Exhibit 99.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated June 27, 1997 (this "Agreement"), by and
between Pumpkin Ltd., a Delaware corporation (the "Company"), and Xxxx Xxxxxxx
(the "Executive").
WHEREAS, pursuant to an Agreement dated June 27, 1997 (the "Asset
Purchase Agreement") among Pumpkin Ltd. d/b/a Pumpkin Masters, Inc., a
Colorado company ("Pumpkin"), the Company, Pumpkin Masters Holdings, Inc., a
Delaware corporation, and Security Capital Corporation, a Delaware
corporation, the Company has agreed to acquire substantially all the assets
and business of Pumpkin; and
WHEREAS, the Company desires to employ the Executive as Co-Chairman
and Director of Promotions, and the Executive desires to be retained in such
capacities on the terms and conditions set forth herein, effective upon the
closing of the transactions contemplated by the Asset Purchase Agreement, it
being understood that if no such closing shall occur, this Agreement shall have
no force and effect.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, the Company and the Executive agree as follows:
1. Prior Agreements. The Executive hereby releases the Company
and its affiliates from all payments and other obligations under all agreements,
plans or arrangements covering the Executive which are in effect prior to the
Commencement Date (as hereinafter defined) and which are not to be assumed by
the Company pursuant to the Asset Purchase Agreement, if any.
2. Employment; Duties. (a) The Company shall employ the Executive
as Co-Chairman and Director of Promotions for the "Employment Period" as defined
in Section 3. The Executive shall also have the title of Founder. The
Executive, in his capacity as Co-Chairman and Director of Promotions, shall have
such duties, responsibilities and authority normally incident to such office,
subject to the provisions of the Bylaws of the Company. Subject to the
foregoing, the precise duties, responsibilities and authority of the Executive
may be expanded, limited or modified, from time to time, at the discretion of
the Company. During the Employment Period, the Executive shall render his
business services solely in the performance of his duties hereunder. The
Executive, during the term of his employment hereunder, shall devote such
portion of his working time as is necessary to perform his duties hereunder and,
during his performance of such duties, shall devote his full attention,
knowledge and experience to such duties and give his best effort, skill and
abilities, exclusively to promote the business and interests of the Company.
The Executive may not serve as
an officer or director of, make investments in, or otherwise participate in,
any other entity without the prior written consent of the Board of Directors;
provided, that the foregoing shall not be deemed to prohibit the Executive
from acquiring, directly or indirectly, solely as an investment, not more
than one percent (1%) of any class of securities of or of the aggregate
principal outstanding indebtedness of any entity that is registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended,
including the regulations issued thereunder; provided further, that such
investment would not prevent, directly or indirectly, the transaction of
business by the Company with any state, district, territory or possession of
the United States of America or any foreign country or any governmental
subdivision, agency or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice; and provided further, that so long as
it does not interfere with the Executive's employment, the Executive may (i)
with the prior written consent of the Board of Directors, (which consent will
not be unreasonably withheld), serve as a director in a noncompeting company,
(ii) serve as an officer, director or otherwise participate in purely
educational, welfare, social, religious and civic organizations, and (iii)
manage personal and family investments.
(b) The Executive shall be employed at Denver, Colorado or such other
place as the Company and Executive shall mutually agree.
3. Employment Period. This Agreement shall have a term of four
years, commencing as of the date of the closing of the transactions contemplated
by the Acquisition Agreement, as reference in the recitals above (the
"Commencement Date") and ending on the fourth anniversary of the Commencement
Date (the "Initial Period"), unless sooner terminated in accordance with the
provisions of Section 8 or Section 9. The term of this Agreement, as in effect
from time to time, is referred to herein as the "Employment Period".
4. Compensation and Benefits.
(a) Base Compensation. The Executive shall be paid an aggregate
base salary (the "Base Salary") of $100,000 per annum, less statutory deductions
and withholdings. The Base Salary shall be payable in a manner consistent with
the normal payroll practices of the Company in effect from time to time. The
Board of Directors of the Company, in its sole discretion, or at the
recommendation of the Compensation Committee, may increase (but not decrease)
the Base Salary, at any time.
(b) Benefits. The Executive shall be entitled to participate,
to the extent eligible, in the employee benefit and group insurance programs
provided by the Company for its officers and employees generally and in
accordance with the terms of the applicable plan documents as they may be
revised from time to time. The Company shall reimburse the Executive on a
regular basis for all reasonable expenses incurred by the Executive in the
performance of his duties hereunder in furtherance of the business of the
Company during the Employment Period. The Executive shall provide the Company
an itemized account to substantiate all such expenditures.
