Document:

EX-10.2 CHANGE-IN-CONTROL COMPENSATION AGREEMENT

 

Exhibit 10.2

CHANGE IN CONTROL COMPENSATION AGREEMENT

BETWEEN

ORIENTAL FINANCIAL GROUP INC.

AND

JOSÉ J. GIL DE LAMADRID

     Agreement made as of the 10th day of November, 2006, by and between Oriental
Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal
offices in San Juan, Puerto Rico (hereinafter referred to as “OFG”) and José J. Gil de Lamadrid, of
legal age, married, business executive and resident of Caguas, Puerto Rico (hereinafter referred to
as the “Chairman”).

WITNESSETH:

WHEREAS, the Chairman is presently the Chairman of the Board of Directors of OFG;

     WHEREAS, it is in the best interest of OFG to promote the retention of the Chairman’s services
on behalf of OFG by reducing concerns that the Chairman may be
adversely affected in the event of change in control of OFG as defined herein below;

     WHEREAS, on this date, OFG and the Chairman have entered into a agreement covering the
Chairman’s services to OFG as the non-executive Chairman of its Board of Directors (the
“Non-Executive Chairman Agreement”)

 

 

     WHEREAS, OFG and the Chairman wish to enter into this Agreement to set forth the terms and
conditions for the payment by OFG of certain compensation to the Chairman in the event of a
termination of the Non-Executive Chairman Agreement as a result of a change in control of OFG;

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the
Chairman do hereby agree as follows:

          1. TERM.

               This Agreement shall be in full force and effect so long as the Non-Executive Chairman
Agreement is in effect.

          2. TERMINATION OF NON-EMPLOYMENT CHAIRMAN AGREEMENT DUE TO A
CHANGE IN CONTROL

               A. In the event there is a Change in Control of OFG (as defined herein below) while the
Non-Executive Chairman Agreement is in effect and as a result thereof or within one (1) year after
the Change in Control, the Non-Executive Chairman Agreement is terminated by OFG or its successor
in interest, the Chairman shall be entitled to the cash payment compensation determined as provided
in subparagraph B below.

               B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the
Chairman’s annual base fee at the time the termination of the Non-Executive Chairman Agreement
occurs plus the last cash bonus paid to the Chairman prior to such termination.

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               C. The cash payment compensation shall be in lieu of any other payments which the Chairman may
be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due
and payable in a lump sum to the Chairman on or before the thirtieth (30th) day
following the termination of the Non-Executive Chairman Agreement. The receipt of the cash payment
compensation shall not affect the rights of Chairman to any vested benefits or accrued
compensation, including bonuses.

               D. For purposes of this Agreement, a “Change in Control of OFG” shall be deemed to have
occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of OFG representing 25% or more of either the then outstanding shares of common stocks
of OFG or the combined voting power of OFG’s then outstanding securities and if individuals who on
the date hereof are members of OFG’s Board of Directors cease for any reason to constitute at least
a majority thereof, unless the appointment election or nomination of each new director who was not
a director on the date hereof has been approved by at least two-thirds of the directors in office
on the date hereof.

               E. For purposes of this Agreement, “Person” shall have the meaning given in Section 3(a)(9) of
the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii)
an individual who on the date of this Agreement is a director or officer of OFG or any of its

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subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG’s outstanding securities;
(iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any
of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of
such securities; or (v) a corporation or entity owned, directly or indirectly, by the stockholders
of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this
Agreement.

               F. Notwithstanding anything to the contrary herein, any event or transaction which would
otherwise constitute a Change in Control of OFG (hereinafter referred to as a “Transaction”) shall
not constitute a Change in Control of OFG for purposes of this Agreement if the Chairman
participates as an acquirer in the Transaction or as an equity investor or stockholder of the
acquiring entity or any of its affiliates and thus, the Chairman shall not be entitled to receive
the benefits provided for in this Agreement.

     3. ASSIGNMENT.

          This Agreement is personal to each of the parties hereto and neither party may assign or
delegate any of his or its rights or obligations hereunder without first obtaining the written
consent of the other party.

     4. AMENDMENTS OR ADDITIONS.

          No amendments or additions to this Agreement shall be binding unless in writing and signed by
both parties. The prior approval by a two-thirds affirmative vote of the full Board of Directors
of OFG shall be required in order for OFG to authorize any amendments or additions to this
Agreement, to give any

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consent or waivers of provisions of this Agreement, or to take any other action under this
Agreement.

