EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT (the "Agreement"), dated July 17, 2007 and is effective
as
of January 1, 2007, by and between Xxxx X. Xxxxxxx ("Executive") and JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company").
WITNESSETH:
WHEREAS,
Executive and the Company entered into an Employment Agreement, dated as of
January 1, 2003 that expired on December 31, 2006; and
WHEREAS,
Executive and the Company desire to enter into a new Employment Agreement to
provide for Executive's continued employment by the Company on the terms and
subject to the conditions set forth herein.
NOW,
THEREFORE,
in
consideration of the mutual promises, representations and warranties set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to
be legally bound hereby, agree as follows:
1.
OFFICES
AND DUTIES.
(a)
The
Company hereby employs Executive during the Term (as hereinafter defined) to
serve as the Company's Executive Vice President and Chief Financial Officer.
As
such, Executive shall have principal responsibility and authority (subject
to
the provisions of Section 1(c)) to administer all financial and accounting
functions for the Company and its subsidiaries, including without limitation
with respect to:
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(i)
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financial
recordkeeping and reporting;
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(ii)
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interfacing
with the Company's independent
auditors;
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(iii)
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preparation
and interpretation of budgets, projections and other financial
analyses;
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(iv)
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tax
reporting and compliance;
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(v)
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cash
management; and
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(vi)
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reporting
to and advising the Company's Board of Directors and executive management
on financial, accounting, tax and compensation
matters.
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Within
the scope of such functions and duties, Executive shall perform such
administrative and supervisory services on behalf of the Company as the
Company's Board of Directors or a Superior Officer (as hereinafter defined)
may
from time to time reasonably direct. The Company's Board of Directors or a
Superior Officer may appoint or designate Executive to serve in such other
corporate offices of the Company or a Subsidiary (as hereinafter defined) as
they may from time to time deem necessary, proper or advisable; provided that,
without his consent (which shall not be unreasonably withheld), Executive shall
not be required to occupy or serve in any office which (i) is not reasonably
related to his functions and duties as Chief Financial Officer and (ii) involves
other substantial duties or liabilities.
(b)
Executive
shall devote substantially all of his business time and attention to the
business and affairs of the Company.
(c)
Executive
shall at all times be subject to the direction and control of the Company's
Board of Directors and the Superior Officers and observe and comply with such
rules, regulations, policies and practices as the Company's Board of Directors
or the Superior Officers may from time to time establish.
(d)
Executive
hereby accepts such employment and agrees that throughout the Term he shall
faithfully, diligently and to the best of his ability, in furtherance of the
business of the Company, perform the duties assigned to him or incidental to
the
offices assumed by him pursuant to this Section.
2.
TERM.
The
employment of Executive hereunder shall commence as of the date hereof and
continue for a term ending on December 31, 2009, subject to earlier termination
upon the terms and conditions provided elsewhere herein (the "Term"). As used
herein, "Termination Date" means the last day of the Term.
3.
COMPENSATION.
(a)(i)
Base
Salary.
As
compensation for his services hereunder, the Company shall pay to Executive
a
base salary at the rate of $400,000 per annum (the "Base Salary"). The Base
Salary shall be paid to Executive in substantially equal installments no less
often than twice monthly, subject to any required tax withholding.
(a)(ii)
Restricted
Stock Award.
Subject
to the terms of the Company's 2002 Stock Award and Incentive Plan (as in effect
on the date hereof and as subsequently may be amended, from time to time, the
"Plan") and the applicable restricted stock agreement, which shall be
substantially in the form annexed hereto as Exhibit A, upon the execution of
this Agreement, the Company shall grant to Executive 15,000 shares of restricted
common stock, par value $.001 per share (the "Restricted Stock"), of the
Company. 5,000 shares of this award of Restricted Stock shall vest (and
associated restrictions shall lapse) on each of December 31, 2007, 2008 and
2009, all in accordance with the terms of the applicable restricted stock
agreement.
(b)
Bonus.
The
Compensation Committee of the Board of Directors or the Board of Directors
may,
from time to time, award an annual bonus to Executive, in cash or in property,
in an amount up to fifty percent (50%) of the Base Salary, as such Committee
or
the Board of Directors may determine in its sole discretion to be appropriate
based on business criteria established or determined by the Committee, including
economic and business conditions affecting the Company, and Executive's personal
performance. Such annual bonus may be awarded in accordance with the Plan or
as
otherwise determined by such Committee or the Board of Directors.
(c)
Additional
Compensation.
The
Company shall pay to the Executive such additional incentive compensation as
the
Compensation Committee of the Board of Directors or the Board of Directors
may
from time to time determine.
(d)
Nothing
contained herein and no action taken in respect of any bonus or additional
compensation (or otherwise in respect of Sections 3(b) or (c)) shall create
or
be construed to create a trust of any kind. Any bonus or additional compensation
under Sections 3(b) or (c) shall be paid from general funds of the Company,
and
no special or separate fund shall be established, and no segregation of assets
shall be made, to assure payment of any bonus or additional compensation
hereunder.
(e)
In
addition to his Base Salary and other compensation provided herein, Executive
shall be entitled to participate, to the extent he is eligible under the terms
and conditions thereof, in any stock, stock option or other equity participation
plan and any profit-sharing, pension, retirement, insurance, medical service
or
other employee benefit plan generally available to the executive officers of
the
Company, and to receive any other benefits or perquisites generally available
to
the executive officers of the Company pursuant to any employment policy or
practice, which may be in effect from time to time during the Term. Except
as
otherwise expressly provided herein, the Company shall be under no obligation
hereunder to institute or to continue any such employee benefit plan or
employment policy or practice.
