EMPLOYMENT AGREEMENT
Exhibit
10.8
THIS
EMPLOYMENT AGREEMENT is made as of April 4, 2005, by and between RC2
Corporation, a Delaware corporation (the "Company"), and Xxxxxx Xx (the
"Employee"). Certain capitalized terms used herein are defined in
section 10 below.
RECITALS
A. The
Company and the Employee desire to terminate any and all prior agreements,
whether oral or written, between the parties and between the Employee and the
Company relating to the Employee’s employment.
B. The
Company desires to employ the Employee and the Employee is willing to make
her
services available to the Company on the terms and conditions set forth
below.
AGREEMENTS
In
consideration of the premises and the mutual agreements which follow, the
parties agree as follows:
1. Employment.
The
Company hereby employs the Employee and the Employee hereby accepts employment
with the Company on the terms and subject to the conditions set forth in this
Agreement.
2. Term.
The
term of the Employee's employment hereunder shall commence on the date hereof
and shall continue until terminated as provided in section 6 below.
3. Duties.
The
Employee shall serve as the Managing Director of RC2 Ltd. and will, under the
direction of the Company's Chief Executive Officer and the Board of Directors,
faithfully and to the best of her ability, perform the duties of such position.
The Employee shall be one of the principal executive officers and Senior
Management of the Company and shall, subject to the control of the Chief
Executive Officer and the Company's Board of Directors, have the normal duties,
responsibilities and authority associated with such position. The Employee
shall
also perform such additional duties and responsibilities which may from time
to
time be reasonably assigned or delegated by the Chief Executive Officer or
Board
of Directors of the Company. The Employee agrees to devote her entire business
time, effort, skill and attention to the proper discharge of such duties while
employed by the Company.
4. Compensation.
Effective April 4, 2005, the Employee shall receive a base salary of $230,000
per year, payable in regular and equal monthly installments (the "Base Salary").
5. Fringe
Benefits.
(a) Vacation.
The
Employee shall be entitled to four weeks of paid vacation annually. The Employee
and the Company shall mutually determine the time and intervals of such
vacation.
(b) Medical,
Health, Dental, Disability and Life Coverage.
The
Employee shall be eligible to participate in any medical, health, dental,
disability and life insurance policy in effect for the Senior Management of
the
Company.
(c) Incentive
Bonus and Stock Ownership Plans.
The
Employee shall be entitled to participate in any incentive bonus plan, incentive
stock option or other stock ownership plan or other incentive compensation
plan
developed generally for the Senior Management of the Company, on a basis
consistent with her position and level of compensation with the Company. Without
limiting the foregoing, Employee shall be entitled to participate on a basis
consistent with past practice and her position and level of compensation with
the Company in the annual Incentive Bonus Plan and Top Management Additional
Bonus Plan, together with all successor or other bonus plans (collectively,
the
"Bonus Plans"). In addition, Employee shall be entitled to receive annual stock
option grants as provided on Schedule 5(c) attached hereto. The options will
be
granted pursuant to a Non-Statutory Stock Option Grant Agreement substantially
in the form of Exhibit A attached hereto.
(d) Automobile.
The
Company agrees to reimburse the Employee up to $600.00 per month, as such amount
may be increased from time to time consistent with the Company's reimbursement
policy for the Senior Management of the Company to cover Employee's expenses
in
connection with her leasing of an automobile. Additionally, the Company will
pay
for the gas used for business purposes. All maintenance and insurance expense
for the automobile is the responsibility of the Employee.
(e) Reimbursement
for Reasonable Business Expenses.
The
Company shall pay or reimburse the Employee for reasonable expenses incurred
by
her in connection with the performance of her duties pursuant to this Agreement
including, but not limited to, travel expenses, expenses in connection with
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
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(f) Key
Man Insurance.
The
parties agree that the Company has the option to purchase one or more key man
life insurance policies upon the life of the Employee. The Company shall own
and
shall have the absolute right to name the beneficiary or beneficiaries of said
policy. The Employee agrees to cooperate fully with the Company in securing
said
policy, including, but not limited to submitting himself to any physical
examination which may be required at such reasonable times and places as Company
shall specify.
