EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of October 1, 1997,
between TOYMAX INTERNATIONAL, INC., a Delaware corporation (the "Company"),
and XXXXXXX X. XXXXXXX, XX. (the "Executive").
WITNESSETH
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to accept such employment on the terms and 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, it is hereby agreed as follows:
1. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment upon the terms
and conditions set forth herein.
2. Term. Subject to the provisions of Section 10 hereof, the
period of the Executives employment under this Agreement shall be from
October 1, 1997 through September 30, 1999, as may be extended as hereinafter
provided. (the 'Term"). As of September 30, 1999 and each subsequent
September 30, (September 30, 1999 and each subsequent September 30
hereinafter called a "Renewal Date"), the Term shall be automatically
extended by one additional year (i.e. to include a period of 12 months
commencing on the day after each Renewal Date) unless, at least 60 days prior
to any such Renewal Date, the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice that the Term will not
be further extended.
3. Position and Duties.
(a) During the Term, the Executive shall serve as Chief
Financial Officer of the Company and shall have such duties consistent with
such office as from time to time may be prescribed by the Board of Directors
of the Company (the "Board").
(b) During the Term, the Executive shall perform and discharge
the duties that may be assigned to him by the Board from time to time in
accordance with this Agreement, and the Executive shall devote his best
talents, efforts and abilities to the performance of his duties hereunder.
(c) During the Term, the Executive shall perform such duties
on a full time basis and the Executive shall have no other employment and no
other outside business activities whatsoever, provided, however, that the
Executive shall not be precluded from making passive investments which do not
require the devotion of any significant time or effort.
4. Compensation.
(a) For the Executive's services hereunder, the Company shall
pay the Executive a minimum annual salary (as the same may be increased from
time to time, the "Base Salary" of $155,000, payable in accordance with the
customary payroll practices of the Company.
(b) The Base Salary shall be reviewed periodically by the
Board and Shall be subject to such increases as the Board, in its sole
discretion, from time to time may determine.
5. Bonuses.
(a) Executive Bonus Plan. During the Term, the Executive
shall be eligible to participate in the Company's Executive Bonus Plan (the
"Bonus Plan"), in accordance with the terms and conditions of such Plan, as
they may exist from time to time. Nothing herein shall preclude the Company
from amending the Bonus Plan from time to time or terminating the Bonus Plan,
in whole or in part at any time.
6. Other Benefits. During the Term, the Company shall provide
the Executive with the following benefits:
(a) Stock Option Plan. The Executive shall be eligible to
participate in the Company's Stock Option Plan in accordance with the terms
and conditions thereof.
(b) Medical Health, Dental and Life Insurance Benefits. The
Company shall at its own expense provide the Executive and his eligible
dependents with the group medical, health, dental and life insurance coverage
provided by the Company generally to its employees. Nothing herein shall
prevent the Company from amending and/or terminating the coverages and/or
plans described in this Section 6(b), provided, however, that such amendment
and/or termination is applicable generally to the employees of the Company
(c) 401 (k) Plan. The Executive shall be entitled to
participate in the Company's 401 (k) Plan in accordance with the terms and
conditions of such plan.
(d) Other Benefits. The Company shall make available to the
Executive any and all other employee or fringe benefits (in accordance with
their terms and conditions) which the Company may make available to its other
employees.
7. Automobile Allowance. During the Term, the Company shall
reimburse the Executive for expenses, such as automobile lease or loan
payments, in an amount up to $600 per month, plus such amount(s) as may be
required to reimburse the Executive for expenses such as registration,
insurance, repairs, maintenance, license fees, gasoline and oil incurred by
the Executive incident to his use of an automobile in connection with his
duties hereunder.
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8. Reimbursement of Expenses. During the Term, the Company shall
pay or reimburse the Executive for all reasonable travel, entertainment and
other business expenses actually incurred or paid by the Executive in the
performance of his duties hereunder upon presentation of expense statements
and/or such other supporting information as the Company may reasonably
require of the Executive.
9. Vacations. The Executive shall be entitled to no less than
four weeks of paid vacation during each full calendar year of the Term (and a
pro rata portion thereof for any portion of the Term that is less than a full
calendar year): provided that no single vacation may exceed two consecutive
weeks in duration. Unused vacation may not be carried over to successive
years only with the advance written consent of the Company. Executive shall
use his best efforts to use vacation each year.
10. Termination. The employment hereunder of the Executive may be
terminated prior to the expiration of the Term in the manner described in
this Section 10.
(a) Termination by the Company for Good Cause. The Company
shall have the right to terminate the employment of the Executive for Good
Cause (as such term is defined herein) by written notice to the Executive
specifying the particulars of the circumstances forming the basis for such
Good Cause.
(b) Termination upon Death. The employment of the Executive
hereunder shall terminate immediately upon his death.
(c) Voluntary Resignation by the Executive. The Executive
shall have the right to voluntarily resign his employment hereunder by
written notice to the Company.
(d) Termination by the Company Without Good Cause. The
Company shall have the right to terminate the Executive's employment
hereunder without Good Cause by written notice to the Executive.
(e) Termination Date. The "Termination Date" is the date as
of which the Executive's employment with the Company terminates. Any notice
of termination given pursuant to the provisions of this Agreement shall
specify the Termination Date.
(f) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Person" means any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, court or government (or political subdivision or
agency thereof).
