EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1998, between NOODLE
KIDOODLE, INC., a Delaware corporation (the "Company"), and
Xxxxxxx Xxxx (the "Executive").
It is hereby agreed as follows:
1. Nature of Employment: the Company hereby employs
Executive as its President and Chief Operating Officer and
confirms the election of Executive by the Company's Board of
Directors as its President and Chief Operating officer, and
agrees to use its best efforts to cause Executive to be
reelected as President and Chief Operating officer during the
term of this Agreement. Executive accepts employment upon the
terms and conditions hereinafter set forth and agrees to serve
the Company as its President and Chief Operating Officer, and as
a member of its Board of Directors so long as so elected during
the term of this Agreement. The Executive shall report to the
Board of Directors of the Company.
The Executive shall also serve without additional
compensation as an officer and director of all corporations from
time to time owned or controlled by the Company if so elected or
appointed. The Executive shall devote his full time, energies,
skills and attention to the performance of his duties and
responsibilities hereunder, and shall perform them faithfully
and diligently. The office of the Executive shall be located
within a 20 mile radius of the Executive's residence on the date
of this Agreement and the Executive shall not be required to
locate his office elsewhere without his prior written consent.
2. Term of Employment: The term of the Executive's
employment under this Agreement shall be for the period
commencing as of February 1, 1998 and terminating on January 31,
2001 unless sooner terminated by either party for cause or as
hereinafter provided.
(a) In the event of the death or "total disability"
(as defined below) of the Executive, the Executive's employment
shall terminate as of the date of his death or the date of his
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certification of total disability, in either of which events,
Executive, his estate, legal representative or designee, as the
case may be, shall receive the full salary compensation
provided for the Executive in Section 3 below for a period of
six (6) months from the date of the Executive's death or total
disability.
(b) In the event the Board of Directors of the
Company shall determine, as confirmed by competent medical
evidence (which shall include a certificate from Executive's
then personal physician) , that Executive has become "totally
disabled" and, on the same or subsequent occasion, shall
determine that such disability shall have continued for a
period of three (3) consecutive months, then Executive's
employment shall terminate thirtty (30) days after the date
upon which the Company shall have given notice to the Executive
of its election to terminate his employment because of such
total disability, provided, however, that prior to termination
the Board of Directors shall have received confirming competent
medical evidence as to the existence of the Executive's total
disability at such time. Any controversy arising in the
determination of whether the Executive shall be deemed to be
"totally disabled" for purposes of his being terminated as
provided for herein shall be settled by an independent
physician licensed to practice medicine selected by the Board
of Directors of the Company and approved by the Executive.
Prior to any such termination, the Company's obligations with
respect to compensation and benefits shall continue during the
period of disability.
(c) In the event of
a change in control (as defined herein) of the Company, which
results in an actual or constructive termination of employment,
the Executive shall have the right within six (6) months after
any such termination, to terminate his employment hereunder and
to receive an amount, payable in a lump sum as severance pay
within 10 days after he shall have given notice of his election
to terminate, equal to the amount by which two hundred ninety-
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nine percent (299%) of the base amount exceeds the present
value of all other payments which would be considered as
contingent on a change of ownership or control (other than
payments which would not be treated as parachute payments)
under section 280G of the Internal Revenue Code. The "base
amount" for purposes of this subsection (c) shall mean the
average annual compensation which was payable by the Company
and was includable in the Executive's gross income for tax
purposes for the most recent five (5) taxable years of the
Executive ending before the date on which a change in control
occurs. A "change in control" for purposes of this subsection
(c) shall mean (i) the acquisition (directly or indirectly) by
any person, entity or group of more than twenty-five percent
(25%) of the outstanding voting stock of the Company
(acquisition shall include accumulation in one or more
transactions, including, without limitation, any issuance,
transfer or purchase of stock., reclassification of securities,
stock split, stock dividend or distribution, reverse stock
split, recapitalization, merger or consolidation with
subsidiaries, and any transaction which has the direct or
indirect effect of increasing the proportionate share of the
outstanding voting stock of the Company held by such person,
entity or group) , or (ii) the individuals who currently
constitute the directors of the Company, or individuals elected
by more than two-thirds of such current directors to replace
any of such current directors, no longer constitute a majority
of the directors of the Company. A "constructive termination
of employment" for purposes of this subsection (c) shall mean
any of the following, if done without the Executive's consent
and having a material adverse effect on his employment or the
conditions under which he works: (i) a change in the title,
duties or responsibilities of the Executive, including the
person or body to whom the Executive reports, (ii) a change in
the location where the Executive's services are rendered, (iii)
a change in the office or secretarial arrangements affecting
the Executive, or (iv) any reduction in compensation or fringe
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benefits or change of any other term of this Agreement, or any
other breach of this Agreement by the Company. A constructive
termination shall be determined by the Executive in his sole,
reasonable discretion.
3. Compensation:
(a) Subject to the provisions of Section 2, as
compensation for his services hereunder the Company agrees to
pay the Executive a salary, payable at such times as may be
customary for the payment of compensation to other the Company
employees, or at such times as the Executive and the Company
shall agree upon, at the rate of $275,000 per annum during the
Term of this Agreement, or at such increased rate as the Board,
with the advice of the Compensation Committee, may from time to
time determine.