(g) Life
and Disability Insurance.
During
the Employment Period, the Company shall provide coverage of at least $2 million
of life insurance and 75% of Base Salary of disability insurance. Such insurance
policies to be owned by any one or more members of Employee’s immediate family
or by a trust for the primary benefit of Employee’s immediate family. The owner
of the policy shall have the power to designate the beneficiary and to assign
any rights under the policy. The Company shall pay 100% of the premiums required
under these policies; provided, however, that the Company shall not be obligated
to pay greater than $20,000 for such premiums during any fiscal year. In the
event that the premiums for such policies would exceed this limitation, the
Company shall consult with the Employee to determine the allocation of such
amount to the premiums for each type of policy to obtain such insurance as
may
be available for an aggregate of $20,000 per fiscal year.
6. Termination.
(a) Termination
of the Employment Period.
The
Employment Period shall continue until the earlier of: (i) March 31, 2008 unless
the parties mutually agree in writing to extend the term of this Agreement
(such
date hereof or such extended date being referred to herein as the "Expected
Completion Date"), (ii) the Employee's death or Disability, (iii) the
Employee resigns or (iv) the Board of Directors determines that termination
of Employee's employment is in the best interests of the Company (the
"Employment Period"). The last day of the Employment Period shall be referred
to
herein as the "Termination Date."
(b) Definitions.
(i) For
purposes of this Agreement, "Disability" shall mean a physical or mental
sickness or any injury which renders the Employee incapable of performing the
services required of her as an employee of the Company and which does or may
be
expected to continue for more than six months during any 12-month period. In
the
event Employee shall be able to perform her usual and customary duties on behalf
of the Company following a period of disability, and does so perform such duties
or such other duties as are prescribed by the Board of Directors for a period
of
three continuous months, any subsequent period of disability shall be regarded
as a new period of disability for purposes of this Agreement. The Company and
the Employee shall determine the existence of a Disability and the date upon
which it occurred. In the event of a dispute regarding whether or when a
Disability occurred, the matter shall be referred to a medical doctor selected
by the Company and the Employee. In the event of their failure to agree upon
such a medical doctor, the Company and the Employee shall each select a medical
doctor who together shall select a third medical doctor who shall make the
determination. Such determination shall be conclusive and binding upon the
parties hereto.
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(ii) For
purposes of this Agreement, "Cause" shall be deemed to exist if the Employee
shall have [a] violated the terms of section 7 or section 8 of
this
Agreement in any material respect; [b] committed a felony or a crime
involving moral turpitude; [c] engaged in serious misconduct which is
demonstrably and materially injurious to the Company and its Subsidiaries;
[d] engaged in fraud or dishonesty with respect to the Company or any
of
its Subsidiaries or made a material misrepresentation to the stockholders or
directors of the Company with respect to an item, transaction or amount in
excess of $10,000; or [e] committed acts of negligence in the performance
of her duties which are demonstrably and materially injurious to the Company.
In
all cases, termination for Cause shall be determined solely by the Board of
Directors and require a two-thirds majority vote.
(iii) For
purposes of this Agreement, "Good Reason" shall mean (1) the material
diminution of the Employee's duties set forth in section 3 above or
(2) the relocation of the offices at which the Employee is principally
employed to a location which is more than 50 miles from the offices
at
which the Employee is principally employed as of the date hereof; provided,
that
travel necessary for the performance of the Employee's duties set forth in
section 3 above shall not determine the location where the Employee
is
"principally employed."
(c) Termination
for Disability or Death.