(f)
During
the Term, Executive shall not be entitled to additional compensation for serving
as a director or officer of the Company or any Subsidiary (other than Executive
Vice President or Chief Financial Officer of the Company), if such service
is
reasonably related to his duties and functions as the Company's Chief Financial
Officer and does not involve any other substantial duties or
liabilities.
4.
EXPENSE
ALLOWANCE.
(a)
The
Company shall pay directly, or advance funds to Executive or reimburse Executive
for, all expenses reasonably incurred by him in connection with the performance
of his duties hereunder and the business of the Company, upon the submission
to
the Company of itemized expense reports, receipts or vouchers in accordance
with
its then customary policies and practices.
(b)
The
Company shall provide to Executive a suitable automobile or other vehicle for
his exclusive use and shall pay the entire cost thereof (including, without
limitation, purchase price or lease payments, insurance premiums, repair
charges, and maintenance and operating expenses), other than fuel charges,
or
shall pay to executive a monthly automobile allowance in the amount of
$1,000.
5.
LOCATION.
Except
for routine travel and temporary accommodation reasonably required to perform
his services hereunder, Executive shall not be required to perform his services
hereunder at any location other than the Company's principal executive
office.
6.
OFFICE.
The
Company shall provide Executive with suitable office space, furnishings and
equipment, secretarial and clerical services and such other facilities and
office support as are reasonably necessary for the performance of his services
hereunder.
7.
VACATION.
Executive
shall be entitled to four weeks paid vacation during each year of his employment
hereunder, such vacation to be taken at such time or times as shall be agreed
upon by Executive and the Company. Vacation time shall be cumulative from year
to year, except that Executive shall not be entitled to take more than six
weeks
vacation during any consecutive 12-month period during the
Term.
8.
KEY-MAN
INSURANCE.
The
Company shall have the right from time to time to purchase, increase, modify
or
terminate insurance policies on the life of Executive for the benefit of the
Company in such amounts as the Company may determine in its sole discretion.
In
connection therewith, Executive shall, at such time or times and at such place
or places as the Company may reasonably direct, submit himself to such physical
examinations and execute and deliver such documents as the Company may deem
necessary or appropriate.
9.
CONFIDENTIAL
INFORMATION.
Executive
shall, during the Term and for a period of five years thereafter, hold all
Confidential Information (as hereinafter defined) in a fiduciary capacity for
the benefit of the Company, and he shall not, at any time hereafter, without
the
prior written consent of the Company, use or disclose to any Person, other
than
the Company or its designees, any such Confidential Information,
except:
(a)
to
the
extent reasonably required for Executive to perform his functions and duties
hereunder;
(b)
to
the
extent disclosure is required by an order, subpoena, demand or other legal
process; provided that Executive promptly gives notice thereof to the Company
so
that the Company may oppose such disclosure or seek a protective order or other
confidential treatment of such Confidential Information;
(c)
to
the
extent any Confidential Information becomes generally available in the public
domain (other than through the disclosure of such Confidential Information
by
Executive in violation of the provisions of this Section or any other
confidentiality obligation of Executive in favor of the Company or a
Subsidiary); and
(d)
that
any
Confidential Information that was known to Executive prior to his initial
employment by the Company may be used by or disclosed by Executive after the
Termination Date.
On
the
Termination Date or upon request by the Company at any time prior thereto,
Executive shall deliver to the Company any manuals, records, files, lists and
other documentation (regardless of form) embodying or containing Confidential
Information, without retaining any copy thereof, except to the extent such
Confidential Information may be retained for use or disclosure by Executive
pursuant to clauses (a) through (d) of the preceding sentence.
10.
INTELLECTUAL
PROPERTY.
Subject
to Sections 2870 and 2871 of the California Labor Code:
(a) Any
Invention (as hereinafter defined) conceived, developed, created or made by
Executive, alone or with others, during the Term and applicable to the business
of the Company, whether or not patentable or registrable, shall become the
sole
and exclusive property of the Company.
(b) Executive
shall disclose the same promptly and completely to the Company and shall, during
the Term or thereafter, (i) execute all documents requested by the Company
for
vesting in the Company the entire right, title and interest in and to the same,
(ii) execute all documents requested by the Company for filing applications
for
and procuring such patents, trademarks, service marks or copyrights as the
Company, in its sole discretion, may desire to prosecute, and (iii) give the
Company all assistance it may reasonably require, including the giving of
testimony in any Proceeding (as hereinafter defined), in order to obtain,
maintain and protect the Company's right therein and thereto; provided that
the
Company shall bear the entire cost and expense of such assistance, including
without limitation paying Executive reasonable compensation for any such
assistance after the Termination Date.
11.
NON-SOLICITATION. During
the Term, and unless his employment terminates pursuant to Section 14(a), for
a
further period of two years thereafter, Executive shall not, directly or
indirectly, for himself or on behalf of any other Person, attempt in any manner
to persuade any supplier, customer or vendor of the Company or Subsidiary to
cease doing business or to reduce the amount of business with the Company or
such Subsidiary which any such supplier, customer or vendor has customarily
done
or contemplates doing with the Company or such Subsidiary.
Executive
acknowledges that the provisions of this Section, and the period of time and
scope and type of restrictions on his activities set forth herein, are
reasonable and necessary for the protection of the Company.
