee's  employment under this Agreement,
beginning with the July 1, 2000  anniversary  date, each of which terms shall be
added at the end of the then  existing  term  (taking  into  account  any  prior
extensions  or failures to extend),  unless  either party  notifies the other at
least 30 days prior to an anniversary  date of this Agreement that he or it does
not  desire  the  additional  one  year  term  to be  added  to the  term of the
Agreement.  For example,  unless either party notifies the other to the contrary
on or before June 1, 2000,  the term of this  Agreement  shall be extended  from
July 1, 2004 to June 30,  2005.  For further  example,  and assuming the term of
this  Agreement has been  extended to June 30, 2005,  if one party  notifies the
other  that it does not  desire  to  extend  the term of this  Agreement  for an
additional  year and such notice is given on or before June 1, 2001, the term of
this  Agreement  shall  not be  extended  from  July 1,  2005  to Jun 30,  2006.
Notwithstanding  the foregoing,  the term of this Agreement may end prior to the
termination  date determined under this paragraph 3 as provided in paragraphs 9,
10, 11 and 12.

         Service While Employed. Employee agrees to devote his best efforts, his
full  diligence  and  substantially  all  of his  business  time  to his  duties
hereunder and shall not engage,  either directly or indirectly,  in any business
or other activity  which is competitive  with or adverse to the interests or the
business of Company.

         Items  Furnished and  Relocation.  Company shall furnish  Employee with
such  private  office,   secretarial  assistance,  and  such  other  facilities,
equipment  and  services  suitable to his  position  and adequate to perform his
duties  hereunder.  Employee  shall not be  relocated  by  Company  without  his

         Compensation,  Vacations and Reimbursement. As partial compensation for
his  services to Company,  Company  agrees to pay  Employee an annual  salary in
regular monthly or other agreed upon  installments of not less than  $400,000.00
and an annual bonus computed in accordance  with Exhibit A which is attached and
is a part of this Agreement. In addition,  Employee shall be entitled to receive
such  bonuses  (in  addition to that  required  under the  preceding  sentence),
incentive compensation, and other compensation, if any, as the Board , executive
committee,  compensation  committee,  or other designated  committee shall award
Employee from time to time whether in cash, Company stock, stock options,  other
stock based compensation,  other form of remuneration, or any combination of the
foregoing. All such compensation shall be subject to legally required income and
employment  tax  withholding.  Employee  shall be entitled to paid vacations and
reimbursement for all reasonable  business expenses in accordance with Company's
policies for executive officers.

         Pension,  Welfare and Related Benefits. In addition to the compensation
described in paragraph 6 above,  Employee  shall be entitled to  participate  in
such bonus, profit sharing,  deferred  compensation and pension plans of Company
for which he is eligible and such welfare and fringe benefits plans and programs
of the Company for which he is eligible.

         Other Benefits;  Loan.  Company shall pay employee the sum of $5,000.00
per month to be used by Employee for such personal,  business,  financial, club,
automobile or other  expenses as he, in his sole  discretion,  shall  determine.
Such  amount  shall be in  addition to any  reimbursement  to which  Employee is
entitled under  paragraph 6. In addition,  at such time that Employee closes the
purchase of a new principal or secondary residence ("Residence"),  Company shall
loan Employee the sum of  $1,250,000.00 to be applied against the purchase price
of the Residence and closing  costs.  Such loan shall be secured by a first lien
on the Residence,  be of a 30 year duration (or such shorter duration  requested
by Employee),  be amortized  through equal monthly payments over the term of the
loan, bear an interest rate equal to the applicable  federal rate (as defined in
Section  1274(d) of the Internal  Revenue Code of 1986, as amended  ("Code") for
loans of similar duration and payment  schedules,  and permit prepayment without
penalty.  The note evidencing the loan and mortgage or other security instrument
shall contain terms and conditions  customarily  included in residential secured
loans in the metropolitan area in which the Residence is located.

