Exhibit 10.29
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of this 29th day of September, 1998, by and between Natural Wonders,
Inc., a Delaware corporation (the "Company" or "Natural Wonders"), and Xxxxxxx
X. Xxxxxx ("Executive").
For good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. TERM. This Agreement will become effective as of October 19, 1998, and
will remain in force until October 18, 2002, unless terminated as provided in
paragraph 12 below. Upon expiration of the term, this Agreement shall
automatically renew for successive additional one (1) year periods unless one
party delivers to the other party written notice of such party's intention not
to renew not less than ninety (90) days before the expiration of the
then-current term.
2. EMPLOYMENT AND DUTIES. The Company hereby agrees to employ Executive to
render executive services for the Company as Executive Vice President, General
Merchandise Manager, or such title as employee may subsequently have, with the
authority and responsibilities customarily accorded an employee with that title.
Executive will also perform those other duties as may be assigned to Executive,
subject to the instructions, directions, and control of the Company at all
times. Executive agrees that throughout the term of this Agreement, Executive
will perform his duties loyally and conscientiously and to the full limit of
Executive's ability. Executive will duly, punctually and faithfully perform and
observe any and all rules and regulations that the Company may now or later
establish governing the conduct of its business and its employees, including
rules and regulations prohibiting unlawful discrimination and harassment.
Subject to the provisions of paragraph 12(e) below, Executive agrees that
Executive's job title, schedule and job duties may change from time to time as
required by the Company's business needs. Executive's performance of Contract
Services will, at all times, be rendered to the Company's satisfaction.
Executive agrees that the Company will be the sole judge as to whether the
services of Executive are satisfactory. Executive will report to the President,
Natural Wonders.
3. FULL TIME. Executive will devote full business time, ability and
attention to the business of the Company during the course of Executive's
employment with the Company. However, Executive's devotion of time to personal
business matters will not be deemed a breach of this Agreement if it does not
interfere with the performance of the duties outlined herein. Specifically,
Executive anticipates continuing to engage in the following activities: board
memberships and community service. Executive agrees to request permission from
the Company to join any board of directors or trustees. The Company agrees that
it will not unreasonably refuse this permission.
4. BASE SALARY. In consideration for the services to be provided by
Executive under this Agreement, the Company will pay Executive an initial base
salary of $333,333.00 per
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year, payable every two weeks. During any period of disability, as defined in
paragraph 12(c) below, Executive shall continue to receive his then existing
salary, until Executive's employment is terminated pursuant to paragraph 12(c).
Subject to the provisions of paragraph 12(e) below, Executive's compensation may
be reviewed and adjusted by the Company's Board of Directors, annually on the
anniversary of the Effective Date.
5. BUSINESS EXPENSES. The Company will promptly reimburse Executive for all
appropriately documented, reasonable business expenses incurred by Executive in
accordance with the Company's policies.
6. VEHICLE ALLOWANCE. In addition to the compensation described in
paragraph 4 above or elsewhere herein, the Company will also pay Executive a
vehicle allowance of $600.00 per month, payable not later than the last business
day of each month.
7. BONUS. In addition to the compensation described in paragraph 4 above,
and not to be limited by any other provision for compensation or benefits
described herein, the Company agrees to pay to Executive a bonus as described in
this paragraph and in Schedule A, a copy of which is attached hereto, and
incorporated by this reference.
a. The Company agrees to pay a bonus to the Executive Team. The
"Executive Team" means the CEO, President and Executive. As set forth Schedule
A, the Executive Team will be eligible for a payment from the Bonus Pool (Column
C of Schedule A) based on the Company's "Net Income" in any given fiscal year
(Column A of Schedule A). "Net Income" for purposes hereof shall be equal to
earnings as used in the calculation of the Company's "earnings per share."
b. Upon achievement of a level of net income as shown in Column A of
Schedule A, the Bonus Pool shall be calculated using the percentage of Net
Income shown in Column B of Schedule A. This calculation shall yield a Bonus
Pool amount within the range shown in Column C of Schedule A. The Bonus Pool
will be divided in three equal shares between the members of the Executive Team,
subject to the limitation in subparagraph c below.
c. For FY 1999, the Bonus Pool (Column C of Schedule A) resulting from
earnings between $2,000,000 and $3,000,000 will be reduced by payment of a
Company-wide bonus of approximately $135,000.
