Exhibit 10.1
EMPLOYMENT, CONFIDENTIALITY
AND NONCOMPETE AGREEMENT
This Employment, Confidentiality and
Noncompete Agreement (“Agreement”) is made and entered
into effective as of the 16th day of January, 2007, by and between
Build-A-Bear Workshop, Inc., a Delaware corporation
(“Company”), and Paul Bundonis
(“Employee”).
WHEREAS, Company desires to employ
and Employee desires to be employed as the Chief Workshop Bear of
Company.
WHEREAS, Company has pioneered the
retail concept of “make your own” stuff plush toys,
including animals and dolls, and is engaged in, among other things,
the business of production, marketing, promotion and distribution
of plush stuff toys, clothing, accessories and similar items,
including without limitation, the ownership, management,
franchising, leasing and development of retail stores in which the
basic operation is the selling of such items, and the promotion of
the related concepts and characters through merchandising and mass
media. The Company is headquartered and its principal place of
business are located in, and this Agreement is being signed in,
St. Louis, Missouri.
WHEREAS, Company conducts business
in selected locations throughout the United States and
internationally through franchise arrangements.
WHEREAS, Company has expended a
great deal of time, money and effort to develop and maintain its
proprietary Confidential Information (as defined herein) which is
material to Company and which, if misused or disclosed, could be
very harmful to Company’s business.
WHEREAS, the success of Company
depends to a substantial extent upon the protection of its
Confidential Information and goodwill by all of its
employees.
WHEREAS, Company compensates its
employees to, among other things, develop and preserve goodwill
with its customers, landlords, suppliers and partners on
Company’s behalf and business information for Company’s
ownership and use.
WHEREAS, if Employee were to leave
Company, Company, in all fairness, would need certain protections
in order to prevent competitors of Company from gaining an unfair
competitive advantage over Company or diverting goodwill from
Company, or to prevent Employee from misusing or misappropriating
the Confidential Information.
NOW, THEREFORE, in consideration of
the compensation and other benefits of Employee’s employment
by Company and the recitals, mutual covenants and agreements
hereinafter set forth, Employee and Company agree as
follows:
1.
Employment Services .
(a) Employee
is hereby employed by Company, and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth.
Employee shall serve
as Chief Workshop Bear, during the Employment
Period, on a full-time basis. Employee shall carry out such duties
as are assigned to him by Company’s Chief Executive
Bear.
(b) Employee
agrees that throughout Employee’s employment with Company,
Employee will (i) faithfully render such services as may be
delegated to Employee by Company, (ii) devote substantially all of
Employee’s entire business time, good faith, best efforts,
ability, skill and attention to Company’s business, and (iii)
follow and act in accordance with all of the rules, policies and
procedures of Company, including but not limited to working hours,
sales and promotion policies, and specific Company rules. Company
further agrees that it shall not during the Initial Term of this
Agreement require Employee to relocate his residence outside of the
St. Louis metropolitan area.
(c) “Company”
means Build-A-Bear Workshop, Inc. or one of its Subsidiaries,
whichever is Employee’s employer. The term
“Subsidiary” means any corporation, joint venture or
other business organization in which Build-A-Bear Workshop, Inc.
now or hereafter, directly or indirectly, owns or controls more
than fifty percent (50%) interest.
2.
Term of Employment . The term of this Agreement shall
commence on the date first set forth above, and shall end on the
third anniversary hereof, unless sooner terminated as provided in
Section 4 hereof (the “Initial Term”). Following the
Initial Term, this Agreement shall renew for successive three-year
periods (each a “Renewal Period”; collectively, the
Initial Term and each Renewal Period, the “Employment
Period”), unless either party notifies the other party of its
decision not to renew the Agreement no later than ninety (90) days
prior to the third anniversary date, or unless the Agreement is
sooner terminated as provided in Section 4 hereof. For the
avoidance of doubt, if either party provides notice of non-renewal
of the Agreement no later than ninety (90) days prior to the third
anniversary date (either at the end of the Initial Term or at the
end of any particular Renewal Period), then the Agreement shall
expire on that anniversary date.
3.
Compensation .
(a)
Base Salary . During the Employment Period, Company shall
pay Employee as compensation for his services an annual base salary
of not less than Two Hundred and Twenty Five Thousand Dollars
($225,000), payable in accordance with Company’s usual
practices. Employee’s annual base salary rate shall be
reviewed by Company’s Compensation Committee at least
annually for increase following each fiscal year so that
Employee’s salary will be commensurate for similarly situated
executives with firms similarly situated to Company; provided,
however , that if Employee’s individualized performance
targets (set for each fiscal year by Employee and Employee’s
team leader) are achieved, Employee’s annual base salary rate
shall not be subject to decrease at any time during the Employment
Period and shall be subject to annual increase by no less than the
average percentage increase given to all other Company executive
employees for such fiscal year (the “Average
Increase”).
(b)
Bonus . Should Company exceed its sales, profits and other
objectives for any fiscal year, Employee shall be eligible to
receive a bonus for such fiscal year in the amount as determined by
the Compensation Committee of the Board of Directors; provided
however the
potential bonus opportunity for Employee in any
given fiscal year will be set by the Compensation Committee such
that, if the Company exceeds its objectives, the Company will pay
Employee not less than thirty five percent (35%) of
Employee’s annual base pay for such fiscal year. Any bonus
payable to Employee will be payable in cash, stock or stock
options, or combination thereof, all as determined by the Board of
Directors or any duly authorized committee thereof, and unless a
different payout schedule is applicable for all executive employees
of the Company, any such bonus payment will be payable in a single,
lump sum payment. In the event of termination of this Agreement
because of Employee's death or disability (as defined by Section
4(b)), termination by the Company without Cause pursuant to Section
4.1(c), or pursuant to Employee's right to terminate this Agreement
for Good Reason under Section 4.1(d), the bonus criteria shall not
change and any bonus shall be pro-rated based on the number of full
calendar weeks during the applicable fiscal year during which
Employee was employed hereunder.
