Document:

exv10w5

 

EXHIBIT 10.5

EMPLOYMENT CONTRACT

between

BABYUNIVERSE, INC.

and

ROBERT BROWN

 

 

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 4th day of April, 2005
between BABYUNIVERSE, INC., a Florida corporation (“Employer”), and Robert Brown (“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 three (3) years commencing as of April 4, 2005 (the
“Commencement Date”) and ending three (3) years 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 Board of Directors 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 Fort Lauderdale, 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 Fort Lauderdale, 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 Board of Directors.

     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 Board
of Directors 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
of One Hundred Fifteen Thousand Dollars and Zero Cents ($115,000.00) on an annualized basis (the
“Base Salary”), which amount shall be paid in accordance with Employer’s customary payroll
practices.

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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 Company’s Board of Directors.

          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.

     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 Severence, 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 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

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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.

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 four (4) weeks paid vacation annually or such other time as
authorized by the Board of Directors during which time Employee’s compensation shall be paid in
full. Vacation Days 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
seventy-five (75) miles outside of Fort Lauderdale, 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
mean:

4

 

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

          2. The commission by Employee, in the reasonable determination of the Employer’s Board of
Directors, of a crime, or an act of fraud or dishonesty against Employer, its subsidiaries or
affiliates; or

          3. 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.

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

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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.

     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 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 independent
contractor physicians to work for (as an employee or independent contractor) any business,

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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 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

7

 

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.
	

	 	5601 NW 9th Avenue, Suite 104
	

	 	Fort Lauderdale, FL 33309
	

	 	Attn: Chairman of the Board
	 
	 	 
	If to Employee:

	 	Robert Brown
	 
	 	 
	

	 	

	 
	 	 
	

	 	

	 
	 	 
	

	 	

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 six (6) month period commencing on the date of the Change of Control and ending on the date
with is (6) months thereafter (the “Six Month 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 Six Month
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 Broward 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

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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 Broward 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:  	 	 
	 	Name:  	 	 
	 	Title:  	 
	 
	 
	 
	 	Robert Brown  
	 
	 	 
	 

12exv10w6

 

EXHIBIT 10.6

EMPLOYMENT CONTRACT

between

BABYUNIVERSE, INC.

and

SEAN WEISS

 

 

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 1st day of January 2005
between BABYUNIVERSE, INC., a Florida corporation (“Employer”), and Sean Weiss (“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 Information
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 three (3) years commencing as of January 1, 2005
(the “Commencement Date”) and ending three (3) years 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 Information 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 Information Officer and such other executive and managerial duties
as normally associated with such positions, subject to the direction of the Board of Directors 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 Fort Lauderdale, 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 Fort Lauderdale, 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 Board of Directors.

     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 Board
of Directors 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
of Eighty-Four Thousand Dollars ($84,000) on an annualized basis (the “Base Salary”), which amount shall
be paid in accordance with Employer’s customary payroll practices.

2

 

          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 Company’s Board of Directors.

          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.

     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 Severence, 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 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

3

 

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.

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 four (4) weeks paid vacation annually or such other time as
authorized by the Board of Directors during which time Employee’s compensation shall be paid in
full. Vacation Days 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
seventy-five (75) miles outside of Fort Lauderdale, 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
mean:

4

 

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

          2. The commission by Employee, in the reasonable determination of the Employer’s Board of
Directors, of a crime, or an act of fraud or dishonesty against Employer, its subsidiaries or
affiliates; or

          3. 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.

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

5

 

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.

     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 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 independent
contractor physicians to work for (as an employee or independent contractor) any business,

6

 

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 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

7

 

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.
	

	 	5601 NW 9th Avenue, Suite 104
	

	 	Fort Lauderdale, FL 33309
	

	 	Attn: Chairman of the Board
	 
	 	 
	If to Employee:

	 	Sean Weiss
	 
	 	 
	

	 	

	 
	 	 
	

	 	

	 
	 	 
	

	 	

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.

8

 

     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 six (6) month period commencing on the date of the Change of Control and ending on the date
with is (6) months thereafter (the “Six Month 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 Six Month
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).

9

 

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 Broward 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 Broward 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.

11

 

     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:  	 	 
	 	Name:  	 	 
	 	Title:  	 
	 
	 
	 
	 	Sean Weiss  
	 
	 	 
	 

12

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