Employment Agreement - eDiets.com Inc. and Christine M. Brown
EMPLOYMENT AGREEMENT
Agreement dated as of the 1st day of June, 2002, by and between
EDIETS.COM, INC., a Delaware corporation having its principal place of business
at 3801 W. Hillsboro Boulevard, Deerfield Beach, Florida 33442 (the
"Corporation") and CHRISTINE M. BROWN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ Executive as an executive
officer, and Executive is willing to accept such employment, all subject to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions hereof, the
Corporation hereby employs Executive, and Executive hereby accepts employment by
the Corporation, for a period of two (2) years commencing on effective date of
agreement (the "Commencement Date") and ending on the second anniversary of the
Commencement Date, unless terminated sooner pursuant to the provisions hereof.
2. DUTIES. Executive shall serve the Corporation as its Vice President,
Operations. Executive's primary responsibility shall be subject to the direction
of the Corporation's Board of Directors and Chief Executive Officer. However,
Executive shall perform such executive, administrative, management, marketing
and other services and duties as are incidental to the offices he holds and as
may, from time to time, be assigned to him by the Board of Directors of the
Corporation or a committee thereof or the Chief Executive Officer. Executive
shall devote all of his business time to the performance of his duties
hereunder, except that Executive may engage, after having obtained prior written
permission from the Chief Executive Officer, in activities that do not adversely
interfere with the performance of said duties. Executive further agrees to serve
as an officer or director of any parent, subsidiary or affiliate of the
Corporation upon the Corporation's request, with no additional compensation
beyond that set forth in Paragraph 3 below.
3. COMPENSATION.
(a) As base compensation for the services to be rendered by Executive
hereunder, the Corporation agrees to pay to Executive an annual base salary of
not less than One Hundred Sixty Thousand Dollars ($160,000), such salary to be
paid in equal biweekly installments for so long as Executive is employed by the
Corporation. Executive's base compensation shall be reviewed at least annually
in January of each year during the term of this Agreement.
June 2002 Employment Agreement Page 1
<PAGE>
(b) Executive shall be entitled, on a basis consistent with the
Corporation's policy, to reimbursement for all normal and reasonable travel,
entertainment and other expenses necessarily incurred by him in the performance
of his obligations hereunder. The Corporation shall reimburse Executive for such
expenses upon presentation to the Corporation, within a reasonable time after
such expenses are incurred, of an itemized account of such expenses, together
with such vouchers or receipts for individual expense items as the Corporation
may from time to time require under its established policies and procedures.
(c) Executive shall be entitled to participate in, or benefit from, in
accordance with the eligibility and other provisions thereof, such
medical insurance, pension, retirement, or other fringe benefit plans or
policies as the Corporation may make available to, or have in effect for,
its executive personnel from time to time. Plans and benefits may be
modified or eliminated by the Corporation from time to time as it
determines in its sole discretion. However, the Corporation agrees that
it will always make available a medical insurance plan to its employees
and executive personnel. Executive shall also be entitled to not less
than three (3) weeks of vacation after two years of service. Subject to
the written approval of the Chief Executive Officer unused vacation time
from prior years may be carried forward and sick/personal in accordance
with company policy. In addition, Executive shall be entitled to sick and
personal time in accordance with company policy.
(d) Except as hereinafter provided, the Corporation shall pay
Executive, for any period during the term of this Agreement during which he is
unable fully to perform his duties because of physical or mental disability or
incapacity, an amount equal to the compensation due him for such period in
accordance with this Agreement, less the aggregate amount of all income
disability benefits which for such period he may receive under or by reason of
(i) any applicable compulsory state disability law, (ii) the Federal Social
Security Act, (iii) any applicable workmen's compensation law or similar law,
and (iv) any plan towards which the Corporation or any parent, subsidiary or
affiliate of the Corporation has contributed or for which it has made payroll
deductions, such as group accident, disability or health policies.
