EXHIBIT 10.27
NATURAL WONDERS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into by and between Natural
Wonders, Inc. (the "Company") and Xxxxxxxx Xxxxxxxxx as of September 15, 1997.
1. POSITION AND DUTIES. Xxxxxxxx Xxxxxxxxx shall be employed by the
Company as its President and Chief Executive Officer, reporting to the Board
of Directors, effective as of the date hereof.
As President, CEO, Xxxxxxxx Xxxxxxxxx agrees to devote her full business
time, energy and skill to her duties at the Company. These duties shall
include, but not be limited to, any duties consistent with her position which
may be assigned to her from time to time by the Company's Board of Directors.
2. TERM OF EMPLOYMENT. Xxxxxxxx Xxxxxxxxx'x employment with the Company
pursuant to this Agreement is for no specified term, and may be terminated by
her, or the Company at any time with or without cause subject to paragraphs 4
and 5, below.
3. COMPENSATION. Xxxxxxxx Xxxxxxxxx shall be compensated by the Company
for her services as follows:
(a) SALARY: Xxxxxxxx Xxxxxxxxx shall be paid a salary of $360,000.00
per year, subject to applicable withholding, in accordance with the Company's
normal payroll procedures. Such salary shall be reviewed annually and
revised as determined appropriate by the Board of Directors. The annual
review shall occur on or about February 1 of each year.
(b) BENEFITS: Xxxxxxxx Xxxxxxxxx shall have the right, on the same
basis as other members of senior management of the Company, to participate in
and to receive benefits under any of the Company's employee benefits plans,
including the medical, dental, and disability group insurance plans.
Xxxxxxxx Xxxxxxxxx shall also be entitled to participate in the 401(k) Plan
maintained by the Company in accordance with its terms. In addition,
Xxxxxxxx Xxxxxxxxx shall be entitled to the benefits afforded to other
members of senior management under the Company's vacation, holiday and
business expense reimbursement policies.
(c) CAR ALLOWANCE: Xxxxxxxx Xxxxxxxxx will receive a monthly car
allowance of $800.00, payable the first paycheck of every fiscal month, in
accordance with current Company practice.
(d) PERFORMANCE BONUS: Xxxxxxxx Xxxxxxxxx will be eligible to
participate in the Company's bonus program which is administered by the
Compensation Committee of the Board of Directors.
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4. BENEFITS UPON VOLUNTARY TERMINATION: In the event that Xxxxxxxx
Xxxxxxxxx voluntarily resigns from her employment with the Company, or in the
event that her employment terminates as a result of her death or disability,
XXXXXXXX XXXXXXXXX SHALL BE ENTITLED TO NO COMPENSATION OR BENEFITS FROM THE
COMPANY OTHER THAN THOSE EARNED UNDER PARAGRAPH 3 ABOVE THROUGH THE DATE OF
HER RESIGNATION OR TERMINATION; AS THE CASE MAY BE. The foregoing
notwithstanding, if Xxxxxxxx Xxxxxxxxx resigns voluntarily on May 1, 1998,
she shall be entitled to receive (i) an amount equal to her then annual base
salary, which shall be paid in sixty biweekly payments commencing on May 1,
1998 and (ii) reimbursement for the employee benefits described in Section
3(b) for a period of twelve months from the date of resignation..
5. BENEFITS UPON OTHER TERMINATION: Xxxxxxxx Xxxxxxxxx agrees that her
employment may be terminated by the Company at any time, with or without
cause. In the event of the termination of Xxxxxxxx Xxxxxxxxx'x employment by
the Company for the reasons set forth below, she shall be entitled to the
following:
(a) TERMINATION FOR CAUSE: If Xxxxxxxx Xxxxxxxxx'x employment is
terminated by the Company for cause as defined below, she shall be entitled
to no compensation or benefits from the Company other than those earned under
paragraph 3 through the date of her termination.
For purpose of this Agreement, a termination "for cause" occurs if
Xxxxxxxx Xxxxxxxxx is terminated for any of the following reasons:
(i) theft, dishonesty, of falsification of any employment or
Company record;
(ii) improper disclosure of the Company's confidential or
proprietary information;
(iii) any intentional act by Xxxxxxxx Xxxxxxxxx which has a
material detrimental effect on the Company's reputation or business; or
(iv) any material breach of this Agreement, which breach is not
cured within thirty (30) days following written notice of such breach from
the Company.