In the
event of termination for Disability, payments of the Employee's Base Salary
shall be made to the Employee for a period of six months after the Termination
Date in accordance with the normal payroll practices of the Company. In
addition, for a period of three years after the Termination Date, the Company
shall reimburse the Employee for amounts paid, if any, to continue medical,
dental and health coverage pursuant to the provisions of the Consolidated
Omnibus Budget Reconciliation Act, continue Employee's life insurance and
disability coverage, to the extent limited by section 5(g) and to the extent
permitted under applicable policies, and pay to the Employee a pro rata portion
of any bonus payable for the year in which termination takes place (if any)
based on the portion of the year occurring prior to the Termination Date. In
the
event of termination as a result of the death of Employee, Employee's designated
beneficiary or her estate shall be entitled to receive the Base Salary accrued
prior to the Termination Date together with the proceeds of any life insurance
obtained pursuant to section 5(g), plus a lump sum payment when determinable
equaling Employee's pro rata portion of any bonus payable under the Bonus Plans
for the year in which termination takes place (if any) based on the portion
of
the year occurring prior to the Termination Date.
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(d) Termination
by the Company without Cause or by the Employee for Good Reason.
If
(i) the Employment Period is terminated by the Company for any reason
other
than for Cause, Disability or death, (ii) the Employment Period is
terminated by the Company for what the Company believes is Cause or Disability,
and it is ultimately determined that the Employment Period was terminated
without Cause or Disability (iii) the Employee resigns for Good Reason,
(iv) this Agreement is not renewed or otherwise extended by the Company after
the Expected Completion Date, and the reason for such non-renewal or extension
is not related to a termination for Cause, Disability or death of the Employee,
the Employee shall be entitled to receive, as damages for such a termination,
resignation or non-renewal, her Base Salary from the Termination Date to the
second anniversary of the Termination Date to be paid in accordance with the
normal payroll practices of the Company plus a lump sum payment equaling 100%
of
the average annual payments under the Bonus Plans over the preceding three
years, provided, however, that if such a termination or resignation described
in
(i), (ii), (iii) or (iv) above occurs at any time after the occurrence of or
in
contemplation of a Change of Control, then Employee shall be entitled to receive
a lump sum payment of her Base Salary from the Termination Date to the third
anniversary of the Termination Date plus 200% of the average annual payments
under the Bonus Plans over the preceding three years. If the Employee's
employment is terminated in the manner described in this section 6(d),
for
a period of three years from the Termination Date, the Company shall reimburse
the Employee for amounts paid, if any, to continue medical, dental and health
coverage pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act, continue Employee's life insurance and disability coverage
to the extent limited by section 5(g) and to the extent permitted under the
applicable policies, and pay to the Employee the fringe benefits pursuant to
section 5 which have accrued prior to the Termination Date.
(e) Termination
by the Company for Cause or by the Employee Without Good Reason.
If the
Employment Period is terminated by the Company with Cause or as a result of
the
Employee's resignation without Good Reason, the Employee shall not be entitled
to receive her Base Salary or any fringe benefits or bonuses for periods after
the Termination Date.
(f) Effect
of Termination.
The
termination of the Employment Period pursuant to section 6(a) shall
not
affect the Employee's obligations as described in sections 7 and
8.
(g) Acceleration
of Option Vesting.
Upon
completion of a Change of Control, all options to purchase stock of the Company
held by the Employee shall immediately vest and become exercisable by the
Employee in accordance with their remaining terms. The Company agrees to take
any and all actions necessary or appropriate to effectuate the acceleration
of
these options and to permit the Employee to exercise the options in accordance
with their terms from and after this accelerated vesting date.
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7. Noncompetition
and Nonsolicitation.
The
Employee acknowledges and agrees that the contacts and relationships of the
Company and its Affiliates with its customers, suppliers, licensors and other
business relations are, and have been, established and maintained at great
expense and provide the Company and its Affiliates with a substantial
competitive advantage in conducting their business. The Employee acknowledges
and agrees that by virtue of the Employee's employment with the Company, the
Employee will have unique and extensive exposure to and personal contact with
the Company's customers and licensors, and that she will be able to establish
a
unique relationship with those Persons that will enable her, both during and
after employment, to unfairly compete with the Company and its Affiliates.
