1
EXHIBIT 10.28
FULCRUM DIRECT, INC.
SEVERANCE, CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS AGREEMENT is entered into as of June 27, 1997, by and
between Xxxxx X. Xxxxxxx ("Xxxxxxx") and Fulcrum Direct, Inc., a Delaware
corporation (together with its subsidiaries, the "Company"). The Company and
Xxxxxxx are sometimes collectively referred to herein as the "Parties" and
individually as a "Party".
WHEREAS, Xxxxxxx has been an employee, officer, director and
stockholder of Storybook Heirlooms, Inc. ("Storybook"), and as such, possesses
special knowledge, abilities and experience regarding the business of Storybook.
The Company, Storybook and its shareholders, are parties to a Securities
Purchase Agreement, of even date herewith (the "Purchase Agreement"), pursuant
to which the Company is purchasing all of the outstanding capital stock of
Storybook.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the Parties agree as follows:
1. The Payments. In consideration of the termination of
Xxxxxxx'x employment and the covenants set forth in paragraphs 2 and 3 below,
the Company shall pay to Xxxxxxx $900,000 as severance and $100,000 for the
covenants set forth in paragraphs 2 and 3 below, in a single cash payment at the
Closing (as defined in the Purchase Agreement) (the "Payment"). Except to the
extent of any compensation and/or expenses owed Xxxxxxx by Storybook prior to
the Closing and not then paid, Xxxxxxx shall not seek or request any other
benefits or perquisites from the Company or any other entity, including benefits
under COBRA or unemployment insurance.
2. Confidential Information. Xxxxxxx acknowledges that the
information, observations and data relating to the business of Storybook which
Xxxxxxx has obtained as an employee, officer, director and stockholder of
Storybook are from and after the date hereof, the property of Storybook and thus
of the Company and its subsidiaries. Xxxxxxx agrees that he shall not use for
his own purposes or disclose to any third party any of such information,
observations or data without the prior written consent of the Company, unless
and to the extent that (i) the aforementioned matters become generally known to
and available for use by the public other than as a result of Xxxxxxx'x acts or
omissions or (ii) the aforementioned matters are required to be disclosed by a
court of competent jurisdiction, provided, that immediately upon learning of
such requirement or the reasonable likelihood thereof, Xxxxxxx will notify the
Company in writing and will use all reasonable efforts, at the Company's written
request, to assist the Company in obtaining a restraining order preventing the
disclosure of the aforementioned matters. Xxxxxxx has delivered to the Company
at the Closing Date, and will so deliver hereafter at any time the Company may
request, all equipment, memoranda, notes, plans, records, reports, computer
tapes, printouts and software and
2
other documentation (and copies thereof) relating to the business of the Company
and its subsidiaries which Xxxxxxx may then possess or have under his control.
3. Non-Competition.
(a) In consideration of the compensation paid to
Xxxxxxx hereunder (subject to paragraph 4 hereof), Xxxxxxx agrees that during
the period beginning on the date hereof and ending on the fourth anniversary of
the date hereof (the "Non-Competition Period"), he shall not, directly or
indirectly, either for himself or for any other person, partnership, corporation
or company, permit his name to be used by or participate in any business or
enterprise identical to or similar to any such business which is engaged in by
Storybook on the date hereof which is located in any State or foreign country in
which Storybook or the Company conducts business during the Non-Competition
Period. For purposes of this Agreement, the term "participate" includes any
direct or indirect interest in any enterprise, whether as an officer, director,
employee, partner, sole proprietor, agent, representative, independent
contractor, consultant, franchisor, franchisee, creditor, owner or otherwise;
provided that the term "participate" shall not include ownership of less than 2%
of the stock of a publicly-held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market. Xxxxxxx agrees that this
covenant is reasonable with respect to its duration, geographical area and
scope.
(b) During the Non-Competition Period, Xxxxxxx shall
not (i) induce or attempt to induce any employee of the Company or any of its
subsidiaries to leave their employ or in any way interfere with or alter the
relationship between the Company or any of its subsidiaries, and any of their
employees, (ii) hire any person who was an employee or independent contractor of
the Company or any subsidiary at any time during the Non-Competition Period or
(iii) induce or attempt to induce any independent contractor, supplier,
licensee, licensor, franchisee or other business relation of the Company or any
of its subsidiaries to cease doing business with them or in any way interfere
with or alter the relationship between the Company or any of its subsidiaries,
and any such person or business relation (including, without limitation, making
any negative statements or communications about the Company, its subsidiaries or
its employees), provided, that, so long as Xxxxxxx does not otherwise violate
his obligations under this paragraph 3, he (or entities with which he is
involved) may engage and do business with, independently, any such party, and
may act as a reference for any employee of the Company or of Storybook, as of
the Closing, who leaves such employment after the Closing which does not involve
any breach by Xxxxxxx of his obligations hereunder.