(b) TERMINATION FOR OTHER THAN CAUSE: If Xxxxxxxx Xxxxxxxxx'x
employment is terminated by the Company for any reason other than cause, she
shall be entitled to the following separation benefits:
(i) an amount equal to her then annual base salary, which
shall be paid in sixty biweekly payments commencing on the date of
termination;
(ii) provided Xxxxxxxx Xxxxxxxxx remains an employee of the
Company as of December 31 of any fiscal year for which a performance bonus
may be awarded,
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payment of any performance bonus that has become earned and payable as of her
termination date; and
(iii) continued provision of the employee benefits described in
paragraphs 3(b) and (c) for a period of twelve months from the date of
termination.
(c) TERMINATION FOLLOWING A CHANGE IN CONTROL: For purposes of this
Agreement, a "change of control" means a merger in which the Company is a
party where the stockholders of the Company before such transaction do not
retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company's assets (other than to one or
more corporations where the stockholder of the Company before such
transaction retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the corporation to which assets
were transferred); or the direct or indirect sales or exchange by the
stockholders of the Company before such transaction do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company.
If Xxxxxxxx Xxxxxxxxx'x employment with the Company is terminated by the
Company for any reason within one (1) year following a change of control, she
shall be entitled to receive the following upon such termination:
(i) In the event that Xxxxxxxx Xxxxxxxxx is entitled to and
accepts any accelerated vesting of any of her unvested company stock options
as a result of such change in control, the Company or its successor shall
continue to pay her salary for a period of six (6) months following her
termination; or
(ii) In the event that Xxxxxxxx Xxxxxxxxx is not entitled to
any accelerated vesting of any of her Company stock options as a result of
such change of control (or in the event that she declines to accept any such
accelerated vesting and provides the Company with all necessary documents to
effect that desire), the Company or its successor shall continue to pay her
salary for a period of one (1) year following her termination.
(d) INVOLUNTARY RESIGNATION FOLLOWING A CHANGE OF CONTROL: In the
event that Xxxxxxxx Xxxxxxxxx resigns from her employment with the Company or
its successor following a change of control, it shall be deemed an
Involuntary Resignation if it results from any of the following: (i) without
Xxxxxxxx Xxxxxxxxx'x express written consent, a significant reduction in her
duties or responsibilities; (ii) without Xxxxxxxx Xxxxxxxxx'x express written
consent, a reduction, without good business reasons, of the facilities and
prerequisite (including office space and location) available to her; (iii) a
reduction by the Company in the base salary of Xxxxxxxx Xxxxxxxxx as in
effect immediately prior to such change of control; (iv) a reduction by the
Company in the kind or level of employee benefits to which she is entitled,
with the result that her overall benefits package is significantly reduced;
(v) the relocation of Xxxxxxxx Xxxxxxxxx to a facility or location more than
a reasonable commute from her then-present location, without her express
written consent.
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Upon Xxxxxxxx Xxxxxxxxx'x Involuntary Resignation she shall be entitled to
receive the separation benefits described in either Section 5c(i) or 5c(ii),
whichever is applicable.
(e) MITIGATION; OFFSET: Xxxxxxxx Xxxxxxxxx shall not be required in
any way to mitigate the amount of any payment or benefit provided for in
Sections 4 and 5, including, but not limited to, by seeking other employment;
provided, that the amount of any payment or benefit provided for in Sections
4 and 5 shall be reduced by the amount of any compensation and fringe
benefits earned by Xxxxxxxx Xxxxxxxxx as the result of employment with or
other service provided to another employer after the date of her termination
or resignation during the period that salary or fringe benefits would
otherwise be payable under Sections 4 and 5.
