EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of December 1, 2001, between
TOYMAX INTERNATIONAL, INC., a Delaware corporation (the "Company"), and XXXXXXX
XXXXXXXX (the "Executive").
W I T N E S S E T H
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 and covenants
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 employment, upon the terms and conditions set forth
herein.
2. TERM. Subject to the provisions of Section 10 hereof, the period of
the Executive's employment under this Agreement shall be from December 1, 2001
through May 31, 2002 (the "Initial Term"). The Initial Term shall be
automatically extended until May 31, 2004 (the "Extended Term") unless, on or
prior to March 15, 2002, the Company shall deliver to the Executive written
notice that the Initial Term will not be extended. The Company's determination
with respect to the extension of the Initial Term shall be made by the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") in its sole discretion considering factors including,
but not limited to, whether or not the Executive has preformed his duties and
achieved the goals as set forth by the Compensation Committee and acknowledged
and agreed to by the Executive.
3. POSITION AND DUTIES.
(a) During the period of the Initial Term, and, if applicable,
the Extended Term (collectively, 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"), or members of the Executive Committee
of the Board (the "Executive Committee").
(b) During the Term, the Executive shall perform and discharge
the duties that may be assigned to him by the Board, or the Executive
Committee 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 for the Initial Term,
the Company shall pay the Executive a minimum annual salary (the "Base
Salary") at the rate of $225,000, payable in accordance with the customary
payroll practices of the Company; provided, however, that, if the Initial
Term is extended pursuant to Section 2: (i) the Base Salary shall be
increased to the rate of $250,000 beginning on April 1, 2002; and (ii) the
Company shall pay to the Executive a bonus in an amount to have made the Base
Salary during the Initial Term be at the rate of $250,000 per annum, less
required and elective withholdings, within 30 days of April 1, 2002.
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 and without prior notice.
(b) STOCK OPTIONS. The Company shall grant to the Executive an
option (the "Option") to purchase 25,000 shares of the common stock of the
Company (the "Common Stock") at an exercise price per share equal to the
closing price of the Common Stock on NASDAQ exchange on the date of this
Agreement. In the event that the Initial Term is extended pursuant to Section
2, on April 1, 2002, the Company shall grant to the Executive a second option
(the "Renewal Option") to purchase an additional 25,000 shares of the Common
Stock at an exercise price per share equal to the closing price of the Common
Stock on NASDAQ exchange on April 1, 2002. Each of the Option and the Renewal
Option shall be granted pursuant to and in accordance with the terms and
conditions of an option agreement substantially in the form attached hereto
as Exhibit A (the "Option Agreement") and the ToyMax International, Inc. 2001
Stock Option Plan (the "Stock Option Plan").
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 Stock Option Plan in accordance with the terms and
conditions thereof.
(b) MEDICAL, HEALTH AND DENTAL INSURANCE BENEFITS. The Company
shall at its own expense provide the Executive and his eligible dependents
with the medical, health and dental 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) TERM LIFE INSURANCE. The Company shall pay on the Executive's
behalf all premiums that become due during the Executive's employment
hereunder that are
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required to maintain in effect a term life insurance policy on Executive's life
with a face value of $500,000.
(d) DISABILITY AND ACCIDENT INSURANCE BENEFITS. (1) Provided that
(a) the Executive is and remains insurable; (b) the Executive is and remains
eligible for coverage under either a group insurance policy maintained by the
Company or its affiliates or an individual insurance policy in either case at
a cost to the Company no greater than the standard rate (the "Standard Rate")
as determined by the insurance underwriter designated by the Company (the
"Underwriter") based upon an individual in good health and such other
factors, including, but not limited to, age, gender and income; and (c) the
Executive shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged or delivered, all documents, applications,
instruments, assurances or acts (including but not limited to physical
examinations), as may be necessary to obtain such insurance coverage, the
Company shall provide the Executive with long term disability insurance
coverage from the "Underwriter" providing for "lifetime" disability benefits,
equal to 50% of the Executive's base salary after a waiting period of ninety
(90) days. In the event the Underwriter offers the Executive (a) such
coverage at a cost in excess of the Standard Rate, or (b) insurance coverage
providing reduced benefits, the Executive may, at his or her option, pay the
excess cost to obtain the insurance coverage or accept the disability
insurance coverage with reduced benefits. Under no circumstances will the
Company have any liability for the excess cost or resulting from the
inability to obtain full benefits.