         Death  and  Disability.  If  Employee  dies  during  the  term  of this
Agreement, his employment shall be deemed to have been terminated as of the last
day of the month in which his death  occurs,  and Company will pay to Employee's
personal  representative  all salary  and any other  compensation  due  Employee
through the end of such month. If Employee becomes permanently  disabled so that
he cannot  perform  his duties , as  determined  by a  physician  selected by or
acceptable to Company, his employment shall be deemed to have been terminated as


of the last day of the month in which such  determination  is made,  and he will
receive  his salary and any other  compensation  due him through the end of such

         Termination Upon Retirement or Notice. From and after the time Employee
attains age 65, he may retire at any time by notifying Company at least 120 days
prior to his intended retirement date or be retired by Company upon at least two
years notice.  In addition,  Employee may  terminate his  employment at any time
after June 30, 2001, upon one year's notice. If a notice of termination has been
given under this  paragraph 10, and the  Agreement is  terminated  under another
provision if this Agreement,  such as by death ("Other  Termination  Provision")
prior  to the  date of such  termination  under  this  paragraph  10,  then  the
Agreement  shall  be  deemed  to have  been  terminated  pursuant  to the  Other
Termination Provision.

         Default.  In the event that  either  party  fails to  perform  material
provision  of this  Agreement  and  such  failure  continues  for 15 days  after
notification from the nonbreaching  party, the nonbreaching  party may terminate
this  Agreement by notice to the  breaching  party.  Such  termination  shall be
without  prejudice to any rights or remedies  which the  nonbreaching  party may

         Change  in  Control.   Notwithstanding  any  other  provision  of  this
Agreement,  should a "change of control" occur, Employee, at his sole option and
discretion, may terminate his employment under this Agreement at any time within
one year after such change of control upon 15 days notice.  In the event of such
termination,  Company  shall pay to  Employee a  severance  payment  ("Severance
Payment") equal to three times the base amount as defined in Section  280G(b)(3)
of the Code minus $1.00.  Notwithstanding  the  foregoing,  (a) if the Severance
Payment  and any other  amounts  payable by Company to  Employee  are  parachute
payments under Code Section 280G (collectively,  "Parachute Payments") and, (b),
if reducing the Severance  Payment would  eliminate the tax provided for in Code
Section 4999  ("Section  4999 Tax") which would  otherwise be  applicable to the
Parachute Payments,  and (c) if, because of such elimination,  the net amount of
the Parachute  Payments (total payments minus Section 4999 Tax) would be greater
than such net amount  without  reduction,  then the  Severance  Payment shall be
reduced by the smallest  amount  required to  eliminate  the  imposition  of the
Section 4999 Tax. The foregoing determination shall be made by Company's general
counsel,  and his determination shall be binding upon Company and Employee.  The
amount  determined under the foregoing  provisions of this paragraph 12 shall be
payable  no later  than one month  after the  effective  date of the  Employee's
termination of employment. A change in control means: (a) the acquisition by any
person or entity, other than Company or a "related entity," of (i) more than 20%
without the approval of the Board or (ii) more than 50% with the approval of the
Board of the  outstanding  shares of Company's  voting stock on a diluted and/or
converted  basis through a tender offer,  exchange  offer or otherwise;  (b) the
sale or other disposition of all or substantially all of Company's assets unless
shareholders  of Company prior to such sale or  disposition  own at least 50% of
the voting stock on a diluted and/or  converted basis of the purchaser,  and the
purchaser  assumes Company's  obligations under this Agreement;  (c) a merger of
consolidation involving Company which results in Company not being the surviving
parent  corporation or after which shareholders of the Company own less than 50%
of the voting stock on a diluted and/or converted basis of the surviving entity;
or (d) any time during any two-year period in which  individuals who constituted


the Board at the start of such period (or,  except in the case of a  transaction
described in a(i) or (c), whose election was approved by at least  two-thirds of
the then  members  of the Board who were  members  at the start of the  two-year
period) do not  constitute  at least 50% of the Board for any reason.  A related
entity is the parent,  a subsidiary  or any employee  benefit plan  (including a
trust  forming a part of such a plan)  maintained  by  Company,  its parent or a
subsidiary.  Notwithstanding  the  foregoing,  any  changes  in stock  ownership
resulting from the initial public offering of the Company's shares (("IPO") or a
change in the Board within two years of the IPO and  resulting  from a change in
stock ownership effected by the IPO shall not be considered a change of control.

