EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of January 1, 1998, between Toy Biz,
Inc., a Delaware corporation (the "Company") and Xxxxx X. Xxxxxx (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes
to accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
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1.1 Employment, Duties. The Company hereby employs the Executive for
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the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as Chief Financial Officer or in such other executive position as
may be mutually agreed upon by the Company and the Executive, and to perform
such other duties consistent with such position as may be assigned to the
Executive by the Board of Directors.
1.2 Acceptance. The Executive hereby accepts such employment and
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agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment (subject to the final sentence of Section 1.1), and to use the
Executive's best efforts, skill and ability to promote the Company's interests.
The Executive further agrees to accept election, and to serve during all or any
part of the Term, as an officer or director of the Company and of any subsidiary
or affiliate of the Company, without any compensation therefor other than that
specified in this Agreement, if elected to any such position by the shareholders
or by the Board of Directors of the Company or of any subsidiary or affiliate,
as the case may be.
1.3 Location. The duties to be performed by the Executive hereunder
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shall be performed primarily at the office of the Company in New York City,
subject to reasonable travel requirements on behalf of the Company.
2. Term of Employment
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2.1 The Term. The term of the Executive's employment under this
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Agreement (the "Term") shall commence on January 1, 1998 and shall end on
December 31, 2000 or such later date to which the Term is extended pursuant to
Section 2.2.
2.2 Special Curtailment. The Term shall end earlier than the
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original December 31, 2000 termination date provided in Section 2.1, if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.
3. Compensation; Benefits.
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3.1 Salary. As compensation for all services to be rendered pursuant
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to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable bi-weekly in arrears, at the annual rate of not less than
$215,000.00, less such deductions or amounts to be withheld as required by
applicable law and regulations (the "Base Salary"). The Company shall, on an
annual basis at the end of each calendar year, review the Executive's Base
Salary and determine, in its discretion, whether to increase the Base Salary,
and if so determined, such increased amount shall, from and after the effective
date of the increase, constitute "Base Salary" for purposes of this Agreement.
3.2 Bonus. In addition to the amounts to be paid to the Executive
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pursuant to Section 3.1, the Executive shall be paid an annual bonus in a
minimum amount equal to $30,000. In addition, the Executive will be eligible,
upon the decision of the Board of Directors and in the Board's sole discretion,
to receive a discretionary bonus with respect to each year of the Term in such
amount as the Board in its sole discretion may determine.
3.3 Business Expenses. The Company shall pay or reimburse the
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Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers.
3.4 Vacation. During the Term, the Executive shall be entitled to a
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vacation period or periods taken in accordance with the vacation policy of the
Company during each year of the Term but in no event shall such period be less
than four weeks. Vacation time not used by the end of a year shall be forfeited.
3.5 Fringe Benefits. During the Term, the Executive shall be
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entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its employees generally, together
with executive medical benefits for the Executive, as from time to time in
effect for officers of the Company generally.
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3.6 Additional Benefits. During the Term, the Executive shall be
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entitled to such other benefits as are specified in Appendix I to this
Agreement.
4. Termination.
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4.1 Death; Disability. If the Executive shall die during the Term,
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of if during the Term the Executive shall become physically or mentally
disabled, whether totally or partially, such that the Executive is unable to
perform the Executive's services hereunder for a period aggregating six (6)
months, the Term shall terminate and no further amounts or benefits shall be
payable hereunder.
4.2 Cause. In the event of gross neglect by the Executive of the
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Executive's duties hereunder, conviction of the Executive of any felony,
conviction of the Executive of any lesser crime or offense involving the
property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, breach by the Executive of any
material provision of this Agreement or any other conduct on the part of the
Executive which would make the Executive's continued employment by the Company
materially prejudicial to the best interests of the Company, the Company may at
any time by written notice to the Executive terminate the Term and, upon such
termination, this Agreement shall terminate and the Executive shall be entitled
to receive no further amounts or benefits hereunder, except any as shall have
been earned to the date of such termination.