Furthermore, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of the
business, trade secrets and Confidential Information (as defined in
section 8 below) of the Company and its Affiliates and to prevent great
damage or loss to the Company and its Affiliates as a result of action taken
by
the Employee. The Employee acknowledges and agrees that the noncompete
restrictions and nondisclosure of Confidential Information restrictions
contained in this Agreement are reasonable and the consideration provided for
herein is sufficient to fully and adequately compensate the Employee for
agreeing to such restrictions. The Employee acknowledges that she could continue
to actively pursue her career and earn sufficient compensation in the same
or
similar business without breaching any of the restrictions contained in this
Agreement.
(a) Noncompetition.
The
Employee hereby covenants and agrees that during the Employment Period and
for
two years thereafter (the "Noncompete Period"), except if employment is
terminated by the Company or its successor after a Change in Control or this
Agreement is not renewed or extended by the Company or its successor after
the
Expected Completion Date then the Noncompete Period shall be six months, she
shall not, directly or indirectly, either individually or as an employee,
principal, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant, representative or in any other capacity,
participate in, become associated with, provide assistance to, engage in or
have
a financial or other interest in any business, activity or enterprise which
is
competitive with the Company or any of its Affiliates or any successor or assign
of the Company or any of its Affiliates. The ownership of less than a one
percent interest in a corporation whose shares are traded in a recognized stock
exchange or traded in the over-the-counter market, even though that corporation
may be a competitor of the Company, shall not be deemed financial participation
in a competitor. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this section is invalid or unenforceable,
the parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area
of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision 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. The term "indirectly" as used in this section and
section 8 below is intended to include any acts authorized or directed by or
on
behalf of the Employee or any Affiliate of the Employee.
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(b) Nonsolicitation.
The
Employee hereby covenants and agrees that during the Noncompete Period, she
shall not, directly or indirectly, either individually or as an employee, agent,
partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor,
consultant or in any other capacity:
(i) canvass,
solicit or accept from any Person who is a customer or licensor of the Company
or any of its Affiliates (any such Person is hereinafter referred to
individually as a "Customer," and collectively as the "Customers") any business
which in competition with the business of the Company or any of its Affiliates
or the successors or assigns of the Company or any of its Affiliates, including,
without limitation, the canvassing, soliciting or accepting of business from
any
Person which is or was a Customer of the Company or any of its Affiliates within
two years preceding the date of this Agreement, during the Employment
Period or during the Noncompete Period;
(ii) advise,
request, induce or attempt to induce any of the Customers, suppliers, or other
business contacts of the Company or any of its Affiliates who currently have
or
have had business relationships with the Company or any of its Affiliates within
two years preceding the date of this Agreement, during the Employment Period
or
during the Noncompete Period, to withdraw, curtail or cancel any of its business
or relations with the Company or any of its Affiliates; and
(iii) hire
or
induce or attempt to induce any officer of the Company or any of its Affiliates
to terminate his or her relationship or breach any agreement with the Company
or
any of its Affiliates unless such person has previously been terminated by
the
Company; or
8. Confidential
Information.
The
Employee acknowledges and agrees that the customers, business connections,
customer lists, procedures, operations, techniques, and other aspects of and
information about the business of the Company and its Affiliates (the
"Confidential Information") are established at great expense and protected
as
confidential information and provide the Company and its Affiliates with a
substantial competitive advantage in conducting their business. The Employee
further acknowledges and agrees that by virtue of her past employment with
the
Company, and by virtue of her employment with the Company, she has had access
to
and will have access to, and has been entrusted with and will be entrusted
with,
Confidential Information, and that the Company would suffer great loss and
injury if the Employee would disclose this information or use in a manner not
specifically authorized by the Company. Therefore, the Employee agrees that
during the Employment Period and for five years thereafter, she will not,
directly or indirectly, either individually or as an employee, agent, partner,
shareholder, owner trustee, beneficiary, co-venturer distributor, consultant
or
in any other capacity, use or disclose or cause to be used or disclosed any
Confidential Information, unless and to the extent that any such information
7
become
generally known to and available for use by the public other than as a result
of
the Employee's acts or omissions. The Employee shall deliver to the Company
at
the termination of the Employment Period, or at any other time the Company
may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the
business of the Company or any of its Affiliates which she may then possess
or
have under her control. The Employee acknowledges and agrees that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its Affiliate' actual or
anticipated business research and development or existing or future products
or
services and which are conceived, developed or made by the Employee while
employed by the Company and its Affiliates ("Work Product") belong to the
Company or such Affiliate, as the case may be.