(e) In the event of a Change of Control (as defined below) all Options
which have been granted to Executive by the Corporation shall immediately become
exercisable with the same effect as if the Executive had remained in the employ
of the Company for a period of time sufficient to cause all Options granted up
to the date of the Change of Control to become vested, and the date of full
vesting in such case shall be deemed to be the date of the Change of Control.
Further, the exercise period of all such options shall be extended to equal the
term of the options. As used herein, the term "Change of Control" shall mean:
(i) another person or entity owns more voting stock of the corporation than
David Humble; (ii) or David Humble is no longer Chairman or Chief Executive
Officer of eDiets.
(f) The parties agree that the exercise period of all "pre-plan"
options that may have been granted to the Executive is that period equal to the
term of said options
June 2002 Employment Agreement Page 2
<PAGE>
and the exercise period of all "in-plan" options shall be extended to equal one
year from the date of termination.
4. TERMINATION ON DISABILITY OR DEATH.
(a) In the event that Executive, due to physical or mental disability
or incapacity, is unable to substantially perform his duties hereunder for a
period of three (3) successive months, the Corporation or Executive shall then
have the right to terminate this Agreement and Executive's employment hereunder
upon thirty (30) days' prior written notice, provided, however, that in the
event that Executive shall recommence rendering services and performing all of
his duties hereunder within such thirty (30) day notice period, such notice
shall be vitiated, and the Corporation and the Executive shall no longer have
the right to terminate based on the disability event described in the notice.
Executive's employment shall terminate immediately upon his death.
(b) Upon termination of Executive's employment by reason of his death
or disability as aforesaid, Executive, or in the case of Executive's death,
Executive's personal representatives, shall be entitled to receive base
compensation earned or accrued to the date of such termination and not already
paid, as well as a pro-rata portion of any earned and unpaid bonus less any
benefits paid to Executive by reason of such disability. Such accrued base
compensation shall be paid to the Executive within 30 days following the date of
termination.
5. TERMINATION FOR CERTAIN CAUSES AND OTHER REASONS.
(a) In the event of the (i) willful material misconduct of Executive
in the performance of his duties hereunder (such as fraud or theft) which harms
the business of the Corporation, or (ii) conviction of the Executive for any
felony under federal or state law, this Agreement and Executive's employment
hereunder may be terminated by the Corporation without prior notice. This
Agreement may also be terminated by the Corporation in the event there has been
a material failure or gross negligence in by Executive in the performance of his
duties hereunder, or (ii) Executive materially breaches any provisions of
Paragraphs 6, 7 or 8, and Executives conduct in (i) or (ii) harms the business
of the Corporation and is not cured by Executive within a period of sixty (60)
days of his receipt from the Corporation of a written notice of proposed
termination specifying the particular failure(s) of performance, and the
proposed remedy upon which the proposed termination will be based, if not cured.
In the event of termination pursuant to this subparagraph 5(a) the Corporation
shall have no further obligation to the Executive except to pay the base
compensation and vacation time vested or accrued to the date of termination, and
the pro-rata share of any earned and unpaid bonus, and all vested and unpaid
commissions, if applicable and upon such termination all unvested options
granted to Executive shall lapse and be no longer exercisable.
In the event Executive is terminated by the Corporation for a reason
other than cause as defined above, but not for death or disability, Executive
shall receive a lump
June 2002 Employment Agreement Page 3
<PAGE>
sum payment of $150,000 plus a pro-rata portion of any earned but unpaid bonus
and/or commissions. In this instance bonus will be calculated on the basis of
the prior year's plan and commissions will be paid according to the plan in
effect at the time of termination. Further, Executive shall be reimbursed for
expenses relating to the extension of health care benefits under COBRA for a
period of three months after termination.
b) Following a Change of Control as defined above, the Executive may
resign for Good Reason, as defined below. In this case, Executive shall receive
a lump sum payment of $150,000 plus a pro-rata portion of any earned but unpaid
bonus and/or commissions. In this instance bonus will be calculated on the basis
of the prior year's plan and commissions will be paid according to the plan in
effect at the time of termination. Further, Executive shall be reimbursed for
expenses relating to the extension of health care benefits under COBRA for a
period of three months after termination.