4.3 Severance. The Company may at any time give notice of
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termination of Executive's services hereunder as of a date (not earlier than ten
(10) days from such notice) to be specified in such notice, and this Agreement
shall terminate on the date so specified; provided that, unless such notice is
given pursuant to Section 4.2, the Executive shall be entitled to receive his
salary and automobile allowance at the rates provided in Sections 3.1 and 3.6
hereof to the date on which termination shall take effect; and his salary and
automobile allowance at the rates provided in Sections 3.1 and 3.6, paid in, at
the Company's option, biweekly or monthly installments, for the nine (9) months
following such date of termination. The nine (9) month period of severance,
unless sooner terminated as provided hereafter, shall be added to the actual
number of days the Executive was employed by the Company during the year of
termination for purposes of determining the achievement of the next vesting
threshold, if any, for the Executive in the Company's stock option plan. All
severance payments, automobile allowance and the addition of the severance
period to the number of days worked (as herein provided for purposes of stock
option vesting) shall cease upon Executive beginning work as an employee or
consultant for any other entity,
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regardless of whether the Executive is terminated for cause or otherwise.
5. Protection of Confidential Information; Non-Competition
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5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company not readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know how",
trade secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, and other business
affairs of the Company, learned by the Executive heretofore or hereafter, and
not to disclose them to anyone outside of the Company, either during or after
the Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written consent;
and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2 During the Term, and for a period of one (1) year after he ceases
to be employed by the Company under this Agreement or otherwise, if such
cessation arises as a result of a circumstance described in Section 4.1 or 4.2,
and also for a period of one (1) year after the Executive resigns, the Executive
shall not, directly or indirectly, enter the employ of, or render any services
to, any person, firm or corporation engaged in any business competitive with the
business of the Company or of any of its subsidiaries or affiliates; the
Executive shall not engage in such business on the Executive's own account; and
the Executive shall not become interested in any such business, directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any other relationship or
capacity; provided, however, that nothing contained in this Section 5.2 shall be
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deemed to prohibit the Executive from acquiring, solely as an investment, up to
five percent (5%) of the outstanding shares of capital stock of any public
corporation. Notwithstanding the foregoing, Executive may engage in, for up to
five (5) hours per month or sixty (60) hours per year, activities for both
affiliates and non-affiliates, provided such activities do not directly compete
with the business of the Company. The foregoing
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prohibitions, following expiration of the Term or early termination thereof,
shall not prohibit the Executive from engaging in a business which encompasses
exclusively distressed or liquidation merchandise.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting a breach of any of
the provisions of Section 5.2, and the Executive hereby agrees to account for
and pay over such Benefits to the Company. Each of the rights and remedies
enumerated above shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states
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within the geographical scope of such covenants as to breaches of such covenants
in such other respective jurisdictions, the above covenants as they relate to
each state being for this purpose severable into diverse and independent
covenants.
5.7 In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Company, all expenses (including reasonable attorneys' fees) of
the Company in such action, suit or other proceeding shall (on demand of the
Company) be paid by the Executive. In the event the Company fails to obtain a
judgment for money damages or an injunction in favor of the Company, all
expenses (including reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive) be paid by the
Company.
6. Inventions and Patents.
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6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the company's facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Company; (b) assign to the Company,
without additional compensation, all patent and other rights to such Inventions
for the United States and foreign countries; (c) sign all papers necessary to
carry out the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive prior
to the date of this Agreement, except for Inventions, if any, disclosed to the
company in writing prior to the date hereof.
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7. Intellectual Property.
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The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. Indemnification.
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The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. Notices.
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All notices, requests, consents and other communica tions required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Toy Biz, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Board of Directors
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If to the Executive, to:
Xxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
10. General.
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10.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in New York.
10.2 The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
10.3 This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and neither party shall
be bound by or liable for any alleged representation, promise or inducement not
so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any
time or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
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11. Subsidiaries and Affiliates.
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11.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the Company or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the Company or other
business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TOY BIZ, INC.
By:
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Executive
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Xxxxx X. Xxxxxx
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APPENDIX I
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Additional Benefits:
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1. The Executive shall be entitled to an automobile allowance of
seven hundred and fifty dollars ($750) per month, payable in accordance with the
Company's regular policy.
2. The Executive shall be entitled to participate in the Company's
stock option plan at a level commensurate with Executive's salary level, title
and responsibilities, as determined by the Compensation Committee of the Board
of Directors of the Company.
Xxxxx X. Xxxxxx
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