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5. Trade Secrets. The Executive acknowledges that it is in the
legitimate business interest of the Company to prohibit his disclosure or use of
Trade Secrets and Confidential Information relating to the Company and its
direct or indirect subsidiaries for any purpose other than in connection with
his performance of his duties to the Company, and to prohibit any potential
appropriation of such Trade Secrets and Confidential Information by the
Executive. The Executive therefore agrees that all Trade Secrets and
Confidential Information relating to the Company and its direct or indirect
subsidiaries heretofore or in the future obtained by the Executive shall be
considered confidential and the proprietary information of the Company and its
direct or indirect subsidiaries. During the Employment Period the Executive
shall not use or disclose, or permit or authorize any other person or entity to
use or disclose, any Trade Secrets or other Confidential Information, other than
as necessary to further the business objectives of the Company in accordance
with the terms of his employment hereunder. The term "Trade Secrets or other
Confidential Information" includes, by way of example and without limitation,
matters of a technical nature, such as scientific, trade and engineering
secrets, "know-how", formulas, secret processes, drawings, patterns (whether or
not published), works of authorship, machines, inventions, computer programs
(including documentation of such programs), services, materials, unfiled
trademark applications, copyright applications, patent applications, new product
plans, other plans, technical information, technical improvements, manufacturing
techniques, specifications, manufacturing and test data, progress reports and
research projects, and matters of a business nature, such as business plans,
prospects, financial information, proprietary information about costs, profits,
markets, sales, lists of customers and suppliers of the Company and its direct
or indirect subsidiaries, procurement and promotional information, credit and
financial data concerning customers or suppliers of the Company and its direct
or indirect subsidiaries, information relating to the management, operation and
planning of the Company and its direct and indirect subsidiaries, and other
information of a similar nature to the extent not available to the public, and
plans for future development. After termination of the Executive's employment
with the Company for any reason, the Executive shall not use or disclose Trade
Secrets or other Confidential Information.
6. Return of Documents and Property. Upon the termination of the
Executive's employment with the Company, or at any time upon the request of the
Company, the Executive (or his heirs or personal representatives) shall deliver
to the Company (a) all documents and materials (including, without limitation,
computer files) containing Trade Secrets or other Confidential Information
relating to the business and affairs of the Company and its direct and indirect
subsidiaries, and (b) all documents, materials and other property (including,
without limitation, computer files) belonging to the Company or its direct or
indirect subsidiaries, which in either case are in the possession or under the
control of the Executive (or his heirs or personal representatives).
7. Discoveries and Work. All Discoveries and Works made or
conceived by the Executive during his employment by the Company, whether during
the Employment Period or at any time prior thereto, jointly or with others, that
relate to the then-current present or anticipated activities of the Company or
its direct or indirect subsidiaries, or are used or usable by the Company or its
direct or indirect subsidiaries shall be owned by the Company or its direct or
indirect subsidiaries. The term "Discoveries and Works" includes, by way of
example but without limitation,
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Trade Secrets and other Confidential Information, patents and patent
applications, trademarks and trademark registrations and applications,
service marks and service xxxx registrations and applications, trade names,
copyrights and copyright registrations and applications and patterns (whether
or not published). The Executive shall (a) promptly notify, make full
disclosure to, and execute and deliver any documents requested by, the
Company, as the case may be, to evidence or better assure title to
Discoveries and Works in the Company or its direct or indirect subsidiaries,
as so requested, (b) renounce any and all claims, including but not limited
to claims of ownership and royalty, with respect to all Discoveries and Works
and all other property owned or licensed by the Company or its direct or
indirect subsidiaries, (c) assist the Company or its direct or indirect
subsidiaries in obtaining or maintaining for itself at its own expense United
States and foreign patents, copyrights, trademarks, trade secret protection
or other protection of any and all Discoveries and Works, and (d) promptly
execute, whether during his employment with the Company or thereafter, all
applications or other endorsements necessary or appropriate to maintain
patents and other rights for the Company or its direct or indirect
subsidiaries and to protect the title of the Company or its direct or
indirect subsidiaries thereto, including but not limited to assignments of
such patents and other rights. Any Discoveries and Works which, within two
years after the termination of the Executive's employment with the Company,
are made, disclosed, reduced to a tangible or written form or description, or
are reduced to practice by the Executive and which pertain to the business
carried on or products or services being sold or developed by the Company or
its direct or indirect subsidiaries at the time of such termination shall, as
between the Executive and, the Company, be presumed to have been made during
the Executive's employment by the Company. The Executive acknowledges that
all Discoveries and Works shall be deemed "works made for hire" under the
Copyright Act of 1976, as amended, 17 U.S.C. Section 101.