9. Common
Law of Torts and Trade Secrets.
The
parties agree that nothing in this Agreement shall be construed to limit or
negate the common law of torts or trade secrets where it provides the Company
and its Affiliates with broader protection than that provided
herein.
10. Definitions.
"Affiliate"
means,
with respect to any Person, any other Person controlling, controlled by or
under
common control with such Person and any partner of a Person which is a
partnership.
“Change
of Control”
means:
(a) the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of
either (i) the then outstanding shares of common stock of The Company
(the
"Outstanding Common Stock") or (ii) the combined voting power of the
then
outstanding voting securities of the Company entitled to vote generally in
the
election of directors (the "Outstanding Voting Securities"); provided, however,
that the following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company, (ii) any acquisition
by
the Company, (iii) any acquisition by any employee benefit plan (or
related
trust) sponsored or maintained by the Company or any corporation controlled
by
the Company or (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this definition; or
8
(b) individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the "Incumbent Board")
cease
for any reason to constitute at least a majority of the Board of Directors
of
the Company; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or
consents by or on behalf of a Person other than the Board of Directors of the
Company; or
(c) approval
by the stockholders of the Company of a reorganization, merger or consolidation
(a "Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result
of
such transaction owns the Company through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such
Business Combination of the Outstanding Common Stock and Outstanding Voting
Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly or indirectly,
30%
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of
the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the
action of the Board of Directors of the Company, providing for such Business
Combination; or
(d) approval
by the stockholders of the Company of (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of
all or
substantially all of the assets of the Company, other than to a corporation,
with respect to which following such sale or other disposition, [a] more
than 60% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
9
voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such sale or other disposition in substantially
the same proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Common Stock and Outstanding Voting Securities,
as the case may be, [b] less than 30% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled
to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by any Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation), except to the extent that such
Person owned 30% or more of the Outstanding Common Stock or Outstanding Voting
Securities prior to the sale or disposition, and [c] at least a majority
of
the members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the
action of the Board of Directors of the Company, providing for such sale or
other disposition of assets of the Company or were elected, appointed or
nominated by the Board of Directors of the Company.
"Person"
means
any individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, unincorporated
organization and any governmental entity or any department, agency or political
subdivision thereof.
“Senior
Management”
at any
time means the senior executive officers of the Company which will include,
without limitation, the Chief Executive Officer, President, Chief Operating
Officer, Chief Financial Officer and such other officers of the Company as
the
Board of Directors shall determine from time to time.
"Subsidiary"
means,
with respect to any Person, any corporation, partnership, association or other
business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence
of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business entity,
a
majority of the partnership or other similar ownership interest thereof is
at
the time owned or controlled, directly or indirectly, by any Person or one
or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in
a
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of partnership, association or other business
entity gains or losses or shall be or control any managing director or general
partner of such partnership, association or other business entity.
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11. Specific
Performance.
The
Employee acknowledges and agrees that irreparable injury to the Company may
result in the event the Employee breaches any covenant or agreement contained
in
sections 7 and 8 and that the remedy at law for the breach of any such
covenant will be inadequate. Therefore, if the Employee engages in any act
in
violation of the provisions of sections 7 and 8, the Employee agrees
that
the Company shall be entitled, in addition to such other remedies and damages
as
may be available to it by law or under this Agreement, to injunctive relief
to
enforce the provisions of sections 7 and 8.
12. Waiver.
The
failure of either party to insist in any one or more instances, upon performance
of the terms or conditions of this Agreement shall not be construed as a waiver
or a relinquishment of any right granted hereunder or of the future performance
of any such term, covenant or condition.