d. Calculations under Schedule A are effective for fiscal years ending
in 1999 and 2000. The parties do not anticipate that the bonus percentage
(Column B) will be changed substantially as a result of review by the Board
Directors, or that the method for calculating the bonus will be altered;
provided, however, that it is understood that performance levels (Column A of
Schedule A) may be adjusted at the end of FY 2000 based on performance to
reflect reasonable revised earnings targets.
e. The Bonus Pool for amounts payable under this section will be
calculated as of the end of each fiscal year (on or around January 31). Any
bonus payable under this
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paragraph shall be paid promptly following approval by the Board of Directors of
the Company of the final draft financial statements for each fiscal year as
presented to the Board by the Company's certified public accountants.
f. To be eligible for his one-third share of any Bonus Pool,
Executive's employment must continue through December 31 of the fiscal year for
which a bonus may be payable.
8. STOCK OPTION PLAN. In addition to the compensation and bonus described
in paragraphs 4 and 7 above, and not to be limited by any other provision for
compensation or benefits described herein, Executive shall be granted,
immediately upon commencement of employment, an option to purchase 250,000
shares of Natural Wonders common stock as set forth in the Nonqualified Stock
Option Agreement, Schedule B, a copy of which is attached hereto, and
incorporated by this reference.
9. LOAN. The Company agrees to loan to Executive the sum of $450,000.00
("Loan") under the terms set forth herein.
a. The Loan will be paid to Executive upon execution of a promissory
note by Executive in favor of Natural Wonders (the "Note") and compliance by
Executive with the requirements of 9(c) below, and in any event, not later than
15 days after Executive commences employment with the Company. The Loan and any
outstanding balance under the Note under this section will not be subject to
interest.
b. The company agrees to forgive the balance of the Loan due under the
Note according to the following schedule:
(i) at the end of the first twelve (12) months of
employment $150,000 of the outstanding balance
will be forgiven;
(ii) at the end of the thirteenth (13th) month of
employment, and continuing each month thereafter,
1/36th of the outstanding balance will be forgiven
until the entire balance of the Loan is forgiven;
(iii) if Executive is terminated pursuant to paragraphs
12(a), 12(c), 12(d) or 12(e) below, the entire
outstanding balance of the Loan will be forgiven
effective with the date of termination; and
(iv) if Executive is terminated pursuant to paragraph
12(b) below or Executive voluntarily resigns or
terminates this Agreement without "Good Reason" (as
defined below), Executive will repay to the Company
the outstanding balance on the Loan in accordance
with the terms of the Note.
c. Executive agrees that securities or other collateral acceptable to
the Company will be placed in escrow as collateral with Xxxxx Fargo Bank or
another bank or
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institution mutually acceptable to the parties. The collateral is to be
maintained in an amount equal to the unforgiven portion of the Loan and excess
collateral may be released from escrow subject to the request of Executive and
the terms of the escrow agreement. The collateral is to guarantee repayment to
the Company any amount of the Loan not forgiven due to termination of
Executive's employment.
10. VACATION. Executive will be eligible for paid vacation of not less than
three weeks each calendar year. Executive begins to accrue vacation concurrent
with the date of this Agreement and is eligible for prorated paid vacation in
the event he works for part of a calendar year.
11. OTHER BENEFITS. In addition to any other benefits of employment
described herein, Executive will be eligible for Company-provided employee
benefits in accordance with the terms and eligibility requirements of those
plans, as the Company may maintain from time to time, for the benefit of its
employees. Executive may receive such other and additional benefits as the
Company may determine from time to time, in its sole discretion.
12. TERMINATION OF THIS AGREEMENT. Before the expiration of this agreement
described in paragraph 1 above, this Agreement may be terminated only in
accordance with the provisions of this section.
a. TERMINATION BY COMPANY WITHOUT CAUSE UPON NOTICE. The Company may
terminate this Agreement at any time, for any lawful reason or no reason,
without cause (as cause is defined in paragraph 12(b) below), upon written
notice to Executive. In the event of such a termination, the parties agree to
act in good faith towards one another during any notice period.