8. Termination.
(a) The Company or the Executive may terminate this Agreement,
with or without cause or for "EBITDA cause", with or without prior notice.
Except as provided in Sections 8(b) and 18, in the event the Company or the
Executive terminates this Agreement, the Executive's rights and the obligations
of the Company hereunder shall cease as of the effective date of the
termination, including, without limitation, the right to receive the Base
Salary, and all other compensation or benefits provided for in this Agreement.
(b) In the event the Company terminates this Agreement without
"cause" or for "EBITDA cause" or in the event that the Executive terminates
this Agreement upon notice for "Good Reason", and for so long as the
Executive continues to observe and perform the covenants contained in
Sections 5, 6, 7, 11, 12 and 13 of this Agreement, the Executive shall be
entitled to continue to receive payments of his Base Salary, subject to
applicable statutory deductions and withholdings and payable at such times
and in such amounts as if this Agreement were not terminated, and to the
continued provision of benefits referred to in Section 4(c), for the one year
period following such termination. All other compensation and benefits
provided for in Section 4 of this Agreement shall cease upon such
termination.
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For purposes of this Agreement, "cause" shall mean (i) the willful
failure of the Executive to follow the directions of the Company (other than any
such failure resulting from his incapacity due to physical or mental illness or
disability which is subject to the provisions of Section 9), after written
notice of such failure from the Board of Directors and a 10-day opportunity to
cure, (ii) any act of fraud or dishonesty, misappropriation or embezzlement,
wilful misconduct or gross negligence in connection with the performance of the
Executive's duties hereunder, (iii) a breach by the Executive of any material
provision hereof or of any material contractual or material legal duty to the
Company (including, but not limited to, the unauthorized disclosure of Trade
Secrets or other Confidential Information, non-compliance with the written
policies, guidelines and procedures of the Company), after written notice
thereof from the Board of Directors and a 30-day opportunity to cure in the
event that such breach was not wilful, (iv) the conviction of the Executive of
the commission of a crime or offense involving moral turpitude (including
pleading guilty or no contest to such a crime or offense or a lesser charge
which results from plea bargaining) which results in the imprisonment of the
Executive, whether or not committed in connection with the business of the
Company, (v) breach by the Executive of the provisions of any stockholders
agreement or other agreement relating to the Executive's acquisition of an
equity interest in the Company to which the Executive may become a party on or
after the date hereof.
For purposes of this Agreement, "EBITDA cause" shall mean (i) the
failure of the Company to achieve EBITDA (as defined in the Asset Purchase
Agreement) of at least One Million Dollars ($1,000,000.00) in any one fiscal
year or (ii) the failure of the Company to achieve average EBITDA (as defined in
the Asset Purchase Agreement) of at least One Million Five Hundred Thousand
Dollars ($1,500,000.00) in any two consecutive fiscal years.
For purposes of this Agreement, "Good Reason" shall mean (i) the
Company changes the Executive's status, title or position as an officer of the
Company and such change represents a material reduction in such status, title or
position conferred hereunder, and/or (ii) the Company changes its principal
location of business or Executive's place of employment, without Executive's
consent, from the Denver, Colorado area. If the Executive terminates this
Agreement for "Good Reason", his notice thereof shall include the specific
section of this Agreement which was relied upon and the reason that the Company
act has given rise to his termination for Good Reason.
(c) In the event the Company terminates this Agreement for cause
or the Executive terminates this Agreement (other than for Good Reason), the
Executive's rights hereunder shall cease as of the effective date of the
termination, including, without limitation, the right to receive the Base
Salary, and all other compensation or benefits provided for in this Agreement.
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9. Disability; Death.
(a) If, prior to the expiration of the Employment Period or the
termination of this Agreement, the Executive shall be unable to perform his
duties by reason of mental or physical disability for at least one-hundred
eighty (180) consecutive days or any one-hundred eighty (180) days (whether or
not consecutive) in any three-hundred sixty (360) consecutive day period, the
Company shall have the right to terminate this Agreement and the remainder of
the Employment Period by giving written notice to the Executive to that effect.