     5. MISCELLANEOUS.

          A. The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof.

          B. This Agreement shall be governed in all respects and be interpreted by and under the laws
of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by
applicable United States federal law, in which case this Agreement shall be governed and be
interpreted by and under United States federal law. Venue for the litigation of any and all maters
arising under or in connection with this Agreement shall be laid in the United States District
Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the
Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of
state court jurisdiction.

	 	 	 	 	 	 	 
	CHAIRMAN

	 	 	 	ORIENTAL FINANCIAL GROUP INC.	 	 
	 
	/s/
José J. Gil de Lamadrid
	 	 	 	/s/ Miguel Vázquez-Deynes	 	 
	 

José J. Gil de Lamadrid

	 	 	 	 

Miguel Vázquez-Deynes
	 	 
	 

	 	 	 	Director-Chairman of	 	 
	 

	 	 	 	Compensation Committee	 	 

5EX-10.1 Employment Contract

 

Exhibit 10.1

EMPLOYMENT CONTRACT

between

BABYUNIVERSE, INC.

and

MICHAEL R. HULL

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article I — Recitals
	 	 	1	 
	 
	 	 	 	 
	Article II — Term
	 	 	1	 
	 
	 	 	 	 
	Article III — Duties
	 	 	1	 
	 
	 	 	 	 
	Article IV — Compensation And Other Benefits
	 	 	2	 
	 
	 	 	 	 
	Article V — Business Expenses
	 	 	4	 
	 
	 	 	 	 
	Article VI — Vacation
	 	 	4	 
	 
	 	 	 	 
	Article VII — Termination of Employment
	 	 	4	 
	 
	 	 	 	 
	Article VIII — Resignation
	 	 	5	 
	 
	 	 	 	 
	Article IX — Non-Competition
	 	 	6	 
	 
	 	 	 	 
	Article X — Notices
	 	 	8	 
	 
	 	 	 	 
	Article XI — Construction of Contract
	 	 	8	 
	 
	 	 	 	 
	Article XII — Change in Control
	 	 	9	 
	 
	 	 	 	 
	Article XIII — Miscellaneous
	 	 	10	 

 

 

EMPLOYMENT CONTRACT

     THIS EMPLOYMENT CONTRACT (“Contract”) is made and entered as of the 28th day of November, 2006
between BABYUNIVERSE, INC., a Florida corporation (“Employer”), and Michael R. Hull (“Employee”).

R E C I T A L S

     A. Employee and Employer desire to enter into this Contract to memorialize the employment
relationship between Employer and Employee.

     B. Subject to the terms and conditions of this Contract, Employee is the Chief Financial
Officer of Employer.

     NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto mutually agree as follows:

Article I — Recitals

     The above stated Recitals are true and correct and are incorporated by reference into this
Contract.

Article II — Term

     The initial term of this Contract shall be one (1) year commencing as of December 11, 2006
(the “Commencement Date”) and ending one (1) year thereafter unless terminated earlier as provided
herein (the “Initial Term”). The Initial Term shall be extended for successive one (1) year
periods unless either party gives the other thirty (30) days prior written notice of its intent not
to renew prior to the expiration of the then current term.

Article III — Duties

     A. In General. Upon the terms and subject to the conditions of this Contract, Employer hereby
employs Employee and Employee hereby accepts such employment with Employer for the term of this
Contract as the Chief Financial Officer of Employer. Employee shall have the powers and duties
with respect to Employer’s business interests (the “Businesses”) as set forth in the Bylaws of
Employer for its Chief Financial Officer and such other executive and managerial duties as normally
associated with such positions, subject to the direction of the Chief Executive Officer or the
President of the Company in accordance with the reasonable policies adopted from time to time by
the Board of Directors and communicated by written notice to Employee (the “Duties”). During the
term of this Contract and subject to Article III.D below, Employee shall devote substantially all
of Employee’s business time, attention, skill and efforts to the faithful performance of the
Duties.

 

 

     B. Place of Performance. The Duties shall be performed in Jupiter, Florida, except for such
travel in the ordinary course of Employer’s business as may from time to time be reasonably
required. Employee’s principal place of business shall be at the executive offices of Employer in
Jupiter, Florida.