(c) The Parties hereto agree that the Company would
suffer irreparable harm from a breach by Xxxxxxx of any of the covenants or
agreements contained herein. In the event of an
2
3
alleged or threatened breach by Xxxxxxx of any of the provisions of this
paragraph 3, Storybook, the Company or their successors or assigns may, in
addition to all other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the provisions
hereof (including the extension of the Non-Competition Period by a period equal
to the length of the violation of this paragraph 3). In the event of an alleged
breach or violation by Xxxxxxx of any of the provisions of this paragraph 3, the
Non-Competition Period described above shall be tolled until such alleged breach
or violation has been duly cured. Xxxxxxx agrees that these restrictions are
reasonable.
(d) Xxxxxxx agrees that the covenants made in
paragraph 3(a) shall be construed as an agreement independent of any other
provision of this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
4. Damages. The allocation of the payments provided for in
paragraph 1 hereof is for accounting purposes only and in no event shall be used
to determine damages for breaches of the covenants set forth in this Agreement,
which damages shall be determined by actual damages caused by any such breach.
5. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Storybook, the Company and their affiliates,
successors and assigns and shall be binding upon and inure to the benefit of
Xxxxxxx and his legal representatives and assigns. The Company may assign or
transfer its rights hereunder to any of its affiliates or to a successor
corporation in the event of merger, consolidation or transfer or sale of all or
substantially all of the assets of the Company.
6. Modification or Waiver. No amendment, modification or
waiver of this Agreement shall be binding or effective for any purpose unless it
is made in a writing signed by the Party against who enforcement of such
amendment, modification or waiver is sought. No course of dealing between the
Parties to this Agreement shall be deemed to affect or to modify, amend or
discharge any provision or term of this Agreement. No delay on the part of the
Company or Xxxxxxx in the exercise of any of their respective rights or remedies
shall operate as a waiver thereof, and no single or partial exercise by the
Company or Xxxxxxx of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any other
occasion.
7. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any choice of
law or conflict of
3
4
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
8. Severability. Whenever possible each provision and term of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement; provided that if a court having competent jurisdiction shall find
that the covenant contained in paragraph 3(a) hereof is not reasonable, such
court shall have the power to reduce the duration and/or geographic area and/or
scope of such covenant, and the covenant shall be enforceable in this reduced
form.
9. No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the Parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
Party.
10. Xxxxxxx'x Representations. Xxxxxxx represents and warrants
to the Company that (i) his execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which he is a party or by which he is bound, and (ii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of his, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, moratorium and other creditors' rights
laws and by any limitations as to enforceability of equitable remedies as may be
observed by the relevant judicial body.
11. Complete Agreement. This Agreement, the documents
expressly referred to herein, and the other documents executed in connection
with the Company's purchase of all the outstanding capital stock of Storybook
Heirlooms, Inc. embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
12. Notice. All notices and other communications hereunder,
following the Closing Date, shall be in writing, and shall be deemed given upon
receipt if delivered personally (including delivery by courier), sent by
facsimile transmission (receipt of which is confirmed) or by certified or
registered mail, return receipt requested, or by a nationally recognized private
overnight courier to the parties at the following addresses (or at such other
address for a party as shall be specified by like
4
5
notice):
If to the Company:
Fulcrum Direct, Inc.
0000 Xxxxxxx Xxx
Xxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Facsimile No: (000) 000-0000
If to Xxxxxxx:
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No: (000) 000-0000
13. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in
counterparts, any one of which need not contain the signatures of more than one
party, but all such signed counterparts taken together shall constitute one and
the same instrument.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
* * * *
5
6
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
FULCRUM DIRECT, INC.
By:________________________________
Its:_______________________________
___________________________________
Xxxxx X. Xxxxxxx
[SEVERANCE, CONFIDENTIALITY AND NON-COMPETITION AGREEMENT]
6