12.
TERMINATION
UPON DEATH OR DISABILITY.
Executive's
employment hereunder shall terminate immediately upon his death. In the event
that Executive is unable to perform his duties hereunder by reason of any
disability or incapacity (due to any physical or mental injury, illness or
defect) for an aggregate of 90 days in any consecutive 12-month period, the
Company shall have the right to terminate Executive's employment hereunder
within 60 days after the 90th day of his disability or incapacity by giving
Executive notice to such effect at least 30 days prior to the date of
termination set forth in such notice, and on such date such employment shall
terminate.
13.
TERMINATION
BY THE COMPANY.
(a)
In
addition to any other rights or remedies provided by law or in this Agreement,
the Company may terminate Executive's employment under this Agreement for the
reasons set forth in this Section 13(a), any of which reasons shall constitute
“cause” and any of which events shall be referred to as a “For Cause Event”,
if:
(i)
Executive
is convicted of, or enters a plea of guilty or nolo contendere (which plea
is
not withdrawn prior to its approval by the court) to, a felony offense and
either Executive fails to perfect an appeal of such conviction prior to the
expiration of the maximum period of time within which, under applicable law
or
rules of court, such appeal may be perfected or, if Executive does perfect
such
an appeal, his conviction of a felony offense is sustained on appeal;
or
(ii)
the
Company's Board of Directors determines, after due inquiry, that Executive
has:
(A)
committed fraud against, or embezzled or misappropriated funds or other assets
of, the Company or any Subsidiary;
(B)
violated, or caused the Company or any Subsidiary, or any officer, employee
or
other agent thereof, or any other Person to violate, any material law,
regulation or ordinance, which violation has or would reasonably be expected
to
have a significant detrimental effect on the Company, or any material rule,
regulation, policy or practice established by the Board of Directors of the
Company or any Subsidiary;
(C)
on a
persistent or recurring basis, (1) failed properly to perform his duties
hereunder or (2) acted in a manner detrimental to, or adverse to the interests
of, the Company; or
(D)
violated, or failed to perform or satisfy any material covenant, condition
or
obligation required to be performed or satisfied by Executive
hereunder.
(b)
The
Company may effect such termination for cause by giving Executive notice to
such
effect, setting forth therein the Termination Date (which may be the date such
notice is given, in case such termination is based on paragraph (i) or clause
A
of paragraph (ii) of Section 13(a), but which shall otherwise be at least 20
days after the date such notice is given) and, in reasonable detail, the factual
basis for such termination, and, in such event, such termination shall be
effective on the Termination Date set forth in such notice, unless Executive
avoids such termination by curing to the reasonable satisfaction of the
Company's Board of Directors the factual basis for termination set forth therein
or otherwise providing the Board of Directors with information reasonably
sufficient for the Board to determine that the termination should not be
effected.
(c)
In
making
any determination pursuant to this Section 13(a) as to the occurrence of any
For
Cause Event described in clauses (A) to (D) of paragraph (ii) thereof, each
of
the following shall constitute convincing evidence of such
occurrence:
(i)
if
Executive is made a party to, or target of, any Proceeding arising under or
relating to any For Cause Event, Executive's failure to defend against such
Proceeding or to answer any complaint filed against him therein, or to deny
any
claim, charge, averment, or allegation thereof asserting or based upon the
occurrence of a For Cause Event;
(ii)
any
judgment, award, order, decree or other adjudication or ruling in any such
Proceeding finding or based upon the occurrence of a For Cause Event (that
is
not reversed or vacated on appeal); or
(iii)
any
settlement or compromise of, or consent decree issued in, any such Proceeding
in
which Executive expressly admits the occurrence of a For Cause
Event;
provided
that none of the foregoing shall be dispositive or create an irrebuttable
presumption of the occurrence of such For Cause Event; and provided further
that
the Company's Board of Directors may rely on any other factor or event as
convincing evidence of the occurrence of a For Cause Event.
(d)
Nothing
contained herein shall prevent the Company’s Board of Directors from making its
determination that a For Cause Event has occurred subsequent to the termination
of the Executive’s employment hereunder.
(e)
In
addition to any other termination rights provided in this Agreement, the Company
may terminate Executive’s employment under this Agreement without cause and for
no reason or any reason upon thirty (30) days prior written notice given at
any
time after the six month anniversary of the date of this Agreement, in which
event the Executive shall be entitled to receive the amounts provided for under
Sections 15(a) and 15(c) below.
14.
TERMINATION
BY EXECUTIVE.
In
addition to any other rights or remedies provided by law or in this Agreement,
Executive may terminate his employment hereunder if:
(a)
the
Company violates, or fails to perform or satisfy any material covenant,
condition or obligation required to be performed or satisfied by it hereunder
or, (ii) as a result of any action or failure to act by the Company, there
is a
material change in the nature or scope of the duties, obligations, rights or
powers of Executive's employment, by giving the Company notice to such effect,
setting forth in reasonable detail the factual basis for such termination,
at
least 10 days prior to the date of termination set forth therein; provided,
however, that the Company may avoid such termination if it, prior to the date
of
termination set forth in such notice, (i) cures or explains to the reasonable
satisfaction of Executive the factual basis for termination set forth therein
or
(ii) confirms in writing that Executive has no further obligation to perform
any
of the duties assigned to him by the Company or any other services for the
Company, and continues to pay and/or provide Executive with the compensation
and
benefits set forth in Sections 3 and 4 hereof in accordance with the provisions
of this Agreement; and
(b)
a
Change
of Control (as hereinafter defined) occurs during the Term, by giving the
Company notice to such effect, setting forth the event or circumstance
constituting such Change of Control, such termination to be effective upon
the
date of termination set forth therein (not less than 90 days after the date
of
such notice).
