EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of September 19, 2005,
by
and between Bluefly, Inc., a Delaware
corporation (the "Company"), and Bradford
Matson ("Matson").
RECITALS
1. The
Company desires to retain the services of Matson as Chief
Marketing Officer of the Company in
accordance with the terms and conditions of
this Agreement.
2. Matson
will serve the Company as Chief Marketing Officer in
accordance with the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
in
this Agreement, and other good and valuable
consideration, the receipt and
sufficiency of which are hereby
acknowledged, the Company and Matson agree as
follows:
1. TERM
The Company hereby agrees to employ Matson as Chief Marketing
Officer of
the Company, and Matson hereby agrees to
serve in such capacity, for a term
commencing on September 19, 2005 (the
"Starting Date") and ending on September
30, 2008 (as the same may be earlier
terminated pursuant to the terms of this
Agreement, the "Employment Term"), upon the
terms and subject to the conditions
contained in this Agreement.
2. DUTIES
During the Employment Term, Matson shall serve as Chief
Marketing
Officer of the Company, and shall be
responsible for the duties attendant to
such office and such other managerial
duties and responsibilities with the
Company consistent with such office as may
be reasonably assigned from time to
time by the Chief Executive Officer and/or
President of the Company.
The principal location of Matson's employment shall be in the New
York
City vicinity (i.e., within a 20 mile
radius), although Matson understands and
agrees that he will be required to travel
from time to time for business
reasons. Matson shall diligently and
faithfully perform his obligations under
the Agreement and shall devote his full
professional and business time to the
performance of his duties as Chief
Marketing Officer of the Company during the
Employment Term. Matson shall not, directly
or indirectly, render business
services to any other person or entity,
without the consent of the Company's
Chief Executive Officer.
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3. BASE
SALARY
For services rendered by Matson to the Company during the
Employment Term, the Company shall pay him
a base salary of $350,000 per year,
payable in accordance with the standard
payroll practices of the Company,
subject to annual increases in the sole
discretion of the Chief Executive
Officer and the Company's Board of
Directors, taking into account the financial
and operating performance of the Company's
business and divisions and a
qualitative assessment of Matson's
performance during such year.
4.
BONUS/OPTIONS
a. During the
Employment Term, Matson shall be eligible to
receive a bonus set by the Company's Board
of Directors in its sole discretion
and based on such factors as the Board of
Directors deems appropriate, provided
that, so long as Matson remains employed by
the Company at the time that bonuses
are awarded for the year ended December 31,
2006, his bonus for such year shall
be a minimum of $50,000. All bonuses shall
be paid in accordance with the
Company's standard payroll practices, net
of any applicable withholding.
b. The
Company hereby agrees to cause, on the Starting
Date, the issuance to Matson of options
("Options") to purchase 400,000 shares
of the Company's common stock, $.01 par
value ("Common Stock"). The Options
shall be issued pursuant to, and in
accordance with, the Company's 2005 Stock
Incentive Plan (the "Plan"). The Options
shall be Incentive Stock Options (as
defined in the Plan) to the extent allowed
by law, and shall be exercisable at a
price equal to the Fair Market Value (as
defined in the Plan) of the Common
Stock on the date hereof. The Options shall
vest over a thirty-six (36) month
period as follows: (i) 16.667% of the
Options shall vest on the six month
anniversary of the date of grant and (ii)
2.778% of the Options shall vest each
month thereafter until all such Options
shall have vested; provided, that, (a)
in the event that Matson's employment with
the Company is terminated as a result
of a Change of Control (as hereinafter
defined) at any time on or prior to the
first anniversary of the Starting Date,
fifty percent (50%) of any unvested
options shall automatically vest as of the
date of such termination; and (b) in
the event that Matson's employment with the
Company is terminated without cause
or as a result of a Constructive
Termination at any time during the Employment
Term after the first anniversary of the
Starting Date, all such options shall be
immediately vested. The Term of each Option
shall be 10 years from the date of
grant. In the event of the termination of
Matson's employment for any reason, he
shall have 90 days within which to exercise
any vested Options and any unvested
Options shall be forfeited. During the Term
of this Agreement, Matson shall be
eligible to participate in the Company's
future stock option grants as
determined appropriate by the Committee in
its sole discretion.
