EMPLOYMENT AGREEMENT
AGREEMENT made as of February 1, 1997, between Net Grocer Inc., a
corporation with its principal office at 919 Third Avenue, New York, New York
10022 (the "Company"), and Jeffrey Steinberg, an individual residing at the
address indicated in the payroll records of the Company from time to time (the
"Executive").
WHEREAS, the parties desire to enter into this Agreement in order to
assure the Company of the services of the Executive and to set forth the duties
and compensation of the Executive, all upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, representations and covenants contained herein, the parties hereto
agree as follows:
1. Duties. The Company shall employ the Executive, and the Executive
shall serve, as Vice President of Marketing and Customer Management of the
Company during the Employment Term (as hereinafter defined). During the
Employment Term, Executive shall perform such duties and functions which are
consistent with Executive's title as the Company's Board of Directors or Chief
Executive Officer shall from time to time determine and Executive shall comply
in the performance of his duties with the policies of, and be subject to, the
direction of the Board of Directors and the Chief Executive Officer of the
Company.
Except as may be expressly otherwise consented to in writing by the
Board of Directors or the Chief Executive Officer of the Company, Executive
covenants and agrees to and shall devote his full working time, attention and
efforts toward the performance of his duties and responsibilities hereunder.
Executive shall not, directly or indirectly, without the prior consent of the
Company's Board of Directors, as owner, partner, joint venturer, stockholder,
employee, corporate officer or director, engage or become financially interested
in, or be concerned with any other duties or pursuits which interfere with the
performance of his duties hereunder, or which even if non- interfering, may be
inimical or contrary to the best interests of the Company.
2. Term. The term of this Agreement and the term of employment (the
"Employment Term") of the Executive shall continue for four years from February
14, 1997 (the "Termination Date") unless sooner terminated in accordance with
the terms hereof; provided however, that the Termination Date shall be extended
automatically for successive one year periods unless either party hereto gives
the other such party written notice of its or his intention to terminate this
Agreement thirty (30) days prior to the Termination Date (or, if applicable,
any extension of the Termination Date).
In the event the Company terminates this Agreement without cause (as
defined in Section 5 hereof), the parties hereto agree that damages to the
Executive shall be difficult to ascertain in any such event, but in order to
limit the liability of the Company in any such event, the Executive shall be
entitled to receive as liquidated damages and not as a penalty the lesser of
(i) the base salary of the Executive for a period of three months from any such
date of termination or (ii) the entire amount of the base salary remaining due
and payable from any such date of termination to the expiration of this
Agreement, to be paid ratably over the remaining term of the Agreement;
provided however, that in the event Executive is terminated without cause (as
defined in Section 5 hereof) during the first twelve months of the Employment
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Term, Executive shall be entitled to receive as liquidated damages and not as a
penalty the base salary of Executive for a period of twelve months from any
such date of termination.
The Executive is entitled to terminate this Agreement, without any
liability, upon ninety (90) days prior written notice given to the Company
(other than liabilities, if any, resulting from violations of this Agreement by
the Executive occurring prior to such termination or from a violation of
Sections 7 or 8 of this Agreement after such termination). In the event the
Executive so terminates this Agreement, the covenant not to compete provided
for in Section 8(a) hereof shall be extended for an additional six months (two
years and six months in total from such termination).
3. Compensation, etc.
a. Salary. In each of the three years of the Employment Term, the
Executive shall receive a base salary at the rate of $125,000 per annum as well
as such bonuses as may be authorized from time to time by the Board of
Directors as provided in Section 3(b) hereof. The Executive's compensation
shall be payable in installments in accordance with the Company's normal salary
payment policies, and shall be subject to such payroll deductions as are
required by law.
b. Bonus. The bonus, if any, payable to Executive shall be
determined solely by the Company's Board of Directors from time to time, based
on the Company's evaluation of the performance by Executive of his services to
the Company and on the revenues, profits, and other measures of Company
performance.
