Document:

GKNT EX10.1 2013.3.31-10-Q

Exhibit 10.1
March 6, 2013

Mr. Ali R Sorbi
Chief Financial Officer
Geeknet, Inc.

Dear Mr. Sorbi:

Geeknet, Inc. (the “Company”) appreciates your efforts and contributions as an employee of the Company and accepts your resignation effective immediately.  This letter memorializes the terms of your resignation to which we have agreed.  
1.Resignation
This letter will serve as an acceptance of your resignation as an officer and employee of the Company and any of its affiliated companies, effective immediately (the “Resignation Date”).  
2.    Payments and Benefits
Subject to your execution and non-revocation of a Mutual Waiver and Release of Claims (the “Release”) substantially in the form attached hereto as Exhibit A within three days following the Resignation Date, as well as your continued compliance with the obligations set forth in the At-Will Employment, Confidential Information, Invention, Assignment and Arbitration Agreement, previously entered into by you and the Company, a copy of which is attached to this Agreement, the Company will (i) make a lump sum of payment of $31,000 less applicable taxes within thirty days of the Resignation Date in full settlement of your profit sharing amount for 2012 performance that would otherwise be paid in March 2013, (ii) continue to pay you your bi-monthly base salary payments through the date that is three months following the Resignation Date in accordance with the Company’s regular payroll policies, (iii) maintain your health insurance benefits through March 31, 2013, (iv) continue your health benefits after March 31, 2013 under the federal COBRA law (a separate notice will be provided to you), with the Company paying your premiums through earlier of June 30, 2013 and the date that you become eligible to receive health insurance benefits from a different employer, and (v) continue your discount on ThinkGeek products on the same basis as active employees (as in effect from time to time), provided that you provides the Company with a personal email address on or prior to the Termination Date.  Additionally, the Company will allow you (1) until March 22, 2013 to file any outstanding expense reports, for reimbursable expenses such as those related to the New York City and business meals with other employees, and (2) to correct PTO records to reflect that you 

did not take vacation from February 15th to 27th.

The parties to this letter agreement agree that the obligations set forth in this Section 2 constitute the total payment and benefit obligations under this letter or otherwise, understanding that nothing contained in this letter will impair any rights that you may have with respect to amounts vested under any applicable savings or health plan of the Company.  Accordingly, all unvested equity awards with respect to Company common stock that you hold as of the Resignation Date will be immediately forfeited and any vested and exercisable stock options to acquire Company common stock that you hold as of the Resignation Date will remain exercisable in accordance with the terms of the applicable equity plan and award agreement.  If you fail to execute the Release in a timely manner (i.e., within three days of the Resignation Date), your rights to receive or retain the payments and benefits described in this Section 2 shall be void.
3.    Additional Considerations
You agree that at all times you will refrain from making, and will not cause any other person to make, any disparaging statements about the Company or any of its directors, shareholders, affiliates, advisors, representatives, officers, partners, agents, current or former employees. Such prohibited disparaging statements would include, without limitation, the business, products, intellectual property, financial standing, future, or employment /compensation/benefit practices of the Company or any of its affiliates. Likewise, the Company agrees to require that each of its current executive officers who are subject to the requirements of Section 16 of the Securities Exchange Act of 1934, as amended, and members of its Board of Directors not to make any oral or written statement to any person that disparages, defames, libels, or slanders you.
Further, the Company agrees that, in response to any inquiries from prospective employers for you, it will state that it has a neutral reference policy, and will provide only the dates of employment, positions held, and compensation information.  In the event the Company is asked whether you are eligible for rehire, the Company will answer in the affirmative.  Notwithstanding, you agree that you will not reapply for a position with the Company.
You further agree that for the period beginning on the Resignation Date and ending on the date that is three months immediately following the Resignation Date, you will not, directly or indirectly (whether through affiliates, relatives, or otherwise), for payment or gratuitously, engage, work for, consult, contribute to, own, establish, be a partner in, advise, or be employed by any Competing Business.  For purposes of this paragraph, “Competing Business” means any E-commerce business that primarily sells through the internet any products that are substantially similar to the products sold by the Company, including, but not limited to, a commercial business that is the same or substantially similar to any of the Company’s businesses (which for the avoidance of doubt includes, but is not limited to, X-treme Geek, Vat19.com, Firebox.com, Perpetual Kid, Exel, GSI Commerce Inc., eBay, and Amazon).  For the avoidance of doubt, ownership for personal investment purposes only of less than 2% of the voting stock of any 

publicly held corporation shall not constitute a violation hereof.  You expressly acknowledge that the scope of the limitations set forth in this paragraph are reasonable and necessary to protect the Company’s legitimate business interests.  These restrictions remain in place, however, only so long as the Company is not in breach of its payment obligations to you, including specifically the payments of severance and health insurance benefits. 
4.    Personnel File    
Within 96 hours of your signing this Agreement, the Company shall provide you with a full copy of your Personnel file.  The Company further agrees that it will not release your Personnel file to any third party or prospective employer, and if so requested, will state that it is our policy not to release employee personnel files.

5.    General Provisions
All payments and benefits provided under this letter will be subject to applicable withholding and deductions.  This letter will be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Virginia without reference to the principles of conflict of law.  This letter, including the Release, constitutes the entire agreement between you and the Company and supersedes any earlier agreement, written or oral, with respect thereto.  In the event that any provision or portion of this letter, including with respect to your agreement not to compete under Section 3 above (where the scope of such provision may be narrowed to the extent required), is determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this letter shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by applicable law.  In addition, you further agree and consent that, in addition to any other remedies available to the Company for any breach of this letter or threatened breach of this letter, the Company shall be entitled to seek a preliminary injunction, temporary restraining order, or other equivalent relief, restraining you from any actual or threatened breach.

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To indicate your agreement with the foregoing, please sign the letter below and return this letter to me.

Very truly yours,

GEEKNET, INC.
 
 
 
By:        /s/ Kathryn K. McCarthy        
Kathryn K. McCarthy 
President and Chief Executive Officer

Accepted and Agreed on this   9    
day of March, 2013: 
 
 
 
/s/ Ali R. Sorbi          
Ali R. Sorbi

Mutual Waiver and Release of Claims
1.    In consideration of the payments and benefits provided under Section 2 of your letter agreement with Geeknet, Inc. (the “Company”) dated March 6, 2013 (the “Letter Agreement”), and in full compromise and settlement of any potential claims and causes of action relating to or arising out of your relationships with the Company and its affiliated entities or the termination of those relationships, and any and all other claims or causes of action that you have or may have against the Releasees (as defined below) up to the date of execution of this release (the “Release”), you hereby:
(a)    release the Company and its officers, directors, executives, agents, investors, stockholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and assigns (the “Releasees”) from any and all claims, rights, demands, actions, suits, damages, losses, expenses, liabilities, indebtedness, and causes of action, of whatever kind or nature that existed from the beginning of time through the date of your execution of this Release, regardless of whether known or unknown, and regardless of whether asserted by you to date, including, but not limited to all claims for or relating to:
(i)    any and all claims relating to or arising from your relationship with the Company and the termination of that relationship, including, without limitation, claims for severance pay, bonuses, sick leave, holiday pay or vacation pay, and any and all claims under any agreement that you have entered into with the Company;
(ii)    any and all claims relating to, or arising from, your right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
(iii)    any and all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; and conversion;
(iv)    any and all claims for violation of any federal, state, or municipal 

statute, including (to the extent applicable), but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the Family & Medical Leave Act, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Worker Adjustment and Retraining Notification Act, the Virginians with Disabilities Act, the Virginia Equal Pay Act the Virginia Human Rights Act, and any applicable local anti-discrimination and anti-harassment ordinances or law;
(v)    any and all claims for violation of the federal, or any state, constitution;
(vi)    any and all claims arising out of any other laws and regulations relating to discrimination;
(vii)    any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by you pursuant to the Letter Agreement; and
(viii)    any and all claims for attorneys’ fees and costs;
2.    In consideration of the release by you and in full compromise and settlement of any potential claims and causes of action relating to or arising out of your relationships with the Company and its affiliated entities or the termination of those relationships, and any and all other claims or causes of action that the Company has or may have against the you up to the date of execution of this release (the “Release”), the Company and its officers, directors, executives, agents, investors, stockholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and assign (“Company Releasors”), except for claims arising out of your fraud or misfeasance with respect to the finances of the Company, hereby release you from any and all claims, rights, demands, actions, suits, damages, losses, expenses, liabilities, indebtedness, and causes of action, of whatever kind or nature that existed from the beginning of time through the date of your execution of this Release, regardless of whether known or unknown, and regardless of whether asserted by you to date, including, but not limited to all claims for or relating to or arising out of your employment with and termination from the Company:
3.    Based upon the mutual releases above, the parties:
(a)    agree that the Release shall be and remains in effect in all respects as a complete general release as to the matters released. You and the Company hereby agree that the Release does not extend to:  (i) claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; or (ii) claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;

(b)    agree that each will not commence, maintain, initiate, or prosecute, or cause, encourage, assist, volunteer, advise or cooperate with any other person to commence, maintain, initiate or prosecute, any action, lawsuit, proceeding, investigation, or claim before any court, legislative body or committee, or administrative agency (whether state, federal or otherwise) against the other relating to any claims, liabilities, obligations, promises, sums of money, agreements, controversies, damages, actions, lawsuits, rights, demands, sanctions, costs (including attorneys’ fees), losses, debts and expenses described in the foregoing; and
(c)    The Parties acknowledge that:  (A) this entire Release is written in a manner calculated to be understood by the Company and you; and (B) you have been advised to consult with an attorney before executing this Release.
4.    You are advised to seek legal counsel regarding the terms of this Release, which includes a release of all claims that exist as of the date of the execution of this Release.  You acknowledge that you have either sought legal counsel or have consciously decided not to seek legal counsel, contrary to the Company’s advice, regarding the terms and effect of this Release.
5.    The Parties  acknowledge that this Release releases only those claims which exist as of the date of each party’s  execution of this Release.
6.    The Parties  acknowledge that you may take three (3) days from the date of receipt of this Release within which to consider and sign this Release, but to the extent that you execute this Release before the expiration of the three (3) day period, you do so knowingly and voluntarily and only after consulting your legal counsel.
7.    This Release and the Letter Agreement constitute the complete understanding between you and the Company regarding the subject matter hereof and thereof. 
8.    This Release may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.  This Release shall be deemed to have been executed and delivered within the Commonwealth of Virginia, and it shall be construed, interpreted, governed, and enforced in accordance with the laws of the Commonwealth of Virginia. 
9.    You expressly acknowledge that the payments and the other consideration that you are receiving under the Letter Agreement constitute material consideration for the execution of this Release, and represent valuable consideration to which you would not otherwise be entitled but for signing this Release.
10.    By entering into this Release and the Letter Agreement, the Company does not admit and specifically denies any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Release and the Letter Agreement are being entered into solely for the purpose of amicably resolving all matters of any kind whatsoever between you and the Company.
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IN WITNESS WHEREOF, you have signed this Release on this    9   day of  
March, 2013.

Geeknet, Inc.
By:    /s/Kathryn K. McCarthy    
Name:    Kathryn K. McCarthy
Title:    President and Chief Executive Officer

/s/ Ali R. Sorbi    
Ali R. SorbiGKNT EX10.2 2013.3.31-10-Q

Exhibit 10.2

March 1, 2013         

 
Dear Mr. Kirk Somers,

I am delighted to offer you the opportunity to join me and the rest of the Geeknet team (the “Company”) in the position of EVP, General Counsel & Chief Administrative Officer.  In this role you will report to Katy McCarthy, Acting CEO of ThinkGeek and CFO of Geeknet. This position will start on Monday, March 4, 2013.   

In conjunction with this position, you will receive the following:

		
	•
	Annual Base Salary:  You will receive an annual base salary of three hundred twenty-five thousand dollars ($325,000.00), minus applicable tax withholdings.  Such compensation shall be paid semi-monthly in accordance with normal Company payroll practices.  I am sure you recognize that the quotation of an annual salary rate is for purposes of communication and is not intended to imply a specific condition or length of employment.

		
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	Stock Option Plan:  If you accept this offer, a recommendation will be made to the Chief Executive Officer (“CEO”) of the Company that you be granted Company Restricted Stock Units (“RSUs’) of the Company’s common stock with an economic value of $40,000 and an option to purchase shares of the Company’s common stock (“Options”) with an economic value of $40,000, for a total economic value of $80,000. This award is subject to approval by the President and CEO of the Company in accordance with metrics established by the Compensation Committee of the Company’s Board of Directors. Once approved, the award is expected to be granted on the last business day of the month in which your employment with the Company begins.  The NASDAQ closing price of the Company’s common stock on the last business day of the month in which your employment with the Company begins will be used to determine the economic value of the RSUs. This award will vest according to a plan schedule (currently 33% vested each year for 3 years), and commence on the last business day of the month in which your employment with the Company begins.  You will be responsible for any taxes associated with the vesting of RSUs.  The award is wholly discretionary in nature, in recognition of performance or anticipated performance, and does not create any obligation on the part of the Company to maintain your employment through any part of the vesting schedule or to grant additional awards in the future.  

		
	•
	Target Short Term Incentive (STI) Opportunity: If you accept this offer, you will be eligible to participate in a 2013 Target STI Opportunity for select Senior Geeknet Executives, which is based on revenue, EBITDA, and individual performance, with the goals to be established by the Company’s Board of Directors and communicated to you at the same time as such goals are established and communicated to similarly situated executives of the Company. Your target payout bonus opportunity will be based on 30% of your base salary, with actual performance to be determined on the pre-established goals described in the prior sentence.  In order to be eligible to receive a bonus under the 2013 Short Term Incentive Opportunity Plan, you must be employed on the date that such bonus payments are made to participants.

		
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	Travel Expenses:  Geeknet will cover travel costs (i.e. air, rental car, and hotel) for weekly travel from Atlanta, GA to Fairfax, VA through December 31, 2013. Geeknet will revisit 2014 travel plans at the end of 2013.  