c. For
purposes of this Agreement, "Change of Control"
shall be deemed to occur upon:
2
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(1)
the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act)
of more than 50% (on a fully diluted basis)
of either (A) the then outstanding
shares of common stock of the Company,
taking into account as outstanding for
this purpose such common stock issuable
upon the exercise of options or
warrants, the conversion of convertible
stock or debt, and the exercise of any
similar right to acquire such common stock
(the "Outstanding Company Common
Stock") or (B) the combined voting power of
the then outstanding voting
securities of the Company entitled to vote
generally in the election of
directors (the "Outstanding Company Voting
Securities"); provided, however, that
for purposes of this Agreement, the
following acquisitions shall not constitute
a Change of Control: (I) any acquisition by
the Company or any "Affiliate" (as
defined below), (II) any acquisition by any
employee benefit plan sponsored or
maintained by the Company or any Affiliate,
(III) any acquisition by Quantum
Industrial Partners LDC, Soros Fund
Management LLC and/or SFM Domestic
Investments LLC and/or any of their
affiliates (collectively, "Soros"), or (IV)
any acquisition which complies with clauses
(A), (B) and (C) of sub-paragraph
(c)(5) hereof;
(2)
Individuals who, on the date hereof, constitute the
Board (the "Incumbent Directors") cease for
any reason to constitute at least a
majority of the Board, provided that any
person becoming a director subsequent
to the date hereof, whose election or
nomination for election was approved by a
vote of at least two-thirds of the
Incumbent Directors then on the Board (either
by a specific vote or by approval of the
proxy statement of the Company in which
such person is named as a nominee for
director, without written objection to
such nomination) shall be an Incumbent
Director; provided, however, that no
individual initially elected or nominated
as a director of the Company as a
result of an actual or threatened election
contest with respect to directors or
as a result of any other actual or
threatened solicitation of proxies or
consents by or on behalf of any person
other than the Board shall be deemed to
be an Incumbent Director;
(3)
the dissolution or liquidation of the Company;
(4)
the sale of all or substantially all of the business or
assets of the Company; or
(5)
the
consummation of a merger, consolidation, statutory
share exchange or similar form of corporate
transaction involving the Company
that requires the approval of the Company's
stockholders, whether for such
transaction or the issuance of securities
in the transaction (a "Business
Combination"), unless immediately following
such Business Combination: (A) more
than 50% of the total voting power of (x)
the corporation resulting from such
Business Combination (the "Surviving
Corporation"), or (y) if applicable, the
ultimate parent corporation that directly
or indirectly has beneficial ownership
of sufficient voting securities eligible to
elect a majority of the directors of
the Surviving Corporation (the "Parent
Corporation"), is represented by the
Outstanding Company Voting Securities that
were outstanding immediately prior to
such Business Combination (or, if
applicable, is represented by
3
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shares into which the Outstanding Company
Voting Securities were converted
pursuant to such Business Combination), and
such voting power among the holders
thereof is in substantially the same
proportion as the voting power of the
Company's Voting Securities among the
holders thereof immediately prior to the
Business Combination, (B) no Person (other
than Soros or any employee benefit
plan sponsored or maintained by the
Surviving Corporation or the Parent
Corporation), is or becomes the beneficial
owner, directly or indirectly, of 30%
or more of the total voting power of the
outstanding voting securities eligible
to elect directors of the Parent
Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and
(C) at least a majority of the
members of the board of directors of the
Parent Corporation (or, if there is no
Parent Corporation, the Surviving
Corporation) following the consummation of the
Business Combination were Board members at
the time of the Board's approval of
the execution of the initial agreement
providing for such Business Combination.
For purposes of Agreement, the term "Affiliate" shall mean any
entity that directly or indirectly is
controlled by, controls or is under common
control with the Company.
5. EXPENSE
REIMBURSEMENT AND PERQUISITES
a. During the
Term of this Agreement, Matson shall be
entitled to reimbursement of all reasonable
and actual out-of-pocket expenses
incurred by him in the performance of him
services to the Company consistent
with corporate policies, if any, provided
that the expenses are properly
accounted for.
b. During
each calendar year of the Employment Term, Matson
shall be entitled to reasonable vacation
with full pay in accordance with they
Company's then-current vacation policies;
provided, however, that Matson shall
schedule such vacations at times convenient
to the Company.
c. Matson
shall be entitled to participate in all health
insurance (National Oxford), dental
insurance, long-term disability insurance
and other employee benefit plans instituted
by the Company from time to time on
the same terms and conditions as other
similarly situated employees of the
Company, to the extent permitted by law. In
addition, Matson shall be a covered
officer under the Company's now existing
and any future Directors and Officers
liability policy.
d. In the
event that Matson has relocated himself and his
family to the New York City vicinity on or
before December 31, 2007 the Company
will promptly pay Matson $50,000 in cash.
In the event that receives a
relocation payment and Matson's employment
with the Company terminates prior to
June 30, 2008 other than pursuant to
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