(2) Provided that the Executive is and remains insurable and the
Executive shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged or delivered, all documents, applications,
instruments, assurances or acts (including but not limited to physical
examinations), as may be necessary to obtain such insurance coverage, the
Company shall provide the Executive with business travel accident and
accidental death and dismemberment insurance coverage in an amount of
$250,000 from an insurance underwriter designated by the Company.
(e) 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.
(f) LIABILITY INSURANCE. The Executive shall be provided with the
directors and officers liability insurance coverage generally provided to
officers of the Company. Notwithstanding the foregoing, the Company agrees to
indemnify the Executive against all costs, damages and expenses, including
attorneys' fees, incurred by the Executive as a result of claims by third
parties arising out of or from the Executive's lawful acts as an employee of
the Company, provided such acts are not grossly negligent and are performed
in good faith and in a manner reasonably believed by the Executive to be in
the Company's best interests. Any counsel employed to defend the Executive in
any such action shall be reasonably acceptable to the Executive and the
Company. Any counsel appointed by any insurance carrier for the Company shall
be deemed acceptable. It is the intent of the parties that the obligation
imposed by this paragraph will survive the termination of this Agreement.
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(g) 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.
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
without 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 providing 90
days written notice to the Company either prior to the end of the Term or
during the Term.
(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:
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(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 35% 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 75%
of the Voting Shares of the surviving or resulting corporation; or (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; (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; (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 the Company and the
Executive.
11. OBLIGATIONS OF THE COMPANY ON TERMINATION. Notwithstanding anything
in this Agreement to the contrary, the Company's obligations on termination of
the Executive's employment shall be as described in this Section 11. The Company
shall have no obligation for termination pay if the termination is during or at
the end of the Initial Term.
(a) OBLIGATIONS OF THE COMPANY IN THE CASE OF TERMINATION WITHOUT
GOOD CAUSE. In the event that (1) the Initial Term is extended pursuant to
Section 2, and (2) prior to the expiration of the Extended 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 nine (9) months
following the Termination Date, of the Executive's Base Salary at the rate in
effect on the
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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 payment, accrued 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: (1) the
Initial Term is extended pursuant to Section 2; and (2) during the Extended Term
a Change of Control occurs, 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. If the Executive has
been employed hereunder for at least one year, 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 payment, accrued 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 payment, accrued vacation, benefits or unreimbursed
expenses accrued but unpaid as of the date of such termination.
(d) OBLIGATIONS OF THE COMPANY IN CASE OF TERMINATION DURING
INITIAL TERM. Notwithstanding anything contained herein to the contrary, upon
termination of the Executive's employment for any reason during the period
beginning on the date hereof and ending on the first of the following to
occur: (i) the date that the Initial Term is extended pursuant to Section 2,
or (ii) May 31, 2002, the Company shall have no payment or other obligations
hereunder to the Executive, except for the payment of any Base Salary, Bonus
Plan payment, if any, accrued vacation, benefits or unreimbursed expenses
accrued but unpaid as of the date of such termination.
(e) GENERAL RELEASE. Prior to the making of any payments by the Company
to the Executive pursuant to this Section 11, the Executive shall deliver to the
Company a release of any and all claims of the Executive against the Company in
a form reasonably satisfactory to the Company.
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
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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 laws 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, Attention: Chief Executive Officer, and (b) if to the Executive,
to _____________________________.
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 and the Option Agreement(s), by and between the Company and the
Executive, shall remain in full force and effect.
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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.
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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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Witness Xxxxxx Xxxxxxxxxx
Chief Executive Officer
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------------------------------ Xxxxxxx Xxxxxxxx
Witness