For purposes of this Agreement, "Good Reason" shall mean: (i) an adverse
and material change in the Executive's position without Executive's prior
consent, where such change has: (a) a negative financial effect on Executive; or
(b) represents a material change in role, title, reporting line, nature of
duties, employee benefits or working conditions, or (ii) a requirement by the
Corporation that Executive perform his primary duties at a location other than
Deerfield Beach, Florida; (iii) a breach by the Corporation of its obligations
or duty of fair dealing to Executive including but not limited to any breach of
its obligations under this Agreement; (iv) a direction to Executive to take
illegal or unethical actions which direction is not withdrawn within seven (7)
days following written notice by Executive to the directing party; and (v) where
the Chief Executive Officer or any member of the Board of Directors tells
another person, whether written or oral, false and harmful information that
affects the Executive's reputation and hinders his current or future working
relationships.
6. DISCLOSURE AND ASSIGNMENT OF DISCOVERIES.
(a) Executive hereby covenants and agrees to disclose promptly and
fully, in writing, whenever possible, to the Corporation and its attorneys and
designated representatives, without additional compensation, all ideas,
formulae, programs, systems, devices, inventions, processes, business concepts,
discoveries, improvements, developments, works of authorship, product marks and
designations, technical information and know-how, whether or not patentable,
copyrightable or otherwise protectable relating to personalized diet and
nutrition programs (together, the "Developments"), which he may conceive,
develop, reduce to practice, acquire or make, alone or jointly with others:
(i) during the term of his employment with the Corporation,
whether during or outside of the usual hours of work; and
(ii) during the Post-Termination Period, as defined in Section 8
below.
Notwithstanding the foregoing, no obligation is being imposed on
Executive to assign to the Corporation any Development for which no equipment,
supplies, facility, or
June 2002 Employment Agreement Page 4
<PAGE>
trade secret information of the Corporation was used and that was developed
entirely on Executive's own time, unless: (a) such Development relates (1) to
the Corporation's business or (2) to the Corporation's actual or demonstrably
anticipated research or development, or (b) the Development results from any
work performed by Executive for the Corporation.
Executive hereby agrees that all of his right, title and interest in and
to such Developments shall be deemed the sole and exclusive property of the
Corporation and shall be subject to the confidentiality provisions of Section 7
as confidential information of the Corporation.
(b) Executive, when requested and required to do so, either during or
after the term of his employment with the Corporation, shall cooperate.
7. CONFIDENTIALITY
(a) Executive understands and hereby acknowledges that as a result of
his employment with the Corporation, he will necessarily become informed of, and
have access to, certain valuable and confidential information of the Corporation
and any of its subsidiaries, joint ventures and affiliates, including, without
limitation, inventions, trade secrets, technical information, know-how, plans,
specifications, identity of customers and suppliers, and that such information,
even though it may be developed or otherwise acquired by Executive, is the
exclusive property of the Corporation to be held by Executive in trust and
solely for the Corporation's benefit. Accordingly, except as provided under this
Agreement, Executive hereby agrees that he shall not, at any time, during the
term of his active employment hereunder and during the Post-Termination period
(as defined below) knowingly use, reveal, report, publish, transfer or otherwise
disclose to any person, corporation or other entity, any of the Corporation's
confidential information without the prior written consent of the Corporation,
except: (i) to officers and employees of the Corporation and to responsible
persons who are in a contractual, employment or fiduciary relationship with the
Corporation or who have a need for such information for purposes in the interest
of the Corporation, (ii) as required by a court or in a legal or administrative
proceeding; and (iii) for such information that legally and legitimately is or
becomes of public knowledge from sources other than Executive. The Corporation's
confidential information shall not include any information known by the
Executive prior to his employment with the Corporation, or information that is
known to Executive from sources other than the Corporation, or information that
is not unique to the diet/fitness business, and shall not include general
industry knowledge such as that regarding online advertising and the management
of online advertising campaigns, e-commerce and subscription sales.
