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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 27, 1997, between Fulcrum Direct,
Inc., a Delaware corporation (the "Company"), and Xxxxxxx XxXxxxx ("Executive").
WHEREAS, the Company and the Executive desire to enter into an
agreement to provide for the employment of Executive as Vice President, Brand
Management - San Francisco of the Company, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Executive hereby agree as
follows:
Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in Section 4(a) (the "Employment Period").
Position and Duties. Commencing on the date hereof and
continuing during the Employment Period, Executive shall serve in such positions
and with such responsibility as shall be specified by the Company's Chairman and
Chief Executive Officer.
Salary, Bonus, Options and Benefits.
(a) During the Employment Period, Executive's base salary (the
"Base Salary") shall be $175,000 which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
subject to required withholding taxes.
(b) In addition to the Base Salary, the Executive shall be
eligible to receive, upon approval of the Company's Board of Directors, a bonus
(payable either in cash or through the grant of stock options of the Company, or
both, as determined by the Company's Board of Directors) following the end of
each fiscal year during the Employment Period based upon the Company's operating
results and Executive's performance during such year. The maximum amount of the
bonus for which the Executive is eligible, shall be determined on the same basis
as other senior managers of the Company.
(c) In addition to the consideration set forth in Sections
3(a) and 3(b) above, on or prior to July 14, 1997 the Company shall place 86,000
shares of the Company's Common Stock, par value $.01 per share (the "Trust
Shares") into a trust that is established for the Executive's benefit and has
terms identical to the trust agreement attached hereto as Exhibit A (the "Rabbi
Trust"). The Trust, and upon termination of the Trust, the Executive shall
become a party to the Stockholders Agreement (the "Stockholders Agreement"),
dated October 21, 1996, between the Company and certain of its stockholders
(which agreement is attached hereto as Exhibit B) and the Trust Shares shall be
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entitled to all rights and subject to all obligations and conditions set forth
in such agreement. Any Trust Shares eligible to be sold pursuant to the terms of
Section 3 of the Stockholders Agreement or registered pursuant to the terms of
Section 7 of the Stockholders Agreement shall be so sold or registered and any
Trust Shares so registered shall be sold at prevailing market prices
(d) In addition to the consideration set forth in Sections
3(a), 3(b) and 3(c) above within 7 days of the date hereof, the Company shall
cause Fulcrum Capital Partners, L.P. ("FCP") to grant Executive an option to
acquire a limited partnership interest in FCP, in the form attached hereto as
Exhibit C.
(e) In addition to the Base Salary, and any bonuses payable to
the Executive pursuant to Section 3(b) above, Executive shall be entitled during
the Employment Period, to health and dental benefits and such other benefits as
are provided to the Company's other senior managers.
(f) Subject to the Company's reimbursement policy, the Company
shall reimburse Executive (or cause Executive to be reimbursed) for all
reasonable out-of-pocket expenses incurred by him or her in the course of
performing his or her duties under this Agreement upon completion of an expense
report in accordance with the Company's reimbursement, reporting and
documentation policies in effect from time to time with respect to travel,
entertainment and other business expenses.
Term.
(a) Executive shall be considered an employee "at will." It is
expressly understood that either the Executive or the Company may terminate this
Agreement upon giving 30 days notice to the other party. This Agreement may be
terminated with or without cause in the absolute discretion of Executive or the
Company as the case may be.
(b) In the event of Executive's voluntary resignation, this
Agreement shall terminate and all compensation and other benefits shall cease to
accrue upon termination. Upon termination for any other reason, Executive shall
be entitled to receive the Base Salary for a period of four months thereafter in
accordance with the Company's normal payroll procedures.
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(c) The Rabbi Trust shall terminate and the Trust Shares shall
be distributed to the Executive upon the earlier of (i) July 1, 1999, or (ii)
termination of Executive's employment with the Company for any reason; provided,
however, that the distribution date described in clause (i) may be extended by
Executive's delivering written notice to the Company and the trustee of the
Rabbi Trust (the "Trustee") not later than December 1st of the calendar year
preceding the calendar year in which such distribution would otherwise be made
(e.g., an election to defer the distribution beyond July 1, 1999 must be filed
on or before December 1, 1998), and provided, further, that in order to
facilitate a distribution under clause (ii), Executive (or his or her estate)
and the Company shall give the Trustee prompt notice of the termination of
Executive's employment. Upon request of the Executive, following termination of
employment, and provided that the Executive has attempted in good faith to sell
the Trust Shares to a third party for an amount per share at least equal to 20
months Base Salary divided by the number of Trust Shares, the Company shall pay
to Executive an amount equal to 20 months Base Salary in exchange for all of the
Trust Shares.
Nondisclosure and Nonuse of Confidential Information.
(a) Executive shall not disclose or use at any time, either
during employment with the Company or thereafter, any Confidential Information
(as defined below) of which Executive is or becomes aware, whether or not such
information is developed by the Executive, except to the extent that such
disclosure or use is directly related to and required by Executive's performance
of duties assigned to Executive by the Company. Executive shall take all
appropriate steps to safeguard Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft.