The
termination by Executive of his employment pursuant to this Section 14 shall
not
constitute or be deemed to constitute for any purpose a "voluntary resignation"
of his employment.
15.
COMPENSATION
UPON TERMINATION.
Notwithstanding
anything contained
herein
to
the contrary:
(a)
Upon
termination of Executive's employment hereunder, he shall be entitled to
receive, in any case, any compensation or other amounts due to him pursuant
to
Section 3 (except as otherwise provided in Section 15(b) below) or Section
4 in
respect of his employment prior to the Termination Date.
(b)
If
Executive’s employment is terminated as a result of the occurrence of a “For
Cause Event" pursuant to Section 13, from and after the Termination Date, the
Company shall have no further obligation to Executive hereunder, including
without limitation any obligation pursuant to Section 17, except for the payment
to Executive of any amount required to be made pursuant to Section 15(a) above;
provided, however, that payment of any bonus compensation under Section 3(b)
shall only be made to the extent it has been earned or awarded with respect
to
the last full fiscal year immediately preceding the Termination Date, and no
bonus compensation shall be paid with respect to the fiscal year in which the
Termination Date occurs.
(c)
If
Executive’s employment is terminated by (i) Executive pursuant to Section 14,
and, if at the time Executive gives the Company the notice of termination
referred to therein, the Company has not given to Executive a notice of
termination upon his disability pursuant to Section 12 or "for cause" pursuant
to Section 13; or (ii) the Company other than as a result of the occurrence
of a
"For Cause Event" pursuant to Section 13, he shall be entitled to receive an
amount equal to the total amount of his annual Base Salary in effect as of
the
Termination Date.
(d)
If
Executive's employment hereunder terminates as a result of his death or
disability pursuant to Section 12, he or his guardian, custodian or other legal
representative or successor shall be entitled to continue to receive the Base
Salary payable pursuant to Section 3(a)(i) in the amounts and at the times
provided therein for a period of six months following the Termination
Date.
(e)
Except
as
otherwise provided in Section 15(d), any amount payable to Executive upon
termination of his employment hereunder shall be paid promptly, and in any
event
within 30 days, after the Termination Date.
16.
CHANGE
OF CONTROL.
(a)
For
the
purposes of this Section 16:
(i)
The
"Act"
is the Securities Exchange Act of 1934, as amended.
(ii)
A
"person" includes a "group" within the meaning of Section 13(d)(3) of the
Act.
(iii)
"Control"
is used herein as defined in Rule 12b-2 under the Act.
(iv)
"Beneficially
owns" and "acquisition" are used herein as defined in Rules 13d-3 and 13d-5,
respectively, under the Act.
(v)
"Non-Affiliated
Person" means any person, other than Executive, an employee stock ownership
trust of the Company (or any trustee thereof for the benefit of such trust),
or
any person controlled by Executive, the Company or such a trust.
(vi)
"Voting
Securities" includes Common Stock and any other securities of the Company that
ordinarily entitle the holders thereof to vote, together with the holders of
Common Stock or as a separate class, with respect to matters submitted to a
vote
of the holders of Common Stock, but securities of the Company as to which the
consent of the holders thereof is required by applicable law or the terms of
such securities only with respect to certain specified transactions or other
matters, or the holders of which are entitled to vote only upon the occurrence
of certain specified events (such as default in the payment of a mandatory
dividend on preferred stock or a scheduled installment of principal or interest
of any debt security), shall not be Voting Securities.
(vii)
"Right"
means any option, warrant or other right to acquire any Voting Security (other
than such a right of conversion or exchange included in a Voting
Security).
(viii)
The
"Code" is the Internal Revenue Code of 1986, as amended.
(ix)
"Base
amount," "present value" and "parachute payment" are used herein as defined
in
Section 280G of the Code.
(b)
A
"Change
of Control" occurs when:
(i)
a
Non-Affiliated Person acquires control of the Company;
(ii)
upon
an
acquisition of Voting Securities or Rights by a Non-Affiliated Person or any
change in the number or voting power of outstanding Voting Securities, such
Non-Affiliated Person beneficially owns Voting Securities or Rights entitling
such person to cast a number of votes (determined in accordance with Section
16(g)) equal to or greater than 25% of the sum of (A) the number of votes that
may be cast by all other holders of outstanding Voting Securities and (B) the
number of votes that may be cast by such Non-Affiliated Person (determined
in
accordance with Section 16(g)); or
(iii)
upon
any
change in the membership of the Company's Board of Directors, a majority of
the
directors are persons who are not nominated or appointed by the Company's Board
of Directors as constituted prior to such change.
(c)
It
is
intended that the present value of any payments or benefits to Executive,
whether hereunder or otherwise, that are includable in the computation of
parachute payments shall not exceed 2.99 times the base amount. Accordingly,
if
Executive receives any payment or benefit from the Company which, when added
to
any parachute payments he receives as a result of the Change in Control, would
subject any of the payments or benefits to Executive to the excise tax imposed
by Section 4999 of the Code, such parachute payments shall be reduced by the
least amount necessary to avoid such tax. The Company shall have no obligation
hereunder to make any payment or provide any benefit to Executive after the
payment of such parachute payments which would subject any of such payments
or
benefits to the excise tax imposed by Section 4999 of the Code.