(ii) "Change of Control with respect to the Company,
means the occurrence of any of the following, other than in connection with
the initial public offering of the Common Stock, (A) the acquisition directly
or indirectly (in one or more related transactions) by any Person (other than
the Executive), or two or more Persons (other than the Executive) acting as a
group, of beneficial ownership (as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of more than 20% of the outstanding
capital stock of the Company entitled to vote for the election of directors
("Voting Shares"); (B) the merger or consolidation of the Company with one or
more other corporations as a result of which the holders of the outstanding
Voting Shares of the Company immediately before the merger hold less than 80%
of the Voting Shares of the surviving or resulting corporation; (C) the sale
of all or substantially all of the assets of the Company.
(iii) "Good Cause" shall exist if, and only if, the
Executive (A) willfully or repeatedly fails in any material respect to perform
his obligations hereunder as provided herein, provided that such Good Cause
shall not exist unless the Company shall first have provided the Executive
with written notice specifying in reasonable detail the factors constituting
such material failure and such material failure shall not have been cured by
the
Executive within 30 days after such notice or such longer period as may
reasonably be necessary to accomplish the cure; or (B) has been convicted of
a crime which constitutes a felony under applicable law or has entered a plea
of guilty or nolo contendere with respect thereto; or (C) has committed any
act in connection with his employment hereunder which constitutes fraud or
gross negligence; or (D) violates any term or terms of the Employee Patent
and Confidential Information Agreement by and between Toymax Inc. and the
Executive.
11. Obligations of Company on Termination. Notwithstanding
anything in this Agreement to the contrary, the Company's obligations on
termination of the Executives employment shall be as described in this
Section 11.
(a) Obligations of the Company in the Case of Termination
Without Good Cause. In the event that prior to the expiration of the Term,
the Company terminates the Executive's employment pursuant to Section 10(d),
without Good Cause, the Company shall provide the Executive with the
following:
(i) Amount of Severance Payment. Except as provided in
Section 11(b) below the Company shall pay the Executive the "Severance
Payments" equal to the sum of the following:
(A) the continuation, for a period of twelve (12)
months following the Termination Date, of the Executive's Base Salary at the
rate in effect on the Termination Date, payable in accordance with the
customary payroll practices of the Company, and
(B) an immediate single lump sum cash payment of
any Base Salary, Bonus Plan bonuses, allowable vacation and unreimbursed
expenses accrued but unpaid as of the Termination Date.
(b) Obligations of the Company in the Case of Termination of
Executive's Employment Following a Change in Control. In the event that at
any time during the Term and following a Change of Control, the Company
terminates the Executive's employment without Good Cause, in lieu of the
Severance Payments to which the Executive is entitled under Section 11(a)(i)
above, the Company shall pay the Executive as follows:
(i) Change of Control Severance Payment. The Company
shall continue to pay to the Executive for a period of twenty-four (24)
months following the Termination Date the Executive's Base Salary at the rate
in effect on the Termination Date, payable in accordance with the customary
payroll practices of the Company, plus an immediate single lump sum cash
payment of any Base Salary, Bonus Plan bonuses, allowable vacation and
unreimbursed expenses accrued but unpaid as of the Termination Date.
(c) Obligations of the Company in case of Termination for
Death, Voluntary Resignation or Good Cause. Upon termination of the
Executive's
employment upon death (pursuant to Section 10(b)), as a result of the
voluntary resignation of the Executive (pursuant to Section 10(c)) or for
Good Cause (pursuant to Section 10(a)), the Company shall have no payment or
other obligations hereunder to the Executive, except for the payment of any
Base Salary, Bonus Plan bonuses, allowable vacation, benefits or unreimbursed
expenses accrued but unpaid as of the date of such termination.
12. Severability. Should any provision of this Agreement be held,
by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid
or unenforceable, and this Agreement and each other provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
13. Successors and Assigns.
(a) This Agreement and all rights under this Agreement are
personal to the Executive and shall not be assignable other than by will or
the laws of descent. All of the Executive's rights under the Agreement shall
inure to the benefit of his heirs, personal representatives, designees or
other legal representatives, as the case may be.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Any Person
succeeding to the business of the Company by merger, purchase consolidation
or otherwise shall assume by contract or operation of law the obligations of
the Company under this Agreement.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York, without regard to the
conflicts of laws rules thereof.
15. Notices. All notices, requests and demands given to or made
upon the respective parties hereto shall be deemed to have been given or made
three business days after the date of mailing when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or one business day after the date of delivery by Federal Express or
other reputable overnight delivery service, addressed to the parties at their
addresses set forth below or to such other addresses furnished by notice
given in accordance with this Section 15: (a) if to the Company, to 000 X.
Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 and (b) if to the Executive, to 00
Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000.
16. Withholding. All payments required to be made by the Company
to the Executive under this Agreement shall be subject to withholding taxes,
social security and other payroll deductions in accordance with applicable
law and the Company's policies applicable to executive employees of the
Company.
17. Complete Understanding. Except as expressly provided below,
this Agreement supersedes any prior contracts, understandings, discussions
and agreements relating
to employment between the Executive and the Company, and constitutes the
complete understanding between the parties with respect to the subject matter
hereof. No statement, representation, warranty or covenant has been made by
either party with respect to the subject matter hereof except as expressly
set forth herein. Notwithstanding the foregoing or anything in this
Agreement to the contrary, the Employee Patent and Confidential Information
Agreement by and between the Company and the Executive, shall remain in full
force and effect.
18. Modification; Waiver.
(a) This Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and the Executive or in the case of a waiver, by
the party against whom the waiver is to be effective. Any such waiver shall
be effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
19. Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of this Agreement.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by the other party hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed in its corporate name by one of its officers duly authorized to
enter into and execute this Agreement and the Executive has manually signed
his name hereto, all as of the day and year first above written.
TOYMAX INTERNATIONAL, INC.
By:
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Xxxxxxx X. Xxxxxxx, Xx.