     C. Delegation. Notwithstanding anything to the contrary contained in this Article III,
Employee shall have the right and authority to delegate responsibility to one or more personnel as
Employee deems appropriate, and is hereby authorized to hire on behalf of Employer additional
agents, employees and other representatives which in Employee’s reasonable opinion, and subject to
the prior approval of the president of the Employer, are necessary to handle the affairs of
Employer, and to terminate the employment of any and all agents, employees and other
representatives of Employer, other than appointed officers of Employer, the termination of whom
shall be subject to the prior approval by Employer’s Chief Executive Officer or President.

     D. Other Activities. Employee shall use Employee’s best efforts for the benefit of Employer
by whatever activities Employee reasonably deems appropriate to maintain and improve Employer’s
standing in the community generally and among other members of the industries in which Employer is
from time to time engaged, including such entertaining for business purposes as Employee reasonably
considers appropriate. Employee shall not, without the approval of the Chief Executive Officer or
the President of Employer, render services of a business nature to any other person or entity, if
such activities would interfere with the performance of Employee’s Duties as required under this
Contract or otherwise prevent Employee from devoting substantially all of Employee’s business time,
attention, skill and efforts to the performance of Employee’s Duties as required under this
Contract. Subject to the foregoing limitations, the following activities shall be deemed to be
permissible: (i) owning or managing real or personal property owned by Employee or Employee’s
family members; (ii) owning any business which does not compete, directly or indirectly, with
Employer; and (iii) holding directorships or similar positions in any organization which is not
competing with Employer and which is approved by the Board of Directors of Employer.

Article IV — Compensation And Other Benefits

     A. Base Salary, Signing Bonus, Annual Bonus and Employee Benefit Plans. For all services
rendered by Employee in any capacity during Employee’s employment under this Contract (including
any renewals hereof), Employer shall pay to Employee as compensation the sum of the amounts set
forth in the following subparagraphs 1 through 4.

          1. Base Salary. Commencing upon the Commencement Date, Employee shall be paid the sum One
Hundred Thirty Five Thousand Dollars ($135,000.00) on an annualized basis (the “Base Salary”),
which amount shall be paid in accordance with Employer’s customary payroll practices and shall be
subject to adjustment from time to time, as determined by the Compensation Committee of the Board
of Directors of Employer.

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          2. Annual Bonus. On or before one hundred twenty (120) days subsequent to the completion of
Employer’s preceding fiscal year, Employee shall be eligible to receive a cash bonus, such bonus to
be within the sole discretion of the Compensation Committee of the Board of Directors of Employer.

          3. Benefit Plans. During the term of Employee’s employment with Employer, Employee shall be
entitled to participate in all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other executives of Employer (“Investment Plans”) and Employee
shall be eligible for participation in and shall receive all benefits under, welfare benefit plans,
practices, policies and programs applicable generally to other executives of Employer, including
but not limited to comprehensive medical and dental coverage (“Welfare Plans”).

          4. Dues. Employer shall pay the dues of such professional associations and societies of which
Employee is a member in furtherance of Employee’s Duties, including without limitation CPE credits
and other professional certifications and continuing education requirements associated with being a
CPA.

     B. Payments Upon Termination.

          1. Termination by Employer for Cause; Voluntary Unilateral Decision by Employee Without Cause;
Death or Disability. If Employee’s employment is terminated (i) by Employer for Cause (as
hereinafter defined at Article VII.B); (ii) by Employee by a voluntary unilateral decision by
Employee without Cause (as defined at Article VII.A); or (iii) as a result of Employee’s death or
Disability (as defined below), then Employee shall be entitled to: (1) the base salary pursuant to
Article IV.A.1 earned through the date of termination; (2) accrued vacation under Article VI
hereof; and (3) all applicable reimbursements from Employer due under Article V hereof. As used in
this Contract, the term “Disability” means (A) Employee’s incapacity due to a permanent mental or
physical illness that prevents Employee from performing Employee’s duties hereunder for 26
consecutive weeks or (B) a physical condition that renders the performance by Employee of
Employee’s duties hereunder a serious threat to the health and well being of Employee. Disability
shall be determined by a physician selected by Employee (or Employee’s legal representative) and
reasonably acceptable to Employer.