(d)
Any
other
provision hereof notwithstanding, Executive may, prior to his receipt of any
parachute payments pursuant to Section 15(c)(ii), waive the payment thereof,
or,
after his receipt of such parachute payments thereunder, treat some or all
of
such amount as a loan from the Company which Executive shall repay to the
Company within 180 days after the receipt thereof, together with interest
thereon at the rate provided in Section 7872 of the Code, in either case, by
giving the Company notice to such effect.
(e)
Any
determination of any payment or benefit required to be made pursuant to this
Section 16, shall be made by the Company's regularly-engaged independent
certified public accountants, whose determination shall be conclusive and
binding upon the Company and Executive; provided that such accountants shall
give to Executive, on or before the date on which any such payment or benefit
would be made, a notice setting forth in reasonable detail such determination
and the basis therefor, and stating expressly that Executive is entitled to
rely
thereon.
(f)
The
number of votes that may be cast by holders of Voting Securities or Rights
upon
the issuance or grant thereof shall be deemed to be the largest number of votes
that may be cast by the holders of such securities or the holders of any other
Voting Securities into which such Voting Securities or Rights are convertible
or
for which they are exchangeable or exercisable, determined as though such Voting
Securities or Rights were immediately convertible, exchangeable or exercisable
and without regard to any anti-dilution or other adjustments provided for
therein.
17.
OTHER
TERMINATION PROVISIONS.
(a)
Upon
request by Executive, on the Termination Date or as soon as practicable
thereafter, the Company shall assign to Executive, and Executive shall assume,
the purchase agreement or lease relating to any automobile or other vehicle
that
the Company provides for his use on the Termination Date pursuant to Section
4(b) (other than an automobile or other vehicle owned or leased by Executive),
if and to the extent assignable under the terms and conditions thereof, and
thereafter Executive shall be liable for, and the Company shall be relieved
of
all liability for, any amount or other obligation required to be paid or
performed thereunder in respect of any period commencing after the date of
assignment.
(b)
Throughout
the 10-year period following the Termination Date, the Company shall indemnify
Executive, and hold him harmless from, any loss, damages, liability, obligation
or expense that he may suffer or incur in connection with any claim made or
Proceeding commenced during such period relating to his service as a director,
officer, employee or agent of the Company (or any subsidiary thereof) to the
same extent and in same manner as the Company shall be obligated so to indemnify
Executive immediately prior to the Termination Date; provided that, if during
such 10-year period the Company adopts or assumes any indemnification policy
or
practice with respect to its directors, officers, employees or agents that
is
more favorable than that in effect on the Termination Date, Executive shall
be
entitled to such more favorable indemnification.
(c)
Throughout
the 10-year period following the Termination Date, the Company shall maintain
for the benefit of Executive directors' and officers' liability insurance (on
a
"claims made" basis) providing coverage at least as favorable to Executive
(including with respect to limits of liability, exclusions, and deductible
and
retention amounts) as that in effect on the
Termination
Date.
18.
LIMITATION
OF AUTHORITY.
Except
as
expressly provided herein, no provision hereof shall be deemed to authorize
or
empower either party hereto to act on behalf of, obligate or bind the other
party hereto.
19.
NOTICES.
Any
notice or demand required or permitted to be given or made hereunder to or
upon
either party hereto shall be deemed to have been duly given or made for all
purposes if (a) in writing and sent by (i) messenger or an overnight courier
service against receipt, or (ii) certified or registered mail, postage paid,
return receipt requested, or (b) sent by telegram, telecopy, telex or similar
electronic means, provided that a written copy thereof is sent on
the
same
day
by postage-paid first-class mail, to such party at the following
address:
to
the
Company at:
00
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn.:
President
Fax:
(000)
000-0000
with
a
copy to:
00000
Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attn:
President
Fax:
(000) 000-0000
Feder,
Kaszovitz, Isaacson, Weber, Xxxxx, Bass & Rhine LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx X. Xxxx, Esq.
Fax:
(000) 000-0000
to
Executive at:
0000
Xxxxxxx Xxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000
Fax:
(000) 000-0000
or
such
other address as either party hereto may at any time, or from time to time,
direct by notice given to the other party in accordance with this Section.
The
date of giving or making of any such notice or demand shall be, in the case
of
clause (a) (i), the date of the receipt; in the case of clause (a) (ii), five
business days after such notice or demand is sent; and, in the case of clause
(b), the business day next following the date such notice or demand is
sent.
20.
AMENDMENT.
Except
as
otherwise provided herein, no amendment of this Agreement shall be valid or
effective, unless in writing and signed by or on behalf of the parties
hereto.
21.
WAIVER.
No
course
of dealing or omission or delay on the part of either party hereto in asserting
or exercising any right hereunder shall constitute or operate as a waiver of
any
such right. No waiver of any provision hereof shall be effective, unless in
writing and signed by or on behalf of the party to be charged therewith. No
waiver shall be deemed a continuing waiver or waiver in respect of any other
or
subsequent breach or default, unless expressly so stated in
writing.
22.
GOVERNING
LAW.
This
Agreement shall be governed by, and interpreted and enforced in accordance
with,
the laws of the State of New York without regard to principles of choice of
law
or conflict of laws.
23.
JURISDICTION.