c. Senior Management Option Plan. The Executive shall be entitled
to participate in the Company's 1996 Stock Option Plan (the "Plan"). Under
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the Plan and contemporaneously with the commencement of the Employment Term,
the Executive shall receive an option (the "Option") to purchase 200 shares of
Company stock available for issuance under the Plan at an exercise price of two
hundred dollars ($200) per share (the "Exercise Price"). Except as specifically
provided otherwise herein, the Option will become exercisable in accordance
with the following schedule based upon the period of the Executive's continuous
employment or service with the Company following the date hereof:
Period Incremental Cumulative
of Continuous Percentage of Percentage of
Employment/ Option Option
Service Exercisable Exercisable
Less than 1 year 0% 0%
1 year 25% 25%
2 years 25% 50%
3 years 25% 75%
4 or more years 25% 100%
The Company hereby represents that the Exercise Price was
determined by dividing the contributions of capital to the Company by the
Company's current stockholders by the number of shares deemed issued and
outstanding on the date hereof. Any agreement entered into between the Company
and Executive pursuant to the Plan relating to the Option shall provide that:
(1) in the event (i) the Company terminates this Agreement
for any reason other than cause (as defined in Section 5 hereof) or
(ii) Executive terminates this Agreement and/or his employment with
the Company any time on or after the first anniversary of the date
hereof, Executive shall be entitled to retain the vested portion of
the Option calculated in accordance with the
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schedule above for a period of three months by which time Executive
must have exercised the Option or the Option shall terminate;
(2) in the event the Company terminates Executive's
employment with the Company without cause, Executive will be credited
with one additional year of continuous employment for purposes of
determining the Cumulative Percentage of Option Exercisable in the
above schedule; provided that Executive shall be credited with a
second year of continuous employment if such event occurs during the
first twelve months of the Employment Term.
(3) in the event Executive (i) is terminated for cause or (ii)
terminates this Agreement and/or his employment with the Company at any
time prior to the first anniversary of the date hereof, the unexercised
portion of the Option shall terminate immediately and Executive shall
not be entitled to exercise any portion of the Option so terminated;
and
(4) at any time after any registration statement covering an
initial public offering of Company stock under the Securities Act
shall have become effective, Executive may make a "cashless exercise"
of any portion of the Option then vested, subject to the provisions
contained herein on permitted exercisability of the Option, such that
Executive shall be entitled upon exercise to that number of shares of
Company stock determined by multiplying the number of shares being
exercised by a fraction, the numerator of which shall be the
difference between the then current market price per share of the
Company stock and the Exercise Price, and the denominator of which
shall be the then current market price per share of the Company stock.
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d. Expenses. The Company acknowledges and agrees
that the Executive, in rendering the services hereunder, will be required to
spend sums of money for travel to various locations and for the entertainment
of various persons and representatives of companies and organizations with whom
the Company is having, or would like to have, business relationships. In
addition to the base salary provided for in Section 3 hereof, the Company shall
reimburse the Executive, upon presentation by the Executive of documented
expense accounts, for any travel or other reasonable out-of-pocket expenses
incurred by the Executive in rendering the services hereunder on behalf of the
Company and which are incurred pursuant to the Company's expense reimbursement
policies; provided however, that Executive shall be entitled to an advance from
the Company for any single expense item greater than $500 in amount but in no
event will Executive be relieved of his obligation to properly document all
expenses. In addition to the foregoing, Executive shall be entitled to
reimbursements for reasonable expenses, including temporary housing and travel
to the Boston area, incurred by Executive in relocating to the New York area as
required pursuant to Section 4 hereof, but in no event in an amount in excess
of $25,000; and provided that all such relocation expenses shall be documented
as set forth above.
e. Vacations. The Executive shall be entitled to 15
business days of vacation under guidelines established by the Company from time
to time. Vacation time shall not cumulate from year to year.
4. Place of Performance. In connection with his employment by the
Company, the Executive shall be based at the principal executive offices of the
Company, except for travel required for Company business.
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5. Termination by the Company. The Company may terminate this
Agreement and all of the Company's obligations hereunder for "cause."
Termination by the Company for "cause" shall mean termination because of: (i)
Executive's refusal to perform, or willful breach or neglect of the performance
of any of his duties or obligations hereunder (other than breaches of the
covenants set forth in Sections 1, 7 and 8 hereof which events are governed by
clauses (vi) and (vii) below); (ii) Executive's conviction (which, through
lapse of time or otherwise, is not subject to appeal) of any crime or offense
involving money or other property of the Company or any of its subsidiaries,
(iii) Executive's performance of any act or his failure to act, for which if
Executive were prosecuted and convicted, a crime or offense involving money or
property of the Company or any of its subsidiaries, or which would constitute a
felony in the jurisdiction involved, would have occurred, (iv) any attempt by
Executive to improperly secure any personal profit in connection with the
business of the Company or any of its subsidiaries, (v) chronic alcoholism or
drug addiction, (vi) any breach by Executive of the terms of Section 7 or 8 of
this Agreement or (vii) any breach by Executive of the terms of Section 1 of
this Agreement.