          2. Termination for Reasons Other than Termination by Employer for Cause; Voluntary Unilateral
Decision by Employee or Death or Disability. If Employee’s employment is terminated for any reason
by either party, other than as a result of termination by Employer for Cause (as defined at Article
VII.B), a termination by a voluntary unilateral decision by Employee without Cause (as defined at
Article VII.A) or a termination as a result of Employee’s death or Disability, Employee shall be
entitled to: (1) any applicable Severance, as such term is defined below, (2) all amounts set forth
in items (1), (2) and (3) of Article IV.B.1 above. For purposes of this Contract, clauses (1) and
(2) of this Article IV.B.2 of this Contract shall collectively be referred to as the “Termination
Benefits.” Payment of the Termination Benefits shall be conditioned upon the execution by Employee
of a valid release, to be prepared by Employer, in which Employee releases Employer, to the maximum
extent permitted by law, from any and all

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claims Employee may have against Employer that relate to or arise out of Employee’s employment
or termination of employment. “Severance” shall be calculated initially as one twelfth of the Base
Salary, with an additional one twelfth of the Base Salary for each full year that this Agreement
and any extension thereof shall be in effect. Notwithstanding anything to the contrary in the
foregoing, the Severance shall never exceed one half of the Base Salary nor shall it be less than
one twelfth of the Base Salary.

Article V — Business Expenses

     A. Business Expenses. Employee is authorized to incur reasonable expenses to execute and/or
promote the Businesses of Employer, including, but not limited to, expenses related to maintenance
of professional licenses and expenses for reasonable entertainment, travel, and similar items, in
each case, in accordance with the policies, practices and procedures of Employer. Employer will
reimburse Employee for all reasonable travel or other expenses incurred while on business.
Employer will not reimburse Employee for automobile expense associated with traveling to Employer’s
offices.

Article VI — Vacation

     Employee will be entitled to fifteen (15) days of paid time off in accordance with the
Employer’s vacation policy annually or such other time as authorized by the Board of Directors
during which time Employee’s compensation shall be paid in full. Days of paid time off that are
unused in any calendar year may not be accumulated and carried forward and used in future years.

Article VII — Termination of Employment

     A. Termination by Employee. Employee may terminate Employee’s employment with Employer at any
time upon notice to Employer for “Cause.” As used in this Paragraph A, the term “Cause” shall
mean:

          1. Employer’s material breach of this Contract; provided, however, that in the event Employee
believes that this Contract has been materially breached, Employee shall provide Employer with
written notice of such breach and provide Employer with a thirty (30) day period in which to cure
or remedy such breach;

          2. Assignment to Employee of regular duties inconsistent with Employee’s position, or status
with Employer; or

          3. The relocation of Employer’s principal executive offices to a location more than forty (40)
miles outside of Jupiter, Florida without Employee’s prior consent.

     B. Termination by Employer. Employee’s employment may be terminated by Employer at any time upon
notice to Employee for “Cause.” As used in this Paragraph B, the term “Cause” shall

4

 

mean: (i) commission of any act of fraud or gross negligence by Employee in the course of
employment hereunder that, in the case of gross negligence, has a material adverse effect on the
business or financial condition of Employer or any of its affiliates; (ii) willful material
misrepresentation at any time by you to the President and Chief Executive Officer or the Board of
Directors of Employer; (iii) Employee’s willful failure or refusal to comply with any of Employee’s
material obligations hereunder or to comply with a reasonable and lawful instruction of the
President and Chief Executive Officer or the Board of Directors of Employer; (iv) engagement by
Employee in any conduct or the commission by Employee of any act that is, in the reasonable opinion
of the Board of Directors of Employer, materially injurious or detrimental to the substantial
interest of Employer or any of its affiliates; (v) Employee’s indictment for any felony, whether of
the United States or any state thereof or any similar foreign law to which Employee may be subject;
(vi) any failure substantially to comply with any written rules, regulations, policies or
procedures of Employer furnished to Employee that, if not complied with, could reasonably be
expected to have a material adverse effect on the business of Employer or any of its affiliates;
(vii) the use by Employee of an illegal substance, including, but not limited to, marijuana,
cocaine, heroin, and all other illegal substances, and/or the dependence by Employee upon the use
of alcohol, which, in any case, in the opinion of both Employee’s family physician and a physician
chosen by Employer, materially impairs Employee’s ability to perform Employee’s Duties hereunder,
which dependence is not cured or rehabilitated, as determined by Employee’s physician, within three
(3) months of receipt of written notice from Employer to Employee; or (viii) any willful failure to
comply with Employer’s policies regarding insider trading.

     C. Death or Disability. This Contract shall terminate upon the death or the Disability of
Employee. Employee or Employee’s heirs or estate (as the case may be) shall be entitled to the
compensation provided for with respect to a termination by death or Disability in this Contract.