13. Notices.
Any
notice to be given hereunder shall be deemed sufficient if addressed in writing
and delivered by registered or certified mail or delivered personally, in the
case of the Company, to its principal business office, and in the case of the
Employee, to her address appearing on the records of the Company, or to such
other address as she may designate in writing to the Company.
14. Severability.
In the
event that any provision shall be held to be invalid or unenforceable for any
reason whatsoever, it is agreed such invalidity or unenforceability shall not
affect any other provision of this Agreement and the remaining covenants,
restrictions and provisions hereof shall remain in full force and effect and
any
court of competent jurisdiction may so modify the objectionable provision as
to
make it valid, reasonable and enforceable. Furthermore, the parties specifically
acknowledge the above covenant not to compete and covenant not to disclose
confidential information are separate and independent agreements.
15. Complete
Agreement.
Except
as otherwise expressly set forth herein, this document embodies the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes and preempts 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. Without limiting the generality
of the foregoing, this Agreement supersedes any agreement between the Company
or
RC2 Ltd. and the Employee (together with all amendments thereto, the “Prior
Agreement”). The Prior Agreement is hereby terminated and shall cease to be of
any further force or effect.
16. Amendment.
This
Agreement may only be amended by an agreement in writing signed by each of
the
parties hereto.
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17. Governing
Law.
This
Agreement shall be governed by and construed exclusively in accordance with
the
laws of the State of Illinois, regardless of choice of law
requirements.
18. Benefit.
This
Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against the Company, its successors and assigns and the
Employee, her heirs, beneficiaries and legal representatives. It is agreed
that
the rights and obligations of the Employee may not be delegated or
assigned.
[Remainder
of page intentionally left blank. Signature page to follow.]
12
IN
WITNESS WHEREOF, the parties have executed or caused this Employment Agreement
to be executed as of the date first above written.
RC2
CORPORATION - COMPENSATION COMMITTEE
/s/
Xxxx X.
Xxxxxxx
Xxxx
X.
Xxxxxxx, Director and
Compensation
Committee Chairman
/s/
Xxxx X.
Xxxxxxx
Xxxx
X.
Xxxxxxx, Director and
Compensation
Committee Member
/s/
Xxxxxx X.
Xxxxxx
Xxxxxx
X.
Xxxxxx, Director and
Compensation
Committee Member
/s/
Xxxxxx
Xx
Xxxxxx
Xx
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SCHEDULE
5(c)
INCENTIVE
STOCK OPTIONS
If
Employee is employed by the Company on February 1 of any year (beginning with
February 1, 2005) during the Employment Period, she shall receive options
to acquire not less than 20,000 shares as determined by the Board of Directors
of the Company. The grant of the options shall be made on the earlier of (1)
the
quarterly meeting of the Board of Directors held in February of the applicable
year or (2) February 28 of the applicable year. Additionally, as of
the
date of each grant above, Employee shall also be granted options to purchase
1,000 additional shares for every full percentage point that the three-year
compounded annual EPS growth rate as of December 31 of the prior year exceeds
25%. The total number of options granted in any fiscal year shall not exceed
100,000. The options to be granted pursuant to this Employment Agreement shall
be granted using a Non-Statutory Stock Option Grant Agreement substantially
in
the form of Exhibit A to the Employment Agreement.
EXHIBIT
A
NON-STATUTORY
STOCK OPTION GRANT AGREEMENT
UNDER
THE
RC2 CORPORATION
2005
STOCK INCENTIVE PLAN
THIS
AGREEMENT, dated as _____________ (the date of grant), is between
_______________ ("Employee") and RC2 CORPORATION, a Delaware corporation (the
"Company").
RECITALS
A. The
Company adopted the RC2 Corporation 2005 Stock Incentive Plan (the "Plan"),
which was approved by its Board of Directors (the "Board") and
stockholders.
B. The
Board
has designated Employee as a participant in the Plan.
C. Pursuant
to the Plan, Employee and the Company desire to enter into this Agreement
setting forth the terms and conditions of the options granted to Employee under
the Plan.
AGREEMENTS
The
Employee and the Company agree as follows:
1. Grant
of Stock Option.