Each
of
the parties hereto hereby irrevocably consents and submits to the jurisdiction
of the courts of the State of New York and the United States District Court
for
the Southern District of New York in connection with any Proceeding arising
out
of or relating to this Agreement, waives any objection to venue in the County
of
New York, State of New York, or such District, and agrees that service of any
summons, complaint, notice or other process relating to such Proceeding may
be
effected in the manner provided by clause (a)(ii) of Section 19.
24.
REMEDIES.
In
the
event of any actual or prospective breach or default under this Agreement by
either party hereto, the other party shall be entitled to equitable relief,
including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either
party
from pursuing any other remedy or relief available at law or in equity for
such
actual or prospective breach or default, including the recovery of damages;
provided that, except as provided in Section 15 and except with respect to
a
breach by Executive of his obligations pursuant to Sections 9, 10 and 11, no
party hereto shall be liable under this Agreement for lost profits or
consequential damages.
25.
SEVERABILITY.
The
provisions hereof are severable and in the event that any provision of this
Agreement shall be determined to be invalid or unenforceable in any respect
by a
court of competent jurisdiction, the remaining provisions hereof shall not
be
affected, but shall, subject to the discretion of such court, remain in full
force and effect, and any invalid or unenforceable provision shall be deemed,
without further action on the part of the parties hereto, amended and limited
to
the extent necessary to render the same valid and enforceable.
26.
COUNTERPARTS.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original and which together shall constitute one and the same
agreement.
27.
ASSIGNMENT.
This
Agreement, and each right, interest and obligation hereunder, may not be
assigned by either party hereto without the prior written consent of the other
party hereto, and any purported assignment without such consent shall be void
and without effect, except that this Agreement shall be assigned to, and assumed
by, any Person with or into which the Company merges or consolidates, or which
acquires all or substantially all of its assets, or which otherwise succeeds
to
and continues the Company's business substantially as an entirety. Except as
otherwise expressly provided herein or required by law, Executive shall not
have
any power of anticipation, assignment or alienation of any payments required
to
be made to him hereunder, and no other Person may acquire any right or interest
in any thereof by reason of any purported sale, assignment or other disposition
thereof, whether voluntary or involuntary, any claim in a bankruptcy or other
insolvency Proceeding against Executive, or any other ruling, judgment, order,
writ or decree.
28.
BINDING
EFFECT.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. This Agreement is not
intended, and shall not be deemed, to create or confer any right or interest
for
the benefit of any Person not a party hereto.
29.
TITLES
AND CAPTIONS.
The
titles and captions of the Articles and Sections of this Agreement are for
convenience of reference only and do not in any way define or interpret the
intent of the parties or modify or otherwise affect any of the provisions
hereof.
30.
GRAMMATICAL
CONVENTIONS.
Whenever
the context so requires, each pronoun or verb used herein shall be construed
in
the singular or the plural sense and each capitalized term defined herein and
each pronoun used herein shall be construed in the masculine, feminine or neuter
sense.
31.
REFERENCES.
The
terms
"herein," "hereto," "hereof," "hereby," and "hereunder," and other terms of
similar import, refer to this Agreement as a whole, and not to any Article,
Section or other part hereof.
32.
NO
PRESUMPTIONS.
Each
party hereto acknowledges that it has had an opportunity to consult with counsel
and has participated in the preparation of this Agreement. No party hereto
is
entitled to any presumption with respect to the interpretation of any provision
hereof or the resolution of any alleged ambiguity herein based on any claim
that
the other party hereto drafted or controlled the drafting of this
Agreement.
33.
CERTAIN
DEFINITIONS.
As
used
herein:
(a)
"Confidential
Information" means all confidential or proprietary information of the Company
or
a Subsidiary, including without limitation information relating to Inventions
(including Confidential Information required to be disclosed to the Company
pursuant to Section 10), Trade Rights, plant and equipment, products, customers,
suppliers, marketing and sales, personnel, and financing and tax
matters.
(b)
"Invention"
means any invention, design, process, system, improvement, development or
discovery or any technical specifications, know-how or information or other
intellectual property relating thereto.
(c)
"Person"
includes without limitation a natural person, corporation, joint stock company,
limited liability company, partnership, joint venture, association, trust,
government or governmental authority, agency or instrumentality, or any group
of
the foregoing acting in concert.
(d)
A
"Proceeding" is any suit, action, arbitration, audit, investigation or other
proceeding before or by any court, magistrate, arbitration panel or other
tribunal, or any governmental agency, authority or instrumentality of competent
jurisdiction.
(e)
"Subsidiary"
means any Person in which the Company, directly or indirectly, owns any equity
interest (including without limitation as a general partner of a partnership
or
a member of a limited liability company).
(j)
"Superior
Officer" means any of the Company's Chairman, Chief Executive Officer, President
or Chief Operating Officer.
(k)
"Trade
Right" means any claim of copyright, trademark, service xxxx, trade name, brand
name, trade dress, logo, symbol, design or other trade right.
34.
ENTIRE
AGREEMENT.
This
Agreement embodies the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes any prior agreement, commitment
or
arrangement relating hereto, including, without limitation, the Employment
Agreement, which shall terminate, notwithstanding any contrary provision
thereof, immediately upon the commencement of the Term.
IN
WITNESS WHEREOF,
the
undersigned have duly executed this Agreement as of the day and year first
above
written.
|
JAKKS
PACIFIC, INC.
|
|
EXECUTIVE:
|
||
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
/s/
Xxxx X. Xxxxxxx
|
||
|
|
Xxxxxxx
X. Xxxxxx, President
|
Xxxx
X. Xxxxxxx
|
||
Exhibit
A
Restricted
Stock Award Agreement
Under
the
JAKKS
Pacific, Inc.