Such bonus, if any, shall be payable
after Company’s accountants have determined the sales and
profits and have issued their audit report with respect thereto for
the applicable fiscal year, which determination shall be binding on
the parties. Any such bonus shall be paid within seventy-five (75)
days after the end of each calendar year, regardless of Employee's
employment status at the time payment is due. If timely payment is
not made, the Company shall indemnify the Employee against any
additional tax liability that the Employee may incur proximately as
a result of the payment being made after the seventy-five day
period.
(c)
Stock Options . Employee may have been granted in the past,
and/or may in the future be granted, a certain number of restricted
shares and/or stock options to purchase shares of Company’s
common stock (the “Common Stock”), pursuant to the
terms set forth more particularly in the stock option and/or
restricted stock agreements (“Stock Agreement”) used in
connection with the Build-A-Bear Workshop, Inc. 2000 Stock Option
Plan (or any successor plan) (the “Plan”). The Plan and
applicable Stock Agreement(s) shall govern any grants of restricted
shares and/or stock options to purchase shares of Company’s
Common Stock.
(d)
Discounts . Employee and his immediate family will be
entitled to a 20% discount for all merchandise purchased at
Company’s stores.
(e)
Vacation . Employee shall be entitled to paid vacation and
paid sick leave on the same basis as may from time to time apply to
other Company executive employees generally. Vacations will be
scheduled with the approval of Company’s Chief Executive
Bear, who may block out certain periods of time during which
vacations may not be taken, including preceding Valentine’s
Day, preceding Easter, from November 1 through December 31, during
Company inventory, and just prior to store openings. One-third of
one year’s vacation (or any part of it) may be carried over
to the next year; provided that such carry over is used in the
first calendar quarter of the next year. Unless approved by the
Chief Executive Bear, all unused vacation shall be forfeited. No
more than two weeks of vacation can be taken at one time. Employee
shall also be entitled to one (1) additional day per calendar year
of paid vacation to be taken in the month of his
birthday.
(f)
Other . Employee shall be eligible for such other
perquisites as may from time to time be awarded to Employee by
Company payable at such times and in such amounts
as Company, in its sole discretion, may
determine. All such compensation shall be subject to customary
withholding taxes and other employment taxes as required with
respect thereto. During the Employment Period, Employee shall also
qualify for all rights and benefits for which Employee may be
eligible under any benefit plans including group life, medical,
health, dental and/or disability insurance or other benefits
(“Welfare Benefits”) which are provided for employees
generally at his then current location of employment. Employee may,
in his sole discretion, decline any perquisite, Welfare Benefit,
proposed annual salary increase, or bonus payment.
4.
Termination of Employment . Prior to the expiration of the
Employment Period, this Agreement and Employee’s employment
may be terminated as follows:
(a) Upon
Employee’s death;
(b) By
the Company upon thirty (30) day’s prior written notice to
Employee in the event Employee, by reason of permanent physical or
mental disability (which shall be determined by a physician
selected by Company or its insurers and acceptable to Employee or
Employee’s legal representative (such agreement as to
acceptability not to be withheld unreasonably), shall be unable to
perform the essential functions of his position, with or without
reasonable accommodation, for six (6) consecutive months; provided,
however, Employee shall not be terminated due to permanent physical
or mental disability unless or until said disability also entitles
Employee to benefits under such disability insurance policy as is
provided to Employee by Company, provided however that continued
entitlement to disability benefits coverage shall be not required
where Employee fails to qualify for benefits coverage continuation
due to an act or omission by Employee.
(c) By
the Company with or without Cause. For the purposes of this
Agreement, “Cause” shall mean: (i) Employee’s
engagement in any conduct which, in Company’s reasonable
determination, constitutes gross misconduct, or is illegal,
unethical, improper provided such conduct brings detrimental
notoriety or material harm to Company; (ii) gross negligence or
willful misconduct; (iii) the Company has good reason to believe
that Employee has committed a felony or a crime involving moral
turpitude; (iv) a material breach of a material provision of this
Agreement by Employee, or (v) failure of Employee to follow a
written directive of the Chief Executive Bear or the Board of
Directors within thirty (30) days after receiving such notice,
provided that such directive is reasonable in scope or is otherwise
within the Chief Executive Bear’s or the Board’s
reasonable business judgment, and is reasonably within
Employee’s control; provided Employee does not cure said
conduct or breach (to the extent curable) within thirty (30) days
after the Chief Executive Bear or the Board of Directors provides
Employee with written notice of said conduct or breach. In the
event of termination with cause, the Employee will be afforded an
opportunity prior to the actual date of termination to discuss the
matter with the Company.
(d)
By the Employee with or
without Good Reason. For purposes of this Agreement, “Good
Reason” shall mean a material breach of a material provision
of this Agreement by Company, provided Company does not cure said
breach within thirty (30) days after Employee provides the Board of
Directors with written notice of the breach.
4.2
Impact of
Termination.
(a) Survival
of Covenants. Upon termination of this Agreement, all rights and
obligations of the parties