(b) Upon the termination of his employment with the Corporation for
any reason whatsoever, Executive shall promptly deliver to the Corporation all
drawings, manuals, letters, notes, notebooks, reports and copies thereof, and
all other materials, including, without limitation, those of a secret and
confidential nature, relating to the Corporation's business which are in
Executive's possession or control.
June 2002 Employment Agreement Page 5
<PAGE>
8. NON-COMPETITION. Executive agrees that, during the term of this active
employment hereunder and for the Post-Termination Period (as defined below), he
shall not, anywhere in the United States of America or elsewhere in the world
(or in such smaller area or for such lesser period as may be determined by a
court of competent jurisdiction to be a reasonable limitation on the competitive
activity of Executive), directly or indirectly:
(i) engage either for his own account or with or for anyone
else; in a "Competitive Line of Business" to the business carried on by the
Corporation. The term "Competitive Line of Business" is defined as any entity
engaged in the business of diet and fitness, either online or offline and any
entity engaged in any business that eDiets, or any affiliated entities of
eDiets, may be engaged in or that eDiets or any of eDiets affiliated entities
has written plans to enter into;
(ii) solicit or attempt to solicit business of any customers of
the Corporation for diet and fitness products or services the same or similar to
those offered, sold, produced or under development by the Corporation at the
time of the beginning of the Post-Termination Period;
(iii) attempt to induce any person, firm or entity with a
material business relationship of the Corporation to cease or materially reduce
the level of business it conducts with the Corporation;
(iv) solicit or attempt to solicit for any business endeavor any
employee of the Corporation;
(v) render any services as an officer, director, employee,
partner, consultant or otherwise to, or have any interest as a stockholder,
partner, lender or otherwise in, any person which is so engaged in a Competitive
Line of Business.
Notwithstanding anything to the contrary contained in this Paragraph 8,
the provisions hereof shall not prevent the Executive from purchasing or owning
less than five percent (5%) of the voting securities of any corporation, the
stock of which is publicly traded or from engaging in general advertising or
solicitations (such as through general print/electronic media), which may have
the unintended effect of causing a client, customer or vendor of the Corporation
to materially reduce the level of business it conducts with the Corporation.
The Post-Termination Period shall be one year after the termination of
employment, except if the Corporation terminates the Executive's employment for
a reason other than "cause" as defined in paragraph 5 above, in which
circumstance there shall be no Post-Termination period.
9. REMEDIES. Because the Corporation does not have an adequate remedy at law
to protect its business from Executive's competition or to protect its interests
in its trade
June 2002 Employment Agreement Page 6
<PAGE>
secrets, privileged, proprietary or confidential information and similar
commercial assets, the Corporation shall be entitled to injunctive relief, only
after providing 72 hours written notice to Executive, in addition to such other
remedies and relief that would, in the event of a breach of the provisions of
Paragraphs 6, 7 and 8, be available to the Corporation.
10. SURVIVAL. The provisions of Paragraphs 6, 7 and 8 shall survive
termination of this Agreement for any reason.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of
the parties and merges and supersedes any prior or contemporaneous agreements
between the parties pertaining to the subject matter hereof. This Agreement may
not be changed or terminated orally, and no change, termination or attempted
waiver of any of the provisions hereof shall be binding unless in writing and
signed by the party against whom the same is sought to be enforced; PROVIDED,
HOWEVER, that Executive's compensation may be increased at any time by the
Corporation without in any way affecting any of the other terms and conditions
of this Agreement, which in all other respects shall remain in full force and
effect. Failure of a party to enforce one or more of the provisions of this
Agreement or to require at any time performance of any of the obligations hereof
shall not be construed to be a waiver of such provisions by such party nor to in
any way affect the validity of this Agreement of such party's right thereafter
to enforce any provision of this Agreement, nor to preclude such party from
taking any other action at any time which it would legally be entitled to take.