         Nondisclosure;   Return  of  Records.  Employee  will  not,  except  as
authorized  by  Company,  publish  or  disclose  to  others,  or use for his own
benefit, or authorize anyone else to publish or disclose or use, or copy or make
notes of any secret,  proprietary,  or confidential  information or knowledge of
data or trade secrets of or relating to the business activities of Company which
may come to Employee's  knowledge  during his employment with the Company.  Upon
termination of Employee's  employment  for any reason,  Employee will deliver to
Company,  without retaining any copies, notes or excerpts,  all records,  notes,
data,  memoranda,  and all other  documents  or  materials  made or  compiled by
Employee,  or made available to him by Company during his employment,  which are
in Employee's  possession  and/or  control and which are the property of Company
and/or which relate to  Employee's  employment  or the  business  activities  of

         Binding  Effect.  This Agreement shall be binding upon and inure to the
benefit of Company and any successors or assigns of Company,  and Employee,  his
heirs, personal  representatives and assigns, except that Employee's obligations
to  perform   services  and  rights  to  receive  payment   therefore  shall  be
nonassignable and nontransferable.

         Entire Agreement:  Modification.  This Agreement constitutes the entire
agreement  between the parties with respect to the subject matter and supersedes
all prior or  contemporaneous  agreements not set forth in this agreement.  This
Agreement  may not be modified  other than by an agreement in writing  signed by
each of the parties.

         Waiver.  Any failure by either  party to enforce any  provision of this
Agreement  shall  not  operate  as a  waiver  of  such  provision  or any  other
provision.  Any waiver by either  party of any breach of any  provision  of this
Agreement shall not operate as a waiver of any other breach of such provision or
any other provision of this agreement.

         Severability.  The  invalidity or  unenforceability  of any  particular
provision  of this  Agreement  shall not  effect  the other  provisions  of this
Agreement,  and this  Agreement  shall be  construed  in all respects as if such
invalid or unenforceable provision were omitted.

         Paragraph  Headings.  Paragraph headings  throughout this Agreement are
solely for the  convenience  of the parties and shall not be construed as a part
of any section or as modifying the contents of any section.


         Governing  Law.  This  Agreement  shall be governed  and  construed  in
accordance with the laws of the State of Delaware.

         Notices.   All  notices  under  this  Agreement   shall  be  personally
delivered,  sent certified mail,  postage  prepaid,  to Company at its corporate
office and to Employee at his principal residence, or sent by telecopy.

         Supplemental Compensation. Except as otherwise provides below, upon the
termination of Employee's employment with Company for any reason, other than due
to his  breach  of a  material  provision  of his  employment  as  described  in
paragraph  11,  Employee  shall be  entitled  to receive  from  Company 36 equal
monthly payments, with the first such payment due on the second first day of the
month after termination of employment, of 8.333% of Employee's compensation over
the 12-consecutive month period for which his compensation was the greatest.  If
Employee  should  die  before  all or any part of the  above  described  monthly
payments have been made, all payments or all remaining payments shall be made to
his  designated  beneficiary,  if any,  otherwise to his estate.  The  aggregate
amount  payable under this paragraph 21 shall be reduced (but not below zero) by
the amount,  if any,  payable under  paragraph 12, and such reduced amount shall
also be payable in 36 equal monthly installments. Notwithstanding the foregoing,
if  Employee  terminates  his  employment  pursuant  to the second  sentence  of
paragraph 10, the amount  payable  under this  paragraph 21, shall be 50% of the
amount that would otherwise be payable.