b. TERMINATION FOR CAUSE BY THE COMPANY. The Company may terminate this
Agreement immediately for cause ("Cause") upon written notice to Executive, the
date of which shall specify the effective date of the termination. For purposes
of this Agreement, Cause means:
(i) the continued failure by Executive to substantially
perform Executive's duties with the Company (other
than any such failure resulting from termination for
Good Reason) after a demand for substantial
performance is delivered to Executive that
specifically identifies the manner which the Company
believes that Executive has not substantially
performed his duties, and Executive has failed to
resume substantial performance of his duties on a
continuous basis within sixty (60) days of receiving
such demand;
(ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to the Company,
monetarily or otherwise;
(iii) Executive's conviction of a felony or conviction of a
misdemeanor which impairs his ability substantially
to perform his duties with the Company; or
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(iv) Executive's dishonesty towards or fraud upon the Company.
c. TERMINATION OF EMPLOYMENT ON DISABLITY OF EXECUTIVE. If Executive
is absent from work due to mental or physical disability for a period of six
months, and at the end of that six-month period is unable to return to work on a
regular basis within thirty (30) days of receipt of written notice requesting
Executive to return to work, Executive's employment will terminate automatically
on the thirty first (31st) day after receipt of written notice from the company.
For purposes of this section, "mental or physical disability" means that a
physical or mental health practitioner determines that Executive suffers from a
physical or mental condition that prevents Executive from carrying out one or
more material aspects of his assigned duties, with or without reasonable
accommodation, for not less than ninety (90) consecutive days.
d. TERMINATION OF EMPLOYMENT ON DEATH OF EXECUTIVE. Executive's
employment will terminate automatically on Executive's death.
e. TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate
this Agreement for "Good Reason" by providing the Company with written notice of
termination of the Agreement. The effective date of the termination shall be the
date specified in the notice. Executive agrees that his right to terminate the
Agreement for "Good Reason" may be waived by failure to provide the notice
required under this section within thirty (30) days of the event constituting
"Good Reason." For purposes of this Agreement, Good Reason means:
(i) a reduction by the Company in Executive's annual base
salary below the amount in paragraph 4 above, unless
because of financial circumstances the Company
reduces the annual base salary of all executives by
the same percentage;
(ii) the failure of the Company to obtain a satisfactory
agreement from any successor to the Company, or
purchaser of all or substantially all of the
Company's assets, to assume and agree to perform this
Agreement (see paragraph 23); provided, however, that
no "Good Reason" will exist as a result of a proposed
transfer of Executive's responsibilities to any
successor corporation as a result of a merger,
reorganization or consolidation, liquidation or a
sale or disposition by the Company of all or
substantially all of the Company's assets;
(iii) the assignment of Executive to duties inconsistent
with his position as Executive Vice President, or
which reflect an adverse change in authority,
responsibility or status with the Company or any
successor;
(iv) requiring Executive to relocate to offices outside
of the Bay Area; or
(v) any material adverse change in any benefit provided
to Executive, unless because of financial
circumstances the Company reduces the benefits
provided to all executives by the same percentage.
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f. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate this
Agreement at any time by providing the Company with written notice. The
effective date of the termination shall be the date specified in the notice.
In the event of such a termination, the parties agree to act in good faith
towards one another during any notice period.
g. NOTICE OF TERMINATION. Any termination by the Company for Cause
or by Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis of termination of Executive's employment under the provision so
indicated.
h. DATE OF TERMINATION. "Date of Termination" shall mean the date
specified in the Notice of Termination, where required, or this Agreement or
in any other case upon ceasing to perform services to the Corporation.
13. COMPENSATION UPON TERMINATION. Upon termination of this Agreement by
either party, Executive shall be entitled to receive the following severance
payments subject to the restrictions set forth in paragraph 14 below:
a. TERMINATION BY COMPANY BY COMPANY BY NON-RENEWAL, WITHOUT CAUSE
UPON NOTICE, TERMINATION BY DEATH OF EXECUTIVE, OR TERMINATION BY EXECUTIVE
FOR GOOD REASON. Upon termination of this Agreement by non-renewal under
paragraph 1 or upon termination of this Agreement under the provisions of
paragraph 12(a), 12(d) or 12(e) above, Executive shall be paid, in a lump
sum, any and all base salary due and owing to him through the Date of
Termination and an amount equal to his earned but unused vacation through the
Date of Termination. In addition, if Executive is terminated under the
provisions of paragraph 12(a), 12(d) or 12(e) above during the initial term
of the Agreement, Executive shall be paid, in twelve equal monthly
installments, an amount equal to $333,333.00 ("Installment Payment"), and if
Executive is terminated under the provisions of paragraph 12(a), 12(d) or
12(e) above during any subsequent renewal term of the Agreement, Executive
shall be paid, in twelve equal monthly installments, an amount equal to 50%
of the Installment Payment. In addition to these payments, the entire
outstanding balance of the Loan shall be forgiven and the Note extinguished
as set forth in paragraph 9 above. If Executive's termination occurs on or
after January 31 in any given year, Executive shall receive the bonus payment
described in paragraph 7 above, for the most recent fiscal year that has been
completed. Executive, his family or his estate shall be entitled to other
benefits to the extent permitted by law, contract, or the terms of any
benefit plan or program.
