EMPLOYMENT AGREEMENT
Exhibit 10.7
THIS
EMPLOYMENT AGREEMENT is made as of
November 5,
2008, by and between RC2 CORPORATION,
a Delaware corporation (the "Company"), and XXXX X. XXXXXX (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 Director of Risk Management of the Company and will, under the direction
of
the Company's Chief Executive Officer and Chief Financial Officer, faithfully
and to the best of her ability, perform the duties of 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 Chief Financial Officer 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
November 5,
2008, the Employee shall receive a
base salary of $75,000 per year, payable under the
regular
pay
practices of the Company
(the "Base
Salary").
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5. Fringe
Benefits.
(a) Vacation. The
Employee shall
beentitled 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
lifeinsurance policy in
effect for full-time employees of the Company. Additionally,
during the
Employee’s employment the Company will continue to pay the premiums for the
Employee’s life insurance policy and disability insurance currently in effect at
November 5, 2008, which were previously provided for her under section 5 (g)
of
the Employment Agreement dated April 1, 2008.
(c) Incentive
Bonus Plan. The
Employee shall be
entitled to participate in any incentive bonus plan or other incentive
compensation plan developed generally for the Company, on a basis consistent
with her position and level of compensation with the
Company.
(d) 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.
6. Termination.
(a) Termination
of the Employment Period. The Employment Period
shall
continue until the earlier of: (i) the Employee's death,
(ii) the Employee resigns for any reason or (iii) the Board of
Directors or Chief Executive Officer 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) Termination
of Employment. In the event of termination
of Employee's employment for any reason, the Company shall pay $157,500
(the "Severance Payment") to Employee
within three days of the Termination Date. 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, and
continue
Employee's then
existing life insurance and disability coverage, to the extent limited
below. 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 Severance Payment together with the proceeds
of any life insurance payable to Employee's designated beneficiary.
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The
Company's obligation to provide life
insurance and disability coverage for a three-year period after the Termination
Date as provided in this Section 6(b) shall be limited such that the
Company shall not be obligated to pay greater than $20,000 for such premiums
or
coverage during any fiscal year. In the event that the premiums for
such policies or coverage would exceed this limitation, the Company shall
consult with 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.
(c) Intentionally
not
used.
(d) 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.
(e) Acceleration
of Option Vesting. Upon termination of
employment of Employee for any reason, 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 (subject to the period
of
exercise set forth in Section 6(f)). 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.
(f) Exercise
of
Options Following Termination of Employment. If the Employee's
employment is terminated for any reason, the Employee (or her designated
beneficiary or her estate in the event of the termination of the Employee's
employment due to death) may exercise any stock options vested as of the
Termination Date (after giving effect to any acceleration of vesting pursuant
to
Section 6(e)) at any time prior to the original expiration date of the
stock option or within twelve months after the Termination Date, whichever
period is shorter.
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.
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(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 of 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.
(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:
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(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 or other senior manager 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 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's 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.
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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
(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
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(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 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.
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"Code"
means the Internal Revenue Code of
1986, as amended or corresponding provisions of subsequent superseding federal
tax laws, as amended.
"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.
"Specified
Employee" shall mean a "key
employee" of the Company while any of its stock is publicly traded on an
established securities market or otherwise. A "key employee" for this
purpose means an individual whose compensation hereunder is subject to Code
Section 409A and who meets the requirements of Code
Section 416(i)(1)(A)(i), (ii) or (iii), applied in accordance with the
regulations under Code Section 416, but disregarding Code Section 416(i)(5),
and
Treasury Regulation Section 1.409A-1(i) at any time during the 12 month
period ending on December 31 of each year. If the individual
meets the definition of a "key employee" as of a December 31 of an
applicable year, the individual shall be treated as a key employee for the
entire 12 month period beginning on April 1 of the following
year.
"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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"Treasury
Regulations" shall include
proposed, temporary and final regulations promulgated under the Code in effect
as of the date of this Agreement and the corresponding sections of any
regulations subsequently issued that amend or supersede such
regulations.
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 the Employment Agreement,
dated as of April 1, 2008, between the Company 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.
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16. Amendment. This
Agreement may only be
amended by an agreement in writing signed by each of the parties
hereto.
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.]
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IN
WITNESS WHEREOF, the parties have
executed or caused this Employment Agreement to be executed as of the date
first
above written.
RC2
CORPORATION
BY
/s/
Xxxxxx X.
Xxxxxxxxx
Its
CEO
/s/
Xxxx
X.
Xxxxxx
Xxxx
X. Xxxxxx
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