Immediately upon the giving of such notice, the Employment Period shall
terminate.
(b) Upon termination of this Agreement pursuant to Section 9(a),
the Executive shall be entitled to continue to receive payments of his Base
Salary, subject to applicable statutory deductions and withholdings and payable
at such times and in such amounts as if this Agreement were not terminated, for
the six-month period following such termination; provided, however, that any
such payments shall be offset by the amount of all proceeds of disability
insurance maintained for the Executive as an employee benefit from the Company
paid to the Executive. In the event of a dispute as to whether the Executive is
disabled within the meaning of Section 9(a), either party may from time to time
request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examination shall be borne by the Company. If, prior to the expiration
of the Employment Period or the termination of this Agreement, the Executive
shall die, the Employment Period shall terminate without further notice. The
Executive's estate shall be entitled to continue to receive payments of his Base
Salary, subject to applicable statutory deductions and withholdings and payable
at such times and in such amounts as if this Agreement were not terminated, for
the six-month period following such termination; provided, however, that any
such payments shall be offset by the amount of all proceeds of life insurance
maintained for the Executive as an employee benefit from the Company paid to the
Executive's estate.
10. No Conflicts. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement do not
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under any contract, agreement
or understanding, whether oral or written, to which the Executive is a party or
of which the Executive is or should be aware.
11. Non-Competition. From and after the Commencement Date, the
Executive will not, except pursuant to the terms hereof, directly or indirectly,
own, manage, operate, join, finance, control or participate in the ownership,
management, operation or control of, or be employed or engaged by or be
otherwise connected in any manner with, any business under a name similar to the
name of any of the Company or any direct or indirect subsidiary thereof. Prior
to the termination of the Executive's employment hereunder and for a period
after any such termination or expiration of this Agreement equal to the greater
of (i) twelve (12) months and (ii) the balance of the
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then existing Employment Period (as if this Agreement were not terminated),
the Executive will not (except as an officer, director, employee, agent or
consultant of the Company) directly or indirectly, own, manage, operate,
join, or have a financial interest in, control or participate in the
ownership, management, operation or control of, or be employed as an
employee, agent or consultant, or in any other individual or representative
capacity whatsoever, or use or permit his name to be used in connection with,
or be otherwise connected in any manner with (i) any business or enterprise
engaged (wherever located) in the design, development, manufacture,
distribution or sale of any products, or the provision of any services, which
the Company or its direct or indirect subsidiaries were designing,
developing, manufacturing, distributing, selling or providing at any time up
to an including the date of termination of this Agreement or (ii) any
business which is similar to or competitive with the business carried on or
planned by the Company or its direct or indirect subsidiaries at any time
during the period of the Executive's employment by the Company, whether
during or prior to the Employment Period, unless the Executive shall have
obtained the prior written consent of the Board of Directors, provided that
the foregoing restriction shall not be construed to prohibit the ownership by
the Executive of not more than one percent (1%) of any class of securities of
or of the aggregate principal outstanding indebtedness of any corporation
which is engaged in any of the foregoing businesses, that is registered
pursuant to the Securities Exchange Act of 1934, which securities are
publicly owned and regularly traded on any national exchange or in the
over-the-counter market, provided further, that such ownership represents a
passive investment and that neither the Executive nor any group of persons
including the Executive in any way, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes part in its business other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.
12. Non-Solicitation. Prior to the termination of the Executive's
employment hereunder and for a period after any such termination or expiration
of this Agreement equal to the greater of (i) twelve (12) months and (ii) the
balance of the then existing Employment Period (as if this Agreement were not
terminated), the Executive agrees, directly or indirectly, whether for his own
account or for the account of any other individual or entity, not to solicit,
divert, appropriate, accept or canvas the trade, business or patronage of, or
sell any products or services which are the same as or similar to those
designed, developed, manufactured, distributed or sold by the Company or its
direct or indirect subsidiaries to, any individuals or entities that were either
customers of the Company or any of its direct or indirect subsidiaries during
the time the Executive was employed by the Company, whether during or prior to
the Employment Period, or prospective customers with respect to whom a sales
effort, presentation or proposal was made by the Company or any of its direct or
indirect subsidiaries during the twelve months preceding the date of termination
or expiration, as the case may be. The Executive further agrees that prior to
the termination of the Executive's employment hereunder and for a period of two
years thereafter, he shall not, directly or indirectly, (i) solicit, induce,
enter into any agreement with, or attempt to influence any individual who is
then currently or was an employee or consultant of the Company or any of its
direct or indirect subsidiaries at any time during the time the Executive was
employed by the Company, whether during or prior to the Employment Period, to
terminate his or her employment relationship with the Company or any of its
direct or indirect subsidiaries or to become employed by the
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Executive or any individual or entity by which Executive is employed or (ii)
interfere in any other way with the employment, or other relationship, of any
employee or consultant of the Company or any of its direct or indirect
subsidiaries.