6. Death; Disability. Except as provided herein, or in the Plan or any
agreement made pursuant thereto, if the Executive shall die or become
"permanently disabled" during the term of this Agreement, this Agreement and
all benefits hereunder shall terminate except that such termination shall not
affect any vested rights which the Executive may have at the time of his death
pursuant to any insurance or other death benefit plans or arrangements of the
Company, which rights shall continue to be governed by the provisions of such
plans and agreements. For the purposes of this
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Agreement, Executive shall be deemed to be "permanently disabled" if, during
the term hereof, because of ill health, physical or mental disability, or for
other causes beyond Executive's control, Executive shall have been unable or
unwilling, or shall have failed to perform his duties hereunder for ninety (90)
consecutive days or for a total period of one hundred twenty (120) days,
whether consecutive or not.
7. Protection of Confidential Information. The Executive acknowledges
that his employment by the Company will, throughout the term of this Agreement,
bring him in contact with many confidential affairs of the Company not readily
available to the public, and plans for future developments. In recognition of
the foregoing, the Executive covenants and agrees that he will not use or
disclose to anyone outside of the Company, as the case may be, any material
confidential matters of the Company, which are not otherwise in the public
domain, either during or for a period of twenty-four months after the
termination of his employment with the Company, except with the Company's
written consent or as required by court order, law or subpoena, or other legal
compulsion to disclose.
8. Covenant Not To Compete.
a. The Executive agrees that during the term of this Agreement and,
subject to the provisions of the last paragraph of Section 2 hereof, for the
two years immediately following the Employment Term (including any extensions
thereof, as provided herein) (the "Covenant Period"), Executive shall not
either directly or indirectly, whether by establishing a new business or by
joining an existing one, and whether as a principal, employee, stockholder,
officer, director, agent, consultant or in any other capacity, compete with the
Company or become associated with a business
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enterprise which competes with any business operation of the Company, or any
business operation of the Company planned prior to Executive's termination of
employment, in the geographical areas in which the Company is then doing and
plans to do business for the next succeeding twelve month period; provided
however, that in the event the Company terminates Executive's employment with
the Company without cause, the Covenant Period shall be six months unless such
termination occurs during the first twelve months of the Employment Term, in
which case the Covenant Period shall be twelve months.
b. Executive and the Company intend that: (i)
this covenant not to compete shall be construed as a series of separate
covenants, one for each county and each product line; (ii) if any portion of
the restrictions set forth in this Section 8 should, for any reason whatsoever,
be declared invalid by a court of competent jurisdiction, the validity or
enforceability of the remainder of such restrictions shall not thereby be
adversely affected; (iii) Executive declares that the territorial and time
limitations set forth in this Section 8 are reasonable and properly required
for the adequate protection of the business in the Company. In the event any
such territorial or time limitation is deemed to be unreasonable by a court of
competent jurisdiction, Executive agrees to the reduction of the territorial or
time limitation to the area or period which such court shall have deemed
reasonable; (iv) the existence of any claim or cause of action by Executive
against the Company shall not constitute a defense to the enforcement by the
Company of such restrictions, but such claim or cause of action shall be
litigated separately.
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9. Successors; Binding Agreement. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and shall be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there be no such designee, to the Executive's
estate. This Agreement shall inure to the benefit of the successors and assigns
of the Company.
10. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered against receipt therefor
or three days after being mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Mr. Jeffrey Steinberg
(at the address referenced on the first page of
this Agreement)
with a copy to: Walter Wekstein, Esq.
Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110
If to the Company: Net Grocer Inc.
919 Third Avenue
New York, New York 10022
Attention: President
with a copy to: Sheldon G. Nussbaum, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officers of the Company as may
be specifically designated by its Board of Directors. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
12. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto or any
predecessor of any party hereto.
14. Non-Assignability. This Agreement is entered into in consideration
of the personal qualities of the Executive and may not be, nor may any right or
interest hereunder be, assigned by him without the prior written consent of
Company.
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15. Choice of Law. This Agreement is to be governed by and interpreted
under the laws of the State of New York without regard to its conflict of laws
principles.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
17. Severability. The provisions of Sections 2, 7, 8, 14 (second
paragraph) and 15 of this Agreement shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first-above written.
NET GROCER INC.
By:/s/ Daniel Nissan
_________________________________
Daniel Nissan, President and
Chief Operating Officer
EXECUTIVE
/s/ Jeffrey Steinberg
____________________________________
Jeffrey Steinberg
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Employment Agreement - NetGrocer Inc. and Jeffrey Steinberg
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