2002
Stock Award and Incentive Plan
This
RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is entered into effective as
of July 17, 2007 by and between Xxxx Xxxxxxx (the "Employee") and JAKKS Pacific,
Inc., a Delaware corporation (the “Company”).
WITNESSETH:
WHEREAS,
pursuant to the Company’s 2002 Stock Award and Incentive Plan (the “Plan”),
either the Company’s Board of Directors or the Compensation Committee thereof
has approved the grant to the Employee of Restricted Stock set forth herein,
subject to the terms and conditions of this Agreement.
1.
AWARD OF RESTRICTED STOCK
The
Company hereby grants to the Employee an award of 15,000
shares
of
restricted common stock of the Company, par value $.001 per share (the
“Restricted Stock”), subject to, and in accordance with, the restrictions,
terms, and conditions set forth in this Agreement. The grant date of this award
of Restricted Stock is July 17, 2007 (the “Grant Date”). This Agreement shall be
construed in accordance with, and subject to, the provisions of the Plan (the
provisions of which are incorporated herein by reference) and, except as
otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan.
2.
RESTRICTIONS; FORFEITURE
2.1
Provided
in all instances that the Employee’s employment with the Company has not
terminated prior to the Final Vesting Date (as defined below), that number
of
shares of Restricted Stock set forth below shall vest on each listed
corresponding date (each such date shall be a "Vesting Date"), such that on
December 31, 2010 (the “Final Vesting Date”) all of the shares of Restricted
Stock shall be fully vested:
|
Date
|
Number
of Shares Vested
|
|
December
31, 2007
|
5,000
Shares
|
|
December
31, 2008
|
5,000
Shares
|
|
December
31, 2009
|
5,000
Shares
|
2.2
On
each
Vesting Date, the Employee shall own the vested shares of Restricted Stock
free
and clear of all restrictions imposed by this Agreement (except those
restrictions imposed by Section 3.4 below). The Restricted Stock may not be
sold, assigned, transferred, pledged, or otherwise encumbered prior to the
date,
if ever, that the Restricted Stock becomes vested in accordance with the terms
of this Agreement.
2.3
In
the
event the Employee’s employment with the Company has terminated prior to a
Vesting Date, (i) the grant of any shares of Restricted Stock pursuant to this
Agreement not yet vested shall be null and void, (ii) any entries on the stock
books and ledgers of the Company with respect to such forfeited shares of
Restricted Stock shall be cancelled, and (iii) the forfeited shares of
Restricted Stock shall become authorized but unissued shares of the Company’s
common stock.
3.
STOCK;
DIVIDENDS; VOTING
3.1
The
stock
certificate(s) evidencing the Restricted Stock shall be registered on the
Company's books in the name of the Employee as of the Grant Date. The Company
may issue stock certificates or otherwise evidence the Employee’s interest by
using a book entry account. The Company may, in its sole discretion, maintain
physical possession or custody of such stock certificates until such time as
the
shares of Restricted Stock are vested in accordance with Article 2. The Company
reserves the right to place a legend on the stock certificate(s) restricting
the
transferability of such certificates and referring to the terms and conditions
(including forfeiture) of this Agreement and the Plan.
3.2
During
the period the Restricted Stock is not vested, the Employee shall be entitled
to
receive dividends and/or other distributions declared on such Restricted Stock
and the Employee shall be entitled to vote such Restricted Stock.
3.3
In
the
event of a change in capitalization, the number and class of shares of
Restricted Stock or other securities that the Employee shall be entitled to,
and
shall hold, pursuant to this Agreement shall be appropriately adjusted or
changed to reflect such change in capitalization, provided that any such
additional shares of Restricted Stock or different shares or securities shall
remain subject to the restrictions contained in this Agreement.
3.4
The
Employee represents and warrants that he is acquiring the Restricted Stock
for
investment purposes only, and not with a view to distribution thereof. The
Employee is aware that the Restricted Stock may not be registered under the
federal or any state securities laws and that, in addition to the other
restrictions on the shares of Restricted Stock, the Restricted Stock will not
be
able to be transferred unless an exemption from registration is available or
the
Restricted Stock becomes registered. By making this award of Restricted Stock,
the Company is not undertaking any obligation to register the Restricted Stock
under any federal or state securities laws.
4.
NO RIGHT TO CONTINUED SERVICE AS AN EMPLOYEE
Nothing in this Agreement or the Plan shall be interpreted or construed to
confer upon the Employee any right with respect to continuance as an employee
of
the Company or any subsidiary of the Company.
5.
TAXES AND WITHHOLDING
The
Employee shall be responsible for all federal, state, and local income taxes
payable with respect to this award of Restricted Stock. The Employee shall
have
the right to make such elections under the Code as are available in connection
with this award of Restricted Stock. The Company and the Employee agree to
report the value of the Restricted Stock in a consistent manner for federal
income tax purposes. The Company shall have the right to retain and withhold
from any payment of Restricted Stock the amount of taxes (if any) required
by
any government to be withheld or otherwise deducted and paid with respect to
such payment. At its discretion, the Company may require the Employee to
reimburse the Company for any such taxes required to be withheld and may
withhold any distribution in whole or in part until the Company is so
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due to the Employee an amount equal to such taxes
required to be withheld or withhold and cancel (in whole or in part) a number
of
shares of Restricted Stock having a market value not less than the amount of
such taxes.