13. Enforcement. (a) The Executive agrees that the remedies at law
for any breach or threat of breach by him of any of the provisions of Sections
5, 6, 7, 11 and 12 hereof will be inadequate, and that, in addition to any other
remedy to which the Company may be entitled at law or in equity, the Company
shall be entitled to a temporary or permanent injunction or injunctions or
temporary restraining order or orders to prevent breaches of the provisions of
Sections 5, 6, 7, 11 and 12 hereof and to enforce specifically the terms and
provisions thereof, in each case without the need to post any security or bond.
Nothing herein contained shall be construed as prohibiting the Company from
pursuing, in addition, any other remedies available to the Company for such
breach or threatened breach. A waiver by the Company of any breach of any
provision hereof shall not operate or be construed as a waiver of a breach of
any other provision of this Agreement or of any subsequent breach by the
Executive.
(b) It is expressly understood and agreed that although the Company
and the Executive consider the restrictions contained in Sections 5, 6, 7, 11
and 12 hereof to be reasonable for the purpose of preserving the goodwill,
proprietary rights and going concern value of the Company, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in such Sections 5, 6, 7, 11 and 12 is an
unenforceable restriction on the Executive's activities, the provisions of such
Sections 5, 6, 7, 11 and 12 shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be reasonable.
Alternatively, if the court referred to above finds that any restriction
contained in Sections 5, 6, 7, 11 or 12 or any remedy provided herein is
unenforceable, and such restriction or remedy cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained therein or the availability of any other remedy.
The provisions of Sections 5, 6, 7, 11 and 12 shall in no respect limit or
otherwise affect the Executive's obligations under other agreements with the
Company.
14. Assignment. The rights and obligations of the parties under this
Agreement shall not be assignable by either the Company or the Executive,
provided that this Agreement is assignable by the Company to any affiliate of
the Company, to any successor in interest to any business of the Company, or to
a purchaser of all or substantially all of the assets of any business of the
Company.
15. Notices. Any notice required or permitted under this Agreement
shall be deemed to have been effectively made or given if in writing and
personally delivered, mailed properly addressed in a sealed envelope, postage
prepaid by certified or registered mail, delivered by a reputable overnight
delivery service or sent by facsimile. Unless otherwise changed by notice,
notice shall be properly addressed to the Executive if addressed to:
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Xxxx Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
with a copy to:
Moye, Giles, X'Xxxxx, Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx #0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
and properly addressed to the Company if addressed to:
Pumpkin Ltd.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President and Chief Executive Officer
with a copy to:
Capital Partners, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
With a copy to:
Xxxxxx Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
16. Severability. Wherever there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring them within the requirements of the law. In the event that
any provision of this Agreement shall be held by a court of proper jurisdiction
to be indefinite, invalid, void or voidable or otherwise unenforceable, the
balance of the Agreement shall continue in full force and effect
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unless such construction would clearly be contrary to the intentions of the
parties or would result in an unconscionable injustice.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Effect of Termination. Notwithstanding anything to the contrary
contained herein, if this Agreement or the Executive's employment is validly
terminated pursuant to Section 8 or Section 9 or expires by its terms, the
provisions of Sections 5, 6, 7, 11, 12, 13, 14, 16 and 19 shall continue in full
force and effect.
19. Miscellaneous; Choice of Law. This Agreement constitutes the
entire agreement, and supersedes all prior agreements, of the parties hereto
relating to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Colorado, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Colorado or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Colorado, except to the extent that the General
Corporation Law of the State of Delaware (the "GCL") applies as a result of the
Company being incorporated in the State of Delaware, in which case such GCL
shall apply.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
PUMPKIN LTD.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
/s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx
