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EXHIBIT 10.3
EMPLOYMENT AGREEMENT dated January
1, 1997 by and between JAKKS
PACIFIC, INC., a Delaware
corporation (the "Company"), and
XXXXXXX X. XXXXXX (the "Employee").
The parties hereto desire to provide for the Employee's continued
employment by the Company in accordance with the terms and provisions set forth
below:
NOW, THEREFORE, the parties agree as follows:
A. EMPLOYMENT; TERM.
The Company will continue to employ the Employee, and the
Employee will continue to work for the Company, as its Executive Vice President,
Chief Operating Officer and Secretary, for a term commencing on the date hereof
and terminating on December 31, 2001 unless sooner terminated in accordance with
Section 9 hereof. Such period, together with the period of any extension or
renewal of such employment, is referred to herein as the "Employment Period."
B. DUTIES.
During the Employment Period, the Employee shall serve as the
Executive Vice President, Chief Operating Officer and Secretary of the Company
and of its subsidiaries and affiliated companies, and perform such further
duties as shall, from time to time, be reasonably assigned to the Employee by
the Board of Directors of the Company consistent with his position and
abilities.
C. DEVOTION OF TIME.
During the Employment Period, the Employee shall: (i) expend
substantially all of his working time for the Company; (ii) devote his best
efforts, energy and skill to the services of the Company and the promotion of
its interests; and (iii) not take part in activities known by Employee to be
detrimental to the best interests of the Company.
D. COMPENSATION.
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In consideration for the services to be performed by the
Employee during the Employment Period hereunder, the Company shall compensate
the Employee at an annual base salary from the date hereof at the annual rate of
$271,000.00 per annum until December 31, 1997, and thereafter at the annual rate
of $296,000.00 per annum until December 31, 1998, and thereafter at the annual
rate of $321,000.00 per annum until December 31, 1999, and thereafter at the
annual rate of $346,000.00 per annum until December 31, 2000, and thereafter at
the annual rate of $371,000.00 per annum until December 31, 2001, payable in
accordance with the Company's customary payroll practices. The Employee shall
also be entitled to receive an annual bonus in respect of each fiscal year of
the Company equal to four (4%) per cent of the Company's earnings before taxes
for each such year, as determined by the Company's firm of independent certified
public accountants in accordance with generally accepted accounting principles
consistently applied. In the event this Agreement terminates prior to the end of
a fiscal year, the bonus for such year shall be calculated based upon the
Company's earnings before taxes during the period up to the end of the month in
which the Agreement terminates annualized for such year.
E. USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES;
ADDITIONAL BENEFITS.
5.1 Employee shall receive an automobile allowance for the use
of any automobile owned or leased by him in accordance with the Company's then
prevalent practices for executive employees.
5.2 The Company shall pay directly, or reimburse the Employee
for, all other reasonable and necessary expenses and disbursements incurred by
him for and on behalf of the Company in the performance of his duties under this
Agreement. For such purposes, the Employee shall submit to the Company itemized
reports of such expenses in accordance with the Company's policies.
5.3 Employee shall be entitled to paid vacations during the
Employment Period in accordance with the Company's then prevalent practices for
executive employees; provided, however, that Employee shall be entitled to such
paid vacations for not less than four (4) weeks per annum.
5.4 Employee shall be entitled to participate in, and to
receive benefits under, any employee benefit plans of the Company (including,
without limitation, pension, profit sharing, group life insurance and group
medical insurance plans) as may exist from time to time for its executive
employees.
F. EMPLOYEE KNOWLEDGE.
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6.1 Employee hereby agrees to communicate and make known to
the Company all knowledge possessed by him relating to any methods,
developments, inventions and/or improvements, whether patented, patentable or
unpatentable, which relate to the business of the Company; whether acquired by
him before or during the Employment Period; provided, however, that nothing
herein shall be construed as requiring any such communication where the method,
development, invention and/or improvement is lawfully protected from disclosure
as the trade secret of a third party or by any other lawful bar to such
communications existing prior to the commencement of employment hereunder; and
provided, further, that pursuant to Section 2871 of the California Labor Code,
any such disclosures shall be held in confidence by the Company.
6.2 Employee hereby agrees to keep all such records in
connection with the Employee's employment as the Company may from time to time
reasonably direct, and all such records shall be the sole and exclusive property
of the Company.
6.3 It is expressly agreed between the Employee and the
Company that any invention the Employee developed entirely on his own time
without using the Company's equipment, supplies, facilities or trade secret
information belong to the Employee except for those inventions that either: (a)
relate at the time of conception or reduction to practice of the invention to
the Company's business or actual or demonstrably anticipated research or
development of the Company; or (b) result from any work performed by the
Employee for the Company.
G. RESTRICTIVE COVENANT.
7.1 The services of the Employee are unique, extraordinary and
essential to the business of the Company, particularly in view of the Employee's
access to the Company's confidential information. Accordingly, the Employee
agrees that if his employment hereunder shall at any time be terminated by the
Employee prior to December 31, 1997 voluntarily or by the Company for cause (as
defined in Section 8.3), the Employee will not at any time within twelve months
of such termination, without the prior written approval of the Board of
Directors of the Company, directly or indirectly, engage in any business
activity competitive with the business of the Company. Furthermore, the Employee
agrees that, during such twelve month period, he shall not solicit, directly or
indirectly, or affect to the Company's detriment any relationship of the Company
with any customer, supplier or employee of the Company or cause any customer or
supplier to refrain from entrusting additional business to the Company. If the
employment of Employee hereunder is terminated by the Company prior to December
31, 1997 other than for cause, the restraints on the Employee set forth in the
preceding two sentences shall be inapplicable. In the event that any of the
provisions of this Section 7.1 shall be adjudicated to exceed the time,
geographic or other limitations permitted by applicable law in any jurisdiction,
then such provision shall be deemed reformed in any
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such jurisdiction to the maximum time, geographic or other limitations permitted
by applicable law.
7.2 As used in this Section 7, the term "Company" shall mean
and include any and all corporations affiliated with the Company, which either
now exist or which may hereafter be organized.
H. EARLIER TERMINATION.
8.1 Employee's employment hereunder shall automatically be
terminated upon the death of the Employee or Employee's voluntarily leaving the
employ of the Company and, in addition, may be terminated, at the sole
discretion of the Company, as follows:
(a) upon thirty (30) days' prior written notice
by the Company, in the event of the Employee's disability as set forth in
Section 8.2 below; or
(b) upon thirty (30) days' prior written notice
by the Company, in the event that the Company terminates the Employee's
employment hereunder for cause as set forth in Section 8.3 below.
8.2 Employee shall be deemed disabled hereunder, if in the
opinion of the Board of Directors of the Company, as confirmed by competent
medical advice, he shall become physically or mentally unable to perform his
duties for the Company hereunder and such incapacity shall have continued for
any period of six (6) consecutive months.
8.3 For purposes hereof, "cause" shall include, but not be
limited to, the following: (a) Employee's willful malfeasance or gross
negligence; or (b) the material breach of any covenant made by Employee
hereunder, and the Employee's failure to cure such conduct or event constituting
"cause" within 30 days after written notice thereof.
8.4 In the event that this Agreement shall be terminated due
to the Employee's death or disability, then the Company shall pay to the
Employee or his personal representatives, as the case may be, severance pay in a
lump sum amount equal to base annual salary for a period of twelve months as set
forth in Section 4 hereof. If, however, this Agreement shall be terminated for
any other reason whatsoever, then the Company shall not be obligated to made any
severance payments whatsoever to the Employee hereunder, except for the
compensation set forth in Section 4 hereof which shall have accrued but be
unpaid at the effective time of termination.
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I. INJUNCTIVE RELIEF
Employee hereby acknowledges and agrees that, in the event he
shall violate any provisions of Sections 6, 7, and 8 hereof, the Company will be
without an adequate remedy at law and accordingly, will be entitled to enforce
such restrictions by temporary or permanent injunctive or mandatory relief
obtained in any action or proceeding instituted in any court of competent
jurisdiction without the necessity of proving damages and without prejudice to
any other remedies which it may have at law or in equity.
J. NO REQUIREMENT OF RELOCATION.
The Company expressly agrees that the Employee, as a condition
of his employment, need not relocate his residence from the community in which
he presently resides. Any demand or requirement by the Company that the Employee
principally perform his duties at a location or office that requires more than
an additional hour of one-way commutation time than the Employee currently
experiences shall, in the absence of the Employee's consent (which may be
withheld for any reason), constitute a termination without cause by the Company
of the Employee's employment hereunder.
K. SERVICE AS DIRECTOR.
During the Employment Period, the Employee shall, if elected
or appointed, serve as a Director of the Company and/or any subsidiary of the
Company upon such terms as shall be mutually agreed upon by the Employee and the
Company.
L. ASSIGNMENT.
This Agreement, as it relates to the employment of the
Employee, is a personal contract and the rights and interests of the Employee
hereunder may not be sold, transferred, assigned, pledged or hypothecated,
except as otherwise set forth herein. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns, including
without limitation, any corporation or other entity into which the Company is
merged or which acquires all of the outstanding shares of the Company's capital
stock, or all or substantially all of the assets of the Company.
M. RIGHT TO PAYMENTS.
Employee shall not under any circumstances have any option or
right to require payments hereunder otherwise than in accordance with the terms
hereof. To the extent permitted by law, the Employee shall not have any power of
anticipation, alienation
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or assignment of payments contemplated hereunder, and all rights and benefits of
the Employee shall be for the sole personal benefit of the Employee, and no
other person shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against the Employee.
N. NOTICES.
Any notice required or permitted to be given pursuant to this
Agreement shall be deemed given three (3) business days after such notice is
mailed by certified mail, return receipt requested, addressed as follows: (i) if
to Employee, at X.X. Xxx 0000, Xxxxxx, XX 00000; and (ii) if to the Company, at
00000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx X000, Xxxxxx, XX 00000, or at such other
address as any such party shall designate by written notice to the other party.
O. WAIVER.
The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and not in any way affect or render invalid or
unenforceable any other provisions of this Agreement, and this Agreement shall
be carried out as if such invalid or unenforceable provisions were not embodied
therein.
P. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and there are no
representations, warranties or commitments except as set forth herein. This
Agreement supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether written or oral, of the parties hereto
relating to the transactions contemplated by this Agreement; provided, however,
that it is the intention of the parties that this Agreement shall be interpreted
and applied in conjunction with the terms of any option, warrant or other right
now in existence or hereinafter granted to the Employee to acquire shares of
capital stock of the Company. In the event of any conflict, however, the terms
of this Agreement shall govern and prevail. This Agreement may be amended only
in writing executed by the parties hereto affected by such amendment.
17. DIRECTORS' APPROVAL.
This Agreement, even if executed on behalf of the Company, is
subject to approval and ratification of the terms hereof by the Company's Board
of Directors.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
JAKKS PACIFIC, INC.
By: /s/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx, President
Xxxxxx X. Xxxxxx, Employee
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