b. TERMINATION FOR CAUSE. Upon termination of this Agreement under
the provisions of paragraph 12(b) above, Executive shall be paid, in a lump
sum, any and all base salary due and owing to him through the effective date
of the termination and an amount equal to his earned but unused vacation
through the Date of Termination. If Executive's termination occurs on or
after January 31 in any given year, Executive shall receive the bonus payment
described in paragraph 7 above, for the most recent fiscal year that has been
completed.
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Executive, his family or his estate shall be entitled to other benefits to the
extent permitted by law, contract, or the terms of any benefit plan or program.
In addition, Executive shall repay to the Company the outstanding balance on the
Loan in accordance with the terms of the Note.
c. TERMINATION FOR DISABILITY. Upon termination of this Agreement
under the provisions of paragraph 12(c) above, Executive shall be paid, in a
lump sum, any and all base salary due and owing to him through the Date of
Termination and an amount equal to his earned but unused vacation through the
Date of Termination. In addition to these payments, the entire outstanding
balance of the Loan shall be forgiven and the Note extinguished as set forth
in paragraph 9 above. If Executive's termination occurs on or after January
31, Executive shall receive the bonus payment described in paragraph 7 above,
for the most recent fiscal year that has been completed. Executive, his
family or his estate shall be entitled to other benefits to the extent
permitted by law, contract, or the terms of any benefit plan or program.
d. VOLUNTARY TERMINATION BY EXECUTIVE. If Executive voluntarily
resigns or terminates this Agreement other than for Good Reason, Executive
shall be paid, in a lump sum, any and all base salary due and owing to him
through the Date of Termination and an amount equal to his earned but unused
vacation through the Date of Termination. If Executive voluntarily resigns or
terminates this Agreement other than for Good Reason on or after January 31
in any given year, Executive shall receive the bonus payment described in
paragraph 7 above, for the most recent fiscal year that has been completed.
Executive, his family or his estate shall be entitled to other benefits to
the extent permitted by law, contract, or the terms of any benefit plan or
program. In addition, Executive shall repay to the Company the outstanding
balance on the Loan in accordance with the terms of the Note.
14. RESTRICTIONS ON COMPENSATION ON TERMINATION. The payments described
under paragraph 13 above are subject to the following restrictions.
a. OBLIGATION TO OBTAIN NEW EMPLOYMENT. Executive agrees to use
reasonable efforts to obtain employment after termination, provided however,
that Executive will have no obligation to accept employment which is not
substantially equivalent in total compensation and responsibility to the
level of compensation and responsibility Executive enjoyed with the Company.
The Company shall be entitled to require, periodically, that Executive
provide the Company with information regarding his job-seeking efforts, and
the Company agrees to do nothing to interfere with the success of those
efforts.
b. REDUCTION IN INSTALLMENT PAYMENT. Any Installment Payment due to
Executive under paragraph 13(a) above will be reduced as follows upon
occurrence of any of the events listed below during the twelve month period
in which the Company is obligated to make payments under paragraph 13(a):
(i) upon commencement of any new employment by Executive,
regardless of compensation level, the Installment
Payment will be reduced by 50% during the term of
such employment;
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(ii) upon receipt of any unemployment compensation
benefits, the Installment Payment will be further
reduced by the amount of those benefits; and
(iii) upon receipt by Executive of any fees or other
compensation for services rendered to third parties
in a capacity other than as an employee, the
Installment Payment will be reduced by 50% of the
amount of such fees or other compensation.
c. RELEASE OF CLAIMS. Prior to payment of the first Installment
Payment, and in return for the Installment Payment provided for under
paragraph 13(a) and the forgiveness of the Loan under paragraph 9(b),
Executive agrees to execute a release of claims in substantially the form of
Schedule C, attached hereto.
15. APPROVALS. Whenever the approval or consent of a party is required by
this Agreement, this approval or consent may be granted or withheld for any
reason or no reason, and may be granted upon such additional terms as
determined, by the party in its sole discretion. Whenever the approval or other
act of the Company is required hereunder, this shall require the approval of the
Chief Executive Officer of the Company who may, by written designation,
authorize an agent of the Company to perform the act.
16. NOTICES. Notices and all other communications required under this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by U.S. registered mail, return receipt requested, postage
prepaid, addressed as set forth below:
To Executive: Xxxxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
To the Company: Natural Wonders, Inc.
ATTN: Chief Executive Officer
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
17. MODIFICATIONS IN WRITING. Except as so expressly provided for herein,
no provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge entitled "Amendment to Executive Employment
Agreement, dated ____" is agreed to in writing by Executive and such Officer of
the Company as may be designated by the Board of Directors.
18. ENTIRE AGREEMENT. This Agreement, which includes Schedules A, B and
C, referenced and incorporated herein, supersedes any and all other
agreements, discussions or understandings, either oral or in writing, between
the parties with respect to the subject matter of this Agreement, and this
Agreement contains all of the covenants and agreements between the parties
with respect to the subject matter of this Agreement. Executive hereby agrees
that benefits under this Agreement shall be in lieu, and in full
satisfaction, of any other severance
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benefits to which Executive is or may be entitled as a result of any other
severance policy of the Company now existing or hereafter adopted or effected.
19. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions will continue in full force without being impaired or
invalidated in any way.
20. WAIVER OF BREACH. Except as so expressly provided herein, the waiver
of a breach of any provision of this Agreement or failure to exercise any
right by the Company or Executive will not operate or be construed as a
waiver of any subsequent breach or relinquishment of such right by such party.
21. INTERPRETATION. Section headings in this Agreement are for
convenience and are not a part of the agreement of the parties, and will not
be used in the construction of the Agreement. No provision of this Agreement
shall be interpreted or construed against a party because that party or its
legal counsel was the drafter.
22. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the laws of the State of California.
23. ARBITRATION OF DISPUTES. The parties agree that any controversy or
claim arising out of Executive's employment or benefits, this Agreement, or any
alleged breach of this Agreement, will be arbitrated in San Francisco,
California in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association then in effect. The arbitrator's decision will
be final and binding on both parties. Each party shall bear its own costs,
attorneys' fees, and expert witness fees. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
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24. SUCCESSORS.
a. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company or any division or subsidiary thereof
employing you to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of the Agreement, and shall entitle Executive to compensation from
the Company in the same amount and on the same terms as Executive would be
entitled to hereunder if Executive terminated his employment for "Good Reason"
under paragraph 12(e), except that for the purposes of implementing this
paragraph, the date on which any succession becomes effective shall be deemed
the effective date of the termination of employment.
b. This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would be payable to him under this Agreement, all such amounts,
unless otherwise provided herein, shall be paid according to the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there is no
such designee, to Executive's estate.
25. 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.
Date: September 29, 1998 NATURAL WONDERS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Title: Acting Chief Executive Officer
Date: September 29, 1998
/s/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx
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SCHEDULE A - BONUS CALCULATION
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[Column A] [Column B] [Column C]
Net Income in Millions Bonus Payout as a % of Bonus Pool
Net Income
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Above Up From To
to
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0.00 0.00% --- ---
1.40
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1.40 0.00% --- ---
2.00
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2.00 15.00% 300,000 450,000
3.00
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3.00 17.14% 514,200 685,600
4.00
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4.00 18.00% 720,000 900,000
5.00
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5.00 18.50% 925,000 1,100,000
6.00
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6.00 18.70% 1,122,000 1,309,000
7.00
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7.00 18.90% 1,323,000 1,512,000
8.00
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8.00 19.10% 1,528,000 1,719,000
9.00
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9.00 19.30% 1,737,000 1,930,000
10.00
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10.00 19.50% 1,950,000 2,145,000
11.00
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11.00 and higher 20.00% 2,200,000 Unlimited
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