6.
EMPLOYEE BOUND BY THE PLAN
The
Employee hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof.
7.
MODIFICATION OF AGREEMENT
This
Agreement may be modified, amended, suspended, or terminated, or any of the
terms or conditions hereof waived, only by a written instrument executed by
the
parties hereto.
8.
SEVERABILITY
Should
any provision of this Agreement be held by a court of competent jurisdiction
to
be unenforceable or invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall continue in full
force
in accordance with their terms.
9.
GOVERNING LAW
The
validity, interpretation, construction, and performance of this Agreement shall
be governed by the laws of the State of Delaware without giving effect to the
conflicts of laws principles thereof.
10.
SUCCESSORS IN INTEREST
This
Agreement shall inure to the benefit of, and be binding upon, the Company and
its successors and assigns, whether by merger, consolidation, reorganization,
sale of assets, or otherwise. This Agreement shall inure to the benefit of
the
Employee’s legal representatives. All obligations imposed upon the Employee and
all rights granted to the Company under this Agreement shall be final, binding,
and conclusive upon the Employee’s heirs, executors, administrators, and
successors.
11.
RESOLUTION OF DISPUTES
Any
dispute or disagreement which may arise under, or as a result of, or in any
way
relate to the interpretation, construction, or application of this Agreement
shall be determined by the Board. Any determination made hereunder shall be
final, binding, and conclusive on the Employee and the Company for all purposes.
12.
RESTRICTIVE
COVENANTS
In
consideration of the Restricted Stock granted to the Employee pursuant to the
Plan and to induce the Company to grant the Employee such Restricted Stock,
the
Employee hereby agrees as follows:
(i)
Definitions.
As
used
in this Section 12, the following terms shall have the meanings ascribed to
them
in this subsection:
“Business”
shall mean the business of designing, developing, marketing, selling and/or
distributing children's toys and games.
“Competitive
Company” shall mean any person, corporation, association, joint venture,
partnership, or other business entity that engages in any part of the Business
in competition with the Company.
“Restrictive
Period” shall mean a period of one year following the Employee’s voluntary
termination of employment with the Company or the termination of the Employee’s
employment with the Company for cause; provided, however, that the Restrictive
Period shall be extended for an additional period equal to any period during
which the Employee is in violation of any of the provisions of Section 12(iv)
below.
“Territory”
shall mean the entire world.
(ii)
Acknowledgements.
The
Employee acknowledges that by reason of the Employee’s position with the Company
the Employee is and will be acquainted with confidential and privileged
information relating to customer files and special customer information, vendor
sources and information, licenses, product lines, intellectual property
(including, but not limited to, patents, trademarks and copyrights), financings,
mergers, acquisitions, selective personnel information and confidential
processes, designs, ideas, plans, devices and materials, and other similar
matters treated by the Company as confidential (the "Confidential Information")
and that use of the Confidential Information might seriously damage the Company
in the operation of the Business.
(iii)
Nondisclosure. The
Employee agrees not to divulge, furnish, or make accessible to any third person,
company or other organization or entity (other than in the regular course of
the
Company's Business) any Confidential Information, without the prior written
consent of the Company; provided, however, that such covenant will not apply
to
any Confidential Information that was known by the Employee prior to the
Company's disclosure thereof to the Employee, that is or becomes through no
fault of the Employee generally available to the public, or that is
independently developed and supplied to the Employee by a source other than
the
Company.
(iv)
Covenant
Not to Compete. The
Employee hereby agrees that during the continuation of the Employee’s employment
with the Company and during the Restrictive Period, the Employee will not,
directly or indirectly, within the Territory:
(1)
own,
manage, operate, control, be employed by, render advisory services to, support
or assist (by loans or otherwise), participate in or be connected in the
management or control of any Competitive Company, unless the Employee’s
affiliation with such Competitive Company is not related in any way, directly
or
indirectly, to the sale or marketing of products or the provision of services
that are of the same kind or a like nature as those products sold or services
provided by the Company at the time the Employee’s employment with the Company
terminates; or
(2)
solicit
or attempt in any manner to persuade or influence any present or future customer
of the Company to divert its business from the Company to any Competitive
Company.
(v)
Enforcement.
The
Employee hereby agrees that in the event of any breach or threatened breach
by
the Employee of any of the foregoing covenants, the Company, in addition to
any
other rights and remedies it may have, will be entitled to an injunction
restraining such breach or threatened breach, and the Employee hereby agrees
to
stipulate that a breach by the Employee would cause irreparable damage to the
Company and that its remedies at law would be inadequate. The Employee further
agrees that the existence of any claim or cause of action on the part of the
Employee against the Company shall not constitute a defense to the enforcement
of these provisions and that the terms of the foregoing covenants, including
without limitation the Restrictive Period and the Territory, are reasonable
in
all respects and necessary for the protection of the Company. If any court
of
competent jurisdiction will finally adjudicate that any of the covenants are
too
broad as to area, activity or time covered, the Employee agrees that such area,
activity or time covered may be reduced to whatever extent such court deems
reasonable and the covenants and the remedy of injunctive relief may be enforced
as to such reduced area, activity or time.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
JAKKS
PACIFIC, INC.
|
XXXX
XXXXXXX
|
|||
|
By:
|
/s/
Xxxxxxx Xxxxxx
|
/s/
Xxxx Xxxxxxx
|
||
|
Xxxxxxx
Xxxxxx, President
|
||||