         Non-Competition.  For a three year period from and after termination of
Employee's  employment  for any reason  other  than  death,  Employee  shall not
engage,  directly  or  indirectly,  either on his own behalf or on behalf of any
other person,  firm,  corporation or other entity,  in any business  competitive
with the  business  of  Company,  in the  geographic  area in which  Company  is
conducting business at the time of termination of Employee's employment,  or own
more  than 5% of any such  firm,  corporation  or  other  entity.  In  addition,
Employee must furnish  Company with such  information as Company shall from time
to time request in order to determine  that Employee is in  compliance  with the
requirements  of the preceding  provisions of this paragraph 22. The payments to
be made under  paragraph 21 are conditioned  upon Employee's  complying with the
provisions  of this  paragraph  22. In the event  that such  provisions  are not
complied with,  then, in addition to all other rights and remedies which Company
may have ( and which Employee agrees shall include  equitable  relief),  Company
may suspend  such  payments  for any period of time in which  Employee is not in
compliance  with the preceding  provisions of this paragraph 22. Employee agrees
that the  restrictions  of this  paragraph  22 are  reasonable  and  required to
protect the legitimate business interests of Company.

         Modification.  In the event that any  provision  of this  Agreement  is
invalid or  unenforceable,  it shall be  modified  to the extent  required to be
valid and enforceable and only to such extent. If it cannot be so modified, then
it shall be deemed to have been deleted from this  Agreement  but such  deletion
shall not affect the remaining terms and provisions of this Agreement.


         Company.  For purposes of paragraphs  4, 13, and 22 of this  Agreement,
the Company means,  Inc. and all subsidiaries and affiliates of

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                            INTELLESALE.COM, INC.

                                             By: /s/ Michael Krawitz
                                                  Title: Vice President

                                              /s/ Marc Sherman
                                             Marc Sherman


                                  EXHIBIT A TO
                              EMPLOYMENT AGREEMENT
                          BETWEEN INTELLESALE.COM, INC.
                                AND MARC SHERMAN

         A.       Current Annual Bonus Formula.

                  For each fiscal year,  Employee's bonus (if any) shall be 1.0%
of the consolidated earnings of Company and subsidiaries before interest, taxes,
depreciation  and  amortization.  The computation of the bonus, if any, to which
Employee is  entitled  shall be made by  Company's  chief  financial  officer in
accordance with generally accepted accounting  principles  consistently applied.
Any bonus to which Employee is entitled shall be paid as soon as practicable but
in no event  later  than the 15th day of the  third  month  after the end of the
fiscal year for which the bonus was earned.  In the event Employee's  employment
terminates  prior  to the  end of the  fiscal  year,  Employee  or his  personal
representative  shall be  entitled  to a pro rata  portion of the bonus for such
fiscal year unless his employment  was  terminated  pursuant to paragraph 11, in
which event no bonus shall be payable.  Employee's pro rata portion of his bonus
shall be the same percentage of the bonus as the number of days for which he was
employed for such fiscal year is of 365.

         B.       Modified Annual Bonus Formula.

                  If Company adopts a bonus plan or program intended to meet the
requirements  for "other  performance-based  compensation"  under  Code  Section
162(m) (4) ("162(m)  Plan") pursuant to which the bonus, if any, to which one or
more of its employees may be  determined,  if the provisions of the 162 (m) Plan
are  applicable  to Employee,  and if the annual  bonus for  Employee  under the
162(m) Plan can, in the Company's  good faith belief,  reasonably be expected to
be  substantially  similar in amount to that  determined  under A above over the
remaining term of this  Agreement,  then the provisions of the 162(m) Plan shall
supersede and replace the  provisions of A above from and after the first day of
Company's fiscal year for which the 162 (m) Plan is effective.


Was this helpful?

Copied to clipboard