The
Company grants to Employee the right and option (hereinafter referred to as
the
"Option") to purchase all or any part of up to ________ shares of the
Company's Common Stock (the "Option Shares") on the terms and conditions set
forth below and in the Plan.
2. Option
Price.
The
purchase price of the Option Shares shall be $_____ per share.
3. Period
of Exercise.
Except
as provided under the Plan, unless the Option is terminated, Employee may
exercise this Option for up to, but not in excess of, the percent of shares
of
Common Stock subject to the Option during the periods specified
below:
|
Percentage
of Shares
|
||
|
of
Common Stock
|
On
or After
|
|
|
20%
|
February __,
2006
|
|
|
40%
|
February __,
2007
|
|
|
60%
|
February __,
2008
|
|
|
80%
|
February __,
2009
|
|
|
100%
|
February __,
2010
|
Employee's
right to
exercise the Option expires ten years from the date of grant (the "Option
Period").
4. Definitions.
Unless
provided to the contrary in this Agreement, the definitions of the Plan and
any
Amendments to the Plan shall apply to this Agreement.
5. Option
Designation.
The
option granted is a Non-Statutory Stock Option in accordance with
Article VII of the Plan.
6. Change
in Capital Structure.
The
Option rights and exercise price of such Option rights will be adjusted in
the
event of a stock dividend, stock split, reverse stock split, recapitalization,
reorganization, merger, consolidation, acquisition or other change in the
capital structure of the Company as determined by the Board of Directors in
accordance with the Plan.
In
the event of a
Change in Control of the Company, as defined in the Plan, the Option will remain
exercisable (subject to the expiration date of the Option) as provided in the
Plan.
7. Nontransferability
of Option.
Options
shall not be transferable other than by will or the laws of descent and
distribution and shall be exercisable, during the Employee's lifetime, only
by
him.
8. Delivery
by the Company.
As soon
as practicable after receipt of all items referred to in Article VII
of the
Plan and any payment required by Article VII of the Plan, the Company
shall
deliver to the Employee certificate(s) issued in Employee's name for the number
of Option Shares purchased by exercise of the Option. If delivery is by mail,
delivery of Option Shares shall be deemed effected when the stock transfer
agent
of the Company shall have deposited the certificates in the United States mail,
addressed to the Employee.
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9. Addresses.
All
notices or statements required to be given to either party hereto shall be
in
writing and shall be personally delivered or sent, in the case of the Company,
to its principal business office and, in the case of Employee, to her address
as
shown on the records of the Company or to such address as Employee designates
in
writing. Notice of any change of address shall be sent to the other party by
registered or certified mail. It shall be conclusively presumed that any notice
or statement properly addressed and mailed bearing the required postage stamps
has been delivered to the party to which it is addressed.
10. Restrictions
Imposed by Law.
Notwithstanding any other provision of this Agreement, Employee agrees that
he
shall not exercise the Option and that the Company will not be obligated to
deliver any shares of Common Stock or make any cash payment if counsel to the
Company determines that such exercise, delivery or payment would violate any
law
or regulation of any governmental authority or any agreement between the Company
and any national securities exchange upon which the Common Stock is listed.
The
Company shall in no event be obliged to take any affirmative action in order
to
cause the exercise of the Option or the resulting delivery of shares of Common
Stock or other payment to comply with any law or regulation of any governmental
authority.
11. Employment.
Nothing
in this Agreement or the Plan shall limit the right of the Company or any parent
or Subsidiary to terminate the Employee's employment or otherwise impose any
obligation to employ the Employee.
12. Governing
Law.
This
Agreement shall be construed, administered and governed in all respects under
and by the laws of the State of Delaware.
13. Provisions
Consistent with Plan.
This
Agreement is intended to be construed to be consistent with, and is subject
to,
all applicable provisions of the Plan, which is incorporated herein by
reference. In the event of a conflict between the provisions of this Agreement
and the Plan, the provisions of the Plan and shall prevail.
EMPLOYEE:
________________________________
RC2
CORPORATION
BY______________________________
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