     D. Termination of Obligations. Upon the resignation of Employee or termination of Employee’s
employment in accordance with the provisions of this Article VII, all obligations of Employee and
Employer hereunder shall be terminated except as otherwise provided herein.

     E. No Mitigation. If Employee’s employment under this Contract terminates for any reason,
with or without Cause, Employee shall have no obligation to seek other employment in mitigation of
damages; and no compensation received by Employee from other employment or other sources shall be
considered as a mitigation of the amounts owing to Employee hereunder.

Article VIII — Resignation

     Any termination of employment under this Contract, whether or not voluntary, will
automatically constitute a resignation of Employee as an officer of Employer and all subsidiaries
of Employer and if requested to do so by Employer’s Board of Directors, shall resign as a member of
the Board of Directors of Employer and all subsidiaries of Employer; provided, however, that
Employee shall execute such resignation documents as Employer may reasonably

5

 

request in order to evidence such resignation and this provision shall survive the termination
of this Contract.

Article IX — Non-Competition

     A. Non-Competition. While in the employment of Employer and for the period of three (3) years
thereafter (the “Non-Competition Period”), unless otherwise agreed to in writing by Employer,
Employee will not, directly or indirectly, own, manage, operate, join, control, be employed by or
participate in the ownership, management, operation or control of, or be connected in any manner
with any business that is engaged in selling brand name baby, toddler, kids or maternity products
or the provision of online content regarding parenting, families or babies.

     B. Confidential Information. During and after the term of the Contract, Employee shall not
directly or indirectly, divulge, furnish or make accessible to any party not authorized by Employer
to receive it, any of the proprietary or confidential information or knowledge of Employer,
including without limitation, any financial information, marketing plans, strategies, trade
secrets, data, know-how, processes, techniques and other proprietary information of Employer or its
subsidiaries (the “Confidential Information”), other than in the course of performing Employee’s
duties hereunder and with the consent of Employer, which consent shall not unreasonably be
withheld, and in accordance with Employer’s policies and regulations, as established from time to
time, for the protection of the Employer’s Confidential Information. The term “Confidential
Information” does not include, and there shall be no obligation hereunder with respect to
information (including office practices and procedures) that is obvious, or that may readily be
determined by any person reasonably knowledgeable in the industry in which Employer operates by
diligent review and examination of public sources, or that becomes generally available to the
public other than as a result of a disclosure by Employee or any agent or other representative
thereof. Employee shall not have any obligation hereunder to keep confidential any Confidential
Information to the extent disclosure of any thereof is required by law, or determined in good faith
by Employee to be necessary or appropriate to comply with any legal or regulatory order, regulation
or requirement; provided, however, that in the event disclosure is required by law, Employee shall
provide Employer with reasonable notice of such requirement so that Employer may seek an
appropriate protective order and Employee shall reasonably cooperate with Employer’s efforts to
seek such a protective order. Upon termination of employment on the expiration of the Contract,
all tangible evidence of such confidential or proprietary information in the possession of Employee
shall be returned to Employer, and Employee shall not make or retain any copies or excerpts
thereof. Employee further agrees not to use any Confidential Information for the benefit of any
person or entity other than Employer or its subsidiaries.

     C. Non-Solicitation. During the term of the Contract and for a period of three (3) years
thereafter (the “Non-Solicitation Period”), Employee shall not influence or attempt to influence
customers or suppliers of Employer or any of its present or future subsidiaries either directly or
indirectly, to divert their business from Employer to any individual, partnership, firm,
corporation, or other entity that is in competition with the business of Employer or any

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subsidiary of Employer at any time during the Non-Solicitation Period. During the
Non-Solicitation Period, Employee shall not directly or indirectly solicit any of Employer’s
employees or independent contractors to work for (as an employee or independent contractor) any
business, individual, partnership, firm, corporation, or other entity in competition with the
business of Employer or any subsidiary of Employer at any time during the Non-Solicitation Period.

     D. Patents/Assignment and Transfer of Inventions. Employee shall disclose, assign and
transfer to the Company any and all ideas, concepts, discoveries, inventions, developments,
improvements, trade secrets, technical data, know-how or other materials conceived, devised,
invented, developed or reduced to practice or tangible medium by Employee or any of Employee’s
affiliates, or under Employee’s direction, during the term of this Agreement (hereinafter
“Inventions”). If any patents shall be developed by Employee or any patents shall result from the
knowledge of Employee during the term of this Agreement, Employee shall assign such patents to the
Employer. Employee also agrees to execute such documents and perform such activities as the
Employer may reasonably request to obtain such patents and to assist the Employer, as reasonably
requested by the Employer’s Board of Directors in defending its patents.

     E. Remedies. In the event of an actual or threatened breach by the Employee of this Article
IX, including any subparagraph hereof, Employer shall be entitled to an injunction restraining
Employee from its prohibited conduct. If the court should hold that the duration and/or scope
(geographic or otherwise) of the covenants contained herein are unreasonable, then, to the extent
permitted by law, the court may prescribe a duration and/or scope (geographic or otherwise), that
is reasonable and the parties agree to accept such determination, subject to their rights of
appeal. Nothing contained herein shall be construed as prohibiting Employer or any third party
from pursuing any of the remedies available to it for such breach or threatened breach, including
recovery of damages from Employee. In any action or proceeding to enforce the provisions of this
Article IX, the prevailing party (other than Employee in the event Employee prevails as a result of
a determination that the duration and/or scope (geographic or otherwise) of the covenants contained
herein are unreasonable) shall be reimbursed by the other party for all costs incurred in such
action or proceeding, including, without limitation, all court costs and filing fees and all
reasonable attorneys’ fees, incurred either at the trial level or at the appellate level. If
Employee shall be in violation of any of the restrictive covenants contained in this Contract, then
the time limitation otherwise applicable to such restrictive covenant shall be extended for a
period of time equal to the period of time during which such breach or breaches occur. If Employer
seeks injunctive relief from such breach in any court, then the covenant shall be extended for a
period of time equal to the pendency of such proceedings, including all appeals. The existence of
any claim or cause of action by Employee against Employer, whether predicated upon this Contract or
otherwise, shall not constitute a defense to the enforcement by Employer of the foregoing
restrictive covenant, but shall be litigated separately.

     F. Acknowledgments by Employee. Employee understands that the restrictions set forth in this
Article IX may limit Employee’s ability to earn a livelihood in a business similar to the business
of Employer or any subsidiary thereof, but Employee nevertheless believes that

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Employee has received and will receive sufficient consideration and other benefits as an
employee of Employer and as otherwise provided hereunder to justify clearly such restrictions
which, in any event (given Employee’s education, skills and ability), Employee does not believe
would prevent Employee’s from earning a living. Employee acknowledges that the geographic
boundaries, scope of prohibited activities, and duration of this Article IX are reasonable in
nature and are no broader than are necessary to maintain the confidentiality and the goodwill of
Employer’s proprietary information, plans and services and to protect the other legitimate business
interests of Employer.

Article X — Notices

     Any notice, request, demand, offer, payment or communication required or permitted to be given
by any provision of this Contract shall be deemed to have been delivered and given for all purposes
if written and if (a) delivered personally or by courier or delivery service, at the time of such
delivery; or (b) directed by registered or certified United States mail, postage and charges
prepaid, addressed to the intended recipient, at the address specified below, at such time that the
intended recipient or its agent signs or executes the receipt:

	 	 	 
	If to Employer:

	 	BabyUniverse, Inc.

150 South US Highway One, Suite 500

Jupiter, Florida 33410

Attn: Chairman of the Board
	 
	 	 
	If to Employee:

	 	Michael R. Hull

4417 Wellington Shores Drive

Wellington, Florida 33467

     Any party may change the address to which notices are to be mailed by giving written notice as
provided herein to the other party. Commencing immediately after the receipt of such notice, such
newly designated address shall be such person’s address for purposes of all notices or other
communications required or permitted to be given pursuant to this Contract.

Article XI — Construction of Contract

     A. Florida Law. This Contract shall be considered for all purposes a Florida document and
shall be construed pursuant to the laws of the State of Florida, and all of its provisions shall be
administered according to and its validity shall be determined under the laws of the State of
Florida without regard to any conflict or choice of law issues.

     B. Gender and Number. Whenever appropriate, references in this Contract in any gender shall
be construed to include all other genders, references in the singular shall be construed to include
the plural, and references in the plural shall be construed to include the singular, unless the
context clearly indicates to the contrary.

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     C. Certain Words. The words “hereof,” “herein,” “hereunder,” and other similar compounds of
the word “here” shall mean and refer to the entire Contract and not to any particular article,
provision or paragraph unless so required by the context.