12. SUCCESSORS AND ASSIGNS. Neither party shall have the right to assign this
personal Agreement, or any rights or obligations hereunder, without the consent
of the other party; PROVIDED, HOWEVER, that upon the sale of all or
substantially all of the assets, business and goodwill of the Corporation to
another corporation, or upon the merger or consolidation of the Corporation with
another corporation, this Agreement shall inure to the benefit of, and be
binding upon, both Executive and the corporation purchasing such assets,
business and goodwill, or surviving such merger or consolidation, as the case
may be, in the same manner and to the same extent as though such other
corporation were the Corporation. Subject to the foregoing, this Agreement shall
inure to the benefit of, and bind, the parties hereto and their legal
representatives, heirs, successors and assigns.
13. ADDITIONAL ACTS. Executive and the Corporation each agrees that he or it
shall, as often as requested to do so, execute, acknowledge and deliver and
file, or cause to be executed, acknowledged and delivered and filed, any and all
further instruments, agreements or documents as may be necessary or expedient in
order to consummate the transactions provided for in this Agreement and do any
and all further acts and things as may be necessary or expedient in order to
carry out the purpose and intent of this Agreement.
14. COMMUNICATIONS. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been given
at the time when mailed in any United States post office enclosed in a
registered or certified
June 2002 Employment Agreement Page 7
<PAGE>
postage prepaid envelope or via personal delivery, messenger, reputable
overnight courier or fax (with hard copy to follow) and addressed to the
addresses set forth at the beginning of this Agreement, or to such other address
as any party may specify by notice to the other party; PROVIDED, HOWEVER, that
any notice of change of address shall be effective only upon receipt.
15. CONSTRUCTION. The headings of the Paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
otherwise affect the construction of the terms or provisions hereof. References
in this Agreement to Sections are to the sections of this Agreement. All terms
and words used in this Agreement, regardless of the number, letter or gender
used, shall be deemed to include any other gender, letter or number as the
context or use thereof may require or permit.
16. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
17. SEVERABILITY. If any provision of this Agreement is held to be invalid or
unenforceable by a court or tribunal of competent jurisdiction, such invalidity
or unenforceability shall not affect the validity and enforceability of the
other provisions of this Agreement and the provision held to be invalid or
unenforceable shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability.
18. LAW; VENUE. This Agreement will be construed in accordance with the laws
of the State of Florida. The party seeking to enforce the provisions of this
Agreement will choose the venue of such action, and the non-enforcing party
agrees to submit to and waives any objections to jurisdiction or venue in that
proceeding.
19. TIME. Time is of the essence of each and every covenant, condition and
obligation of this Agreement. Except as herein expressly permitted, neither
party hereto shall have the right to extend any date, the date of expiration of
any period of time or the date for the performance of any act or the
satisfaction of any condition. Failure by a party hereto to perform timely its
covenants, agreements and obligations hereunder shall, unless waived in writing
by the other party hereto, be a material default under this Agreement. Any time
period provided for herein which ends on a Saturday, Sunday or a legal holiday
in the State of Florida will extend to 5:00 p.m. of the next business day.
20. EXHIBITS. All of the exhibits attached to this Agreement are hereby
incorporated into, and made a part of, this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first set forth above.
CORPORATION: EDIETS.COM, INC.
June 2002 Employment Agreement Page 8
<PAGE>
By: /s/ David R. Humble,
-------------------------------
David R. Humble, Chairman
EXECUTIVE: CHRISTINE M. BROWN
By: /s/ Christine M. Brown
-------------------------------
Vice President, Operations
June 2002 Employment Agreement Page 9