		
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	Severance Terms: If your employment is terminated without cause (as customarily defined by the Company), you are eligible to receive a severance payment, in all cases subject to your entering into a separation and release agreement on terms acceptable to Geeknet. If termination occurs prior to the first anniversary of the commencement of your employment, to completion of the first 

 

        

twelve (12) months of service you will receive, less applicable withholding taxes, the equivalent number of months of base salary remaining in the year plus six (6) months of base salary, not to exceed a total of (12 months), with any such payment to be reduced by applicable withholdings, and Company-paid coverage for a period of six (6) months for the cost of continuation coverage (i.e. COBRA) for yourself and eligible dependents under the Company's Benefit Plans.  If termination of your employment without cause occurs after the first twelve (12) months first anniversary of the commencement of your employment, you will be entitled to receive, less applicable withholding taxes, the equivalent of six (6) months of base salary (less applicable withholding taxes) and Company-paid coverage for a period of six (6) months for the cost of continuation coverage (i.e. COBRA) for yourself and eligible dependents under the Company's Benefit Plans.  All severance benefits shall be paid in equal installments in accordance with the Company’s normal payroll practices; provided, however, that the first payment shall be made on the thirtieth day following your termination of employment (with all payments that would otherwise be made between the date of your termination of employment and such thirtieth (30th) day to be paid in the first installment).  The period during which you will be receiving severance payments will be the “Severance Period”. The terms of severance set forth in this letter agreement shall remain in effect is severance agreement will remain in effect for the duration of your employment. 

		
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	 Offset:  You acknowledge and agree that you will immediately inform the Company if you commence new employment during the Severance Period and, upon your commencement of employment with a new employer, the severance payments and post-employment benefits set forth in the preceding paragraph shall immediately cease and you will no longer have any right to receive payments or benefits under this letter agreement.  If you enter into new employment with another employer during the Severance Period and you do not inform the Company, you acknowledge and agree that the Company, upon discovery of you commencing such employment, shall have the right to (i) cease making any payment or providing any benefits and (ii) require the repayment of all severance payments that it paid to you pursuant to the terms of this letter agreement.

		
	•
	Employee Benefits:  You will receive and be eligible to participate in the Company’s normal employee benefits package provided to full time employees, including health insurance (medical, dental and vision insurance), life and disability insurances, flexible spending account program as well as our 401(k) retirement plan.  You will also receive 20 days of paid time off (PTO) per year under the Executive PTO plan, accrued semi-monthly on the basis of your length of employment from your date of hire in regular, full-time position. PTO can be taken in advance of the time being accrued in the PTO bank. 

At Will Employment & Severance for Termination without Cause

This offer of employment, if accepted, does not constitute an employment contract; your employment with Geeknet, Inc. is “at will” and may be terminated by you or the Company at any time of any reason or no reason, as permitted by law.

Entire Agreement

This offer letter is the complete offer for employment and may not be amended or altered in any way by oral statements.  Terms of this offer are confidential.

Effectiveness of Offer

This offer of employment shall remain in effect until close of business on Monday, March 4, 2013.

Additional Requirements

        

At the commencement of your employment, you will be required to sign Company policy documents on a variety of topics, including confidentiality, conflict of interest, business conduct and ethics.  This offer is contingent on you satisfactorily passing a background investigation and completion of reference checks.

The Immigration Reform Control Act requires employers to verify eligibility of all personnel for employment in the United States.  We will provide an Eligibility Verification Form (INS form I-9), which specifies which documents you are required to produce to establish such eligibility.  Please complete Part A of the I-9 form and bring it and the required documentation with you when you report for work on your first day.

At Geeknet, Inc., we depend on the commitment, enthusiasm and skills of our team members to lead the Company’s growth.  Each person has both the luxury and the duty to contribute to the future success of the Company in the most meaningful way he or she can.  We therefore expect you to play a key role in the growth and success of our business.  I look forward to having you on the team and to working with you to carry out the vision and mission of Geeknet, Inc.

Sincerely,

/s/ Carol DiBattiste

Carol DiBattiste 
EVP, General Counsel and Chief Administrative Officer
Geeknet, Inc.     
I accept this offer: 

Signature: __/s/ Kirk L. Somers__________________
                            

        

Amendment to Offer Letter

This Amendment is entered into by and between Geeknet, Inc. (the “Company”) and Kirk Somers (“Employee”). The Company and Employee agree that the position of EVP, General Counsel & Chief Administrative Officer will start on Friday, March 1, 2013. This role reports to Kathryn McCarthy, CEO of ThinkGeek and Geeknet. 

Employee Signature: __/s/ Kirk L. Somers______________

Date:    March 7, 2013                           _              

Company Signature: __/s/ Kathryn K. McCarthy_________

Date: __03-11-13___________________

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