     D. Captions. Paragraph titles or captions contained in this Contract are inserted only as a
matter of convenience and/or reference, and they shall in no way be construed as limiting,
extending, defining or describing either the scope or intent of this Contract or of any provision
hereof.

     E. Severability. The invalidity or unenforceability of any provision hereunder (or any
portion of such a provision) shall not affect the validity or enforceability of the remaining
provisions (or remaining portions of such provisions) of this Contract.

Article XII — Change in Control

     This Contract shall continue in full force and effect notwithstanding any change in control,
merger, consolidation or reorganization of any kind involving Employer or the sale of all or
substantially all of its assets. This Contract shall be binding upon Employer and Employee and
their respective heirs, executors, administrators, successors and assigns.

     Notwithstanding anything to the contrary contained herein, if at any time during the term of
this Contract and any renewal thereof, there shall be a Change in Control (as hereinafter defined)
of Employer, and if such Change in Control results in a diminution in Employee’s compensation,
responsibilities or position such that Employee cannot in good faith continue to fulfill the
responsibilities for which he is employed, as determined by Employee in his sole discretion during
the ninety (90) day period commencing on the date of the Change of Control and ending on the date
which is ninety (90) days thereafter (the “Ninety Day Period”), and if such Change in Control did
not occur due to Employee’s intentional bulk sale of voting shares of Employer owned by him
directly to such control persons or group, then Employee shall have the option of terminating this
Contract upon ten (10) days’ written notice provided that such notice be received by Employer
within the Ninety Day Period and, in such event Employer shall pay to Employee at the time of such
termination the Termination Benefits. Said lump sum payment shall be in lieu of any and all
compensation due to Employee for the years that would otherwise be remaining for the term of this
Contract. Upon receipt of said lump sum payment, this Contract and all rights and duties of the
parties shall be terminated.

     As used herein, “Change in Control” shall mean the occurrence of any one of the following:
(i) Employer enters into an agreement of reorganization, merger, or consolidation pursuant to which
Employer or a subsidiary is not the surviving corporation; (ii) Employer sells substantially all of
its assets to a purchaser other than a subsidiary; or (iii) shares of stock of Employer
representing in excess of fifty percent (50%) of the total combined voting power of all outstanding
classes of stock of Employer are acquired, in one transaction or a series of transactions, by a
single purchaser or group of related purchasers (as such terms are defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended).

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Article XIII — Miscellaneous

     A. Entire Contract. This Contract (and all other documents executed simultaneously herewith
or pursuant hereto) constitutes the entire agreement among the parties pertaining to the subject
matter hereof, and supersedes and revokes any and all prior or existing agreements, written or
oral, relating to the subject matter hereof, and this Contract shall be solely determinative of the
subject matter hereof.

     B. Restrictive Covenant. In the event the non-competition, non-solicitation clause or any
other restrictive covenant of this Contract shall be deemed unenforceable, invalid or overbroad in
whole or in part for any reason, then any arbitration panel or court of competent jurisdiction is
hereby authorized, requested and instructed to reform such provision(s) to provide for the maximum
competitive restraints upon Employee’s activities (in time and geographic area), which may then be
legal and valid.

     C. Waiver. Either Employer or Employee may, at any time or times, waive (in whole or in part)
any rights or privileges to which Employee or it may be entitled hereunder. However, no waiver by
any party of any condition or of the breach of any term, covenant, representation or warranty
contained in this Contract, in any one or more instances, shall be deemed to be or construed as a
further continuing waiver of any other condition or of any breach of any other terms, covenants,
representations or warranties contained in this Contract, and no waiver shall be effective unless
it is in writing and signed by the waiving party.

     D. Attorneys’ Fees. In the event that either party shall be required to retain the services
of an attorney to enforce any of Employee’s or its rights hereunder, the prevailing party in any
arbitration or court action shall be entitled to receive from the other party all costs and
expenses including (but not limited to) court costs and attorneys’ fees (whether in the arbitration
or in a court of original jurisdiction or one or more courts of appellate jurisdiction) incurred by
him or it in connection therewith. The parties hereby expressly confer on the arbitrator the right
to award costs and attorneys’ fees in the arbitration.

     E. Dispute Resolution. Except for any dispute or controversy in which Employer is seeking
injunctive relief pursuant to Article IX, Employee and Employer shall settle by arbitration any
dispute or controversy arising in connection with this Contract, whether or not such dispute
involves a plan subject to the Employee Retirement Income Security Act of 1974, as amended. Such
arbitration shall be conducted in accordance with the rules of the American Arbitration Association
before a panel of three arbitrators sitting in Palm Beach County, Florida or such other location as
shall be mutually agreed by the parties. The award of the arbitrators shall be final and
nonappealable, and judgment may be entered on the award of the arbitrators in any court having
proper jurisdiction. THE ARBITRATORS SHALL HAVE NO AUTHORITY TO AWARD PUNITIVE DAMAGES UNDER ANY
CIRCUMSTANCES (WHETHER IT BE EXEMPLARY DAMAGES, TREBLE DAMAGES, OR ANY OTHER PENALTY OR PUNITIVE
TYPE OF DAMAGES) REGARDLESS OF WHETHER SUCH DAMAGES MAY

10

 

BE AVAILABLE UNDER APPLICABLE LAW, EMPLOYEE AND EMPLOYER HEREBY EACH WAIVING THEIR RIGHT, IF ANY,
TO RECOVER PUNITIVE DAMAGES IN CONNECTION WITH ANY SUCH CLAIMS, DISPUTES OR DISAGREEMENTS
REGARDLESS OF WHETHER SUCH CLAIM, DISPUTE OR DISAGREEMENT ARISES UNDER THE LAW OF CONTRACTS, TORTS,
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE OF EVERY KIND AND STRICT LIABILITY WITHOUT FAULT), OR
PROPERTY, OR AT COMMON LAW OR IN EQUITY OR OTHERWISE. EMPLOYEE ACKNOWLEDGES THAT BY SIGNING THIS
AGREEMENT) EMPLOYEE IS WAIVING ANY RIGHT THAT EMPLOYEE MAY HAVE TO A JURY TRIAL OR, OTHER THAN AS
PROVIDED BY SECTION 16, A TRIAL BEFORE A JUDGE IN CONNECTION WITH, OR RELATING TO, A CLAIM.

     F. Venue. Without limiting Paragraph E above, any litigation arising hereunder shall be
instituted only in Palm Beach County, Florida, the place where this Contract was executed, and all
parties hereto agree that venue shall be proper in said county for all such legal or equitable
proceedings.

     G. Assignment. The rights and obligations of the parties under this Contract shall inure to
the benefit of and shall be binding upon their successors, assigns, and/or other legal
representatives. Additionally, covenants in this Contract which are for the benefit of Employer
also shall run in favor of Employer’s subsidiaries. This Contract shall not be assignable by
Employer or Employee. The services of Employee are personal and Employee’s obligations may not be
delegated by Employee’s except as otherwise provided herein.

     H. Amendment. This Contract may not be amended, modified, superseded, canceled, or
terminated, and any of the matters, covenants, representations, warranties or conditions hereof may
not be waived, except by a written instrument executed by Employer and Employee or, in the case of
a waiver, by the party to be charged with such waiver.

     I. No Third Party Beneficiary. Nothing expressed or implied in this Contract is intended or
shall be construed to confer upon or give any person, other than Employer and Employee and their
respective successors and permitted assigns, any rights or remedies under or by reason of this
Contract.

     J. Indemnification. To the fullest extent permitted by law and Employer’s certificate of
incorporation and by-laws, Employer shall promptly indemnify Employee for all amounts (including,
without limitation, judgments, fines, settlement payments, losses, damages, costs and expenses
(including reasonable attorneys’ fees)) incurred or paid by the Employee in connection with any
action, proceeding, suit or investigation arising out of or relating to the performance by Employee
of services for (or acting as a fiduciary of any Employee benefit plans, programs or arrangements
of) Employer or any of its subsidiaries or affiliates, including as a director, officer or employee
of Employer or any such subsidiary or affiliate. Employer also agrees to maintain a directors’ and
officers’ liability insurance policy covering Employee to the extent Employer provides such
coverage for its other executive officers.

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     K. Tax Withholding. All payments to the Employee under this Contract will be subject to the
withholding of all applicable employment and income taxes.

     L. Counterparts. This Contract may be executed in one or more counterparts, and any such
counterpart shall, for all purposes, be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

     IN WITNESS WHEREOF, Employer and Employee have caused this Contract to be executed on the day
and year first above written.

	 	 	 	 	 
	 	BABYUNIVERSE, INC.

 	 
	 	By:  	/s/ John C. Textor
 	 
	 	 	Name:  	John C. Textor 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	Michael R. Hull

 	 
	 	/s/ Michael R. Hull
 	 
	 	 	 
	 	 	 
	 

12

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