(b) As used in this Agreement, the term "Confidential
Information" means information that is not generally known to the public and
that is used, developed or obtained by the Company in connection with its
business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) analysis, (v) drawings,
photographs and reports, (vi) computer software, including operating systems,
applications and program listings, (vii) flow charts, manuals and documentation,
(viii) data bases, (ix) accounting and business methods, (x) inventions,
devices, new developments, methods and processes, whether patentable or
unpatentable and whether or not reduced to practice, (xi) customers and clients
and customer or client lists, (xii) copyrightable works, (xiii) all information
relating to Storybook Heirlooms, Inc., (xiv) all technology and trade secrets,
and (xv) all similar and related information in whatever form. Confidential
Information shall not include any information that has been published in a form
generally available to the public prior to the date Executive proposes to
disclose or use such information. Information shall not be deemed to have been
published merely because individual portions of the information have been
separately published, but only if all material features comprising such
information have been published in combination.
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Delivery of Materials Upon Termination of Employment. As
requested by the Company from time to time and upon the termination of
Executive's employment with the Company for any reason, Executive shall promptly
deliver to the Company all equipment provided to the Executive by the Company
and copies and embodiments, in whatever form, of all Confidential Information in
Executive's possession or within his control (including, but not limited to,
written records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing any Confidential Information) irrespective of the location
or form of such material and, if requested by the Company, shall provide the
Company with written confirmation that all such equipment and materials have
been delivered to the Company.
Noncompetition. Executive acknowledges and agrees with the
Company that Executive's services to the Company are unique in nature and that
the Company would be irreparably damaged if Executive were to provide similar
services to any person or entity competing with the Company or engaged in a
similar business. Executive accordingly covenants and agrees with the Company in
consideration of the compensation provided herein that during the period
commencing with the date of this Agreement and ending on the second anniversary
following the date of the termination of Executive's employment with the Company
(the "Noncompetition Period"), Executive shall not, directly or indirectly,
either for himself or herself or for any other individual, corporation,
partnership, joint venture or other entity, participate in any business
(including, without limitation, any division, group or franchise of a larger
organization) which engages or which proposes to engage in the United States or
Japan, in the promotion, development, sale, distribution or production of
children's and teen apparel, shoes or accessories (such activities being
referred to as the "Restricted Activities"). For purposes of this Agreement, the
term "participate in" shall include, without limitation, having any direct or
indirect interest in excess of 4.9% in any corporation, partnership, joint
venture or other entity, whether as a sole proprietor, owner, stockholder,
partner, joint venturer, creditor or otherwise, or rendering any direct or
indirect service or assistance to any individual, corporation, partnership,
joint venture and other business entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant or otherwise); provided, that
Executive may be employed by any person or entity which engages in Restricted
Activities if (i) less than 25% of such person's or entity's revenues are
generated from such Restricted Activities and (ii) Executive's responsibilities
are clearly and specifically segregated from any such person's or entity's
Restricted Activities, such that Executive in no way participates in the
Restricted Activities, including, without limitation, by providing management
oversight, direction, merchandising, design or creative input relating to the
Restricted Activities.
Nonsolicitation. During the Noncompetition Period, Executive
shall not (i) induce or attempt to induce any employee of the Company to leave
the employ of the Company, or in any way
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interfere with or alter the relationship between the Company and any employee
thereof, (ii) hire directly or through another entity any person who was an
employee or independent contractor of the Company at any time during the
Noncompetition Period, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company to cease doing
business with the Company, or in any way interfere with or alter the
relationship between any such independent contractor, customer, supplier,
licensee or business relation and the Company (including, without limitation,
making any negative statements or communications concerning the Company or any
subsidiary or employee of the Company).
Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company: Fulcrum Direct, Inc.
0000 Xxxxxxx Xxx
Xxx Xxxxxx, XX 00000
Attn.: Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
With copies to: Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxxxxxx Xxxxx, Esq.
Telecopy: 000-000-0000
To Executive: _________________________
_________________________
_________________________
Attn.:___________________
Telecopy:________________
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
General Provisions.
(a) Company Subsidiaries. For purposes of Sections 4(c), 5, 6
and 7 of this Agreement, the term "Company" shall include all subsidiaries and
affiliates of the Company.
(b) Limitations. Executive and the Company acknowledge and
agree that this Agreement is not intended and should not be construed to grant
Executive any right to continued employment with the Company or to otherwise
define the terms of Executive's employment with the Company.
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(c) Absence of Conflicting Agreements. Executive hereby
warrants and covenants that (i) employment by the Company and execution,
delivery and performance of this Agreement do not and shall not result in a
breach of the terms, conditions or provisions of any agreement, instrument,
order, judgment or decree to which Executive is subject, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The parties
agree that a court of competent jurisdiction making a determination of the
invalidity or unenforceability of any term or provision of Sections 5, 7 and 8
of this Agreement shall have the power to reduce the scope, duration or area of
any such term or provision, to delete specific words or phrases or to replace
any invalid or unenforceable term or provision in Sections 5, 7 and 8 with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.
(e) Complete Agreement. This Agreement, the documents attached
hereto as exhibits, 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.
(f) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(g) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its respective successors and assigns. The rights and
obligations of Executive under this Agreement may not be assigned or delegated
except that the Executive's right to unpaid compensation shall pass to his or
her estate and beneficiaries according to his or her will or the laws of descent
and distribution.
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(h) Choice of Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by the internal law, and not the law of conflicts, of
the State of Delaware.
(i) Remedies. Each of the parties to this Agreement shall be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that Executive's breach of any
term or provision of this Agreement shall materially and irreparably harm the
Company, that money damages shall accordingly not be an adequate remedy for any
breach of the provisions of this Agreement by Executive and that the Company in
its sole discretion and in addition to any other remedies it may have at law or
in equity may apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(j) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and
Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
FULCRUM DIRECT, INC.
By____________________________
Its___________________________
______________________________
Xxxxxxx XxXxxxx