(b) In addition to the salary to be paid pursuant to
Section 3 (a) , the Executive shall be eligible to participate
in the Company's Bonus Incentive Plan (the "Bonus Plan") or any
successor plan thereto, pursuant to the terms of such Bonus
Plan.
(c) The Executive shall also be eligible for grants
of stock options to acquire shares of Common Stock of the
Company ("Options") pursuant to the Company's 1994 Stock
Incentive Plan (the "Plan"), or any successor plan thereto,
pursuant to the terms of the Plan.
4. Additional Compensation; Benefits: The Board of
Directors of the Company, in its sole and absolute discretion,
may at any time and from time to time pay to the Executive such
additional incentive payments, bonuses and/or profit sharing
distributions, in addition to the compensation provided in
Section 3, as the Board of Directors, with the advice of the
Compensation Committee, may determine. The stock option and
compensation committee of the Company in its sole and absolute
discretion may at any time and from time to time award to the
Executive such stock options or other stock based pay under the
Company's stock option plan or otherwise, in addition to the
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compensation provided for in Section 3, as such committee or
board may from time to time determine.
The Executive shall, in any event, be entitled to
the continuation of any employee benefits, including life,
disability or accident insurance coverage, currently being
received by the Executive, and shall be eligible to
participate in any plan of the Company available to the
employees of the Company and any other plan which may be
adopted in the future with respect to employees or executives
of the Company or any of its operating divisions if he shall
be eligible under the terms of such plan without restriction
or limitation by reason of this Agreement.
The Executive shall also be entitled to paid
vacation for such periods and times as have been heretofore
customary for the Executive.
5. Expenses: the Company shall promptly reimburse
the Executive for all specified items of travel, entertainment
and miscellaneous expenses reasonably incurred by him in
connection with the performance of his duties hereunder upon
presentation of vouchers therefor in accordance with normal
procedures and standards established by the Company for such
purposes. the Company shall also, at its own expense, provide
Executive with a new automobile of the Company's choice and
shall bear all expenses of maintaining and insuring such
automobile.
6. Nondisclosure; Noncompetition:
(a) Executive shall not, at any time during or
following expiration or termination of Executive's employment
(regardless of the reason therefor), directly or indirectly,
disclose to any person (except in the regular course of the
Company's business), or use in competition with the Company,
any of the Company's trade secrets or confidential
information.
(b) For a period of one (1) year following expiration
of his employment or termination of employment for any reason
other than (i) termination by the Company without cause, or (ii)
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termination by the Executive in accordance with Section 2(c)
hereof, the Executive shall not, without the Company's written
consent, (A) enter into the employ of or render any services to
any person, firm or corporation engaged in any "Competitive
Business" (as defined below); (3) engage in any Competitive
Business for his own account or (C) become interested in any
Competitive Business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee,
consultant, advisor or in any other relationship or capacity.
As used herein, "Competitive Business" shall mean operating
stores for the retail sale of educationally oriented products
for children, including without limitation, toys, games, books,
video and audio tapes, computer software, crafts, and science
and construction merchandise. The geographic locations in which
this covenant shall be operative shall include a fifty (50) mile
radius of any Noodle Kidoodle store then operated by the
Company, or then planned by the Company to be opened within a
twelve month period.
7. Fees and Expenses: the Company shall pay all
legal fees and related expenses incurred by the Executive as a
result of (i) termination of his employment following a change
in control of the Company (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
or incurred by the Executive in seeking advice with respect to
tax matters relating thereto) or (ii) the Executive's seeking to
obtain or enforce any right or benefit provided by this
Agreement, if the Company shall have denied such right or
withheld such benefit, and if the Executive shall prevail in
obtaining or enforcing it.
8. Miscellaneous:
(a) the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of its business and/or assets, by
agreement in form and substance satisfactory to the Executive,
to expressly assume and agree to perform this Agreement in the
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same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there be
no such designee, to the Executive's estate.
(c) No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and
such officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
(d) The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of New York.
(e) In the event that any provision of this Agreement
is held to be invalid or unenforceable in any jurisdiction for
any reason unless narrowed by construction, this Agreement
shall, as to such jurisdiction, be construed as if such
invalid or unenforceable provision had been more narrowly
drawn so as not to be invalid or unenforceable; and such
provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or
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unenforceability, without invalidating the remaining
provisions of this Agreement or affecting the validity or
enforceability of such provisions in any other jurisdiction.
(f) The invalidity or unenforcibility of any
provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
(g) Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively
by arbitration in New York, New York in accordance with the
rules of the American Arbitration Association then in effect.
(h) The Executive or his estate or designee shall be
entitled to receive reasonable attorneys' fees, costs and
expenses incurred in enforcing the Executive's rights under
this Agreement..
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
NOODLE KIDOODLE, INC.
By:/s/ Xxxxxxx Xxxxxxxx
ATTEST: Name: Xxxxxxx Xxxxxxxx
Title: Chairman and Chief
Executive Officer
By:/s/Xxxxxxx X. Xxxxxxx
Name:Xxxxxxx X. Xxxxxxx
Executive:
/s/ Xxxxxxx Xxxx
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