(f) COBRA: To the extent Xxxxxxxx Xxxxxxxxx is entitled to the
benefits set forth in section 3(b), upon termination of her employment
relationship, Xxxxxxxx Xxxxxxxxx will be provided with the election forms for
medical insurance continuation as provided by the Consolidated Omnibus Budget
Reconciliation Act (COBRA). If she elects to continue insurance under COBRA,
the Company will reimburse her for the cost of her continued health
insurance, for up to twelve (12) months. This does not extend the length of
the COBRA period. In the event she becomes eligible, through replacement
employment, for equivalent medical coverage during the twelve month period,
this benefit will cease. Xxxxxxxx Xxxxxxxxx, and not the Company, is solely
responsible for taking any steps necessary to elect to continue benefits
under COBRA.
6. EXCLUSIVE REMEDY: Except as set forth above, Xxxxxxxx Xxxxxxxxx shall
be entitled to no further compensation for any damage or injury arising out
of the termination of her employment by the Company.
7. CONFIDENTIAL INFORMATION AND INVENTIONS AGREEMENT: Xxxxxxxx Xxxxxxxxx
agrees to execute and abide by the terms and conditions of the Company's
employee Confidential Information and Inventions Agreement.
8. NON-SOLICITATION OF EMPLOYEES. Xxxxxxxx Xxxxxxxxx recognizes that she
possesses and will possess confidential information about other employees of
the Company relating to their education, experience, skills, abilities,
compensation and benefits. Xxxxxxxx Xxxxxxxxx recognizes that the information
she possesses and will possess about these other employees is not generally
known, is of substantial value to the Company in developing its business, and
has been and will be acquired by her because of her business position with
the Company. Xxxxxxxx Xxxxxxxxx agrees that, during the period of her
employment hereunder and for a period of two (2) years thereafter, she will
not , directly or indirectly, solicit or recruit any employee of the Company
for the purpose of being employed by her or by any competitor of the Company
on whose behalf she is acting as an agent, representative or employee and
that she will not convey any such confidential information or trade secrets
about other employees of the Company to any other person.
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9. ATTORNEYS' FEES: The prevailing party shall be entitled to recover from
the losing party its attorneys' fees and costs incurred in any action brought
to enforce any right arising out of this Agreement.
10. DISPUTE RESOLUTION: In the event of any dispute or claim relating to or
arising out of this employment relationship, this Agreement, or the
termination of this employment relationship (including, but not limited to,
any claims of wrongful termination or age or other discrimination), all such
disputes shall be fully and finally resolved by binding arbitration conducted
by the American Arbitration Association in Alameda County, California;
provided, however, that this arbitration provision shall not apply to any
disputes or claims relating to or arising out of the misuse or
misappropriation of the Company's trade secrets or proprietary information.
11. SUCCESSORS AND ASSIGNS: This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. In view of
the personal nature of the services to be performed under this Agreement by
Xxxxxxxx Xxxxxxxxx she shall not have the right to assign or transfer any of
her right, obligations or benefits under this Agreement, except as otherwise
noted herein.
12. ENTIRE AGREEMENT: This Agreement constitutes the entire Employment
Agreement between Xxxxxxxx Xxxxxxxxx and the Company regarding the terms and
conditions of her employment, with the exception of (i) the confidentiality
and inventions agreement described in paragraph 7 and (ii) any stock option
agreement between Xxxxxxxx Xxxxxxxxx and the Company. This Agreement
supersedes all prior negotiations, representations or agreements between
Xxxxxxxx Xxxxxxxxx and the Company, whether written or oral, concerning
Xxxxxxxx Xxxxxxxxx'x employment by the Company.
13. NO REPRESENTATIONS: Xxxxxxxx Xxxxxxxxx acknowledges that she is not
relying, and has not relied, on any promise, representation or statement made
by or on behalf of the Company which is not set forth in this Agreement.
14. VALIDITY: If any one or more of the provisions (or any part thereof) of
this Agreement shall be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability or the remaining
provisions (or any part thereof) shall not in any way be affected or impaired
thereby.
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15. MODIFICATIONS: This Agreement may only be modified or amended by a
supplemental written agreement signed by Xxxxxxxx Xxxxxxxxx and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.
NATURAL WONDERS, INC.
Date: 10/24/97 By: /s/ Pearson X. Xxxxxx
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Its Chairman of the Board of Directors
Date: 9/15/97 /s/ Xxxxxxxx Xxxxxxxxx
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Xxxxxxxx Xxxxxxxxx
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