EXHIBIT 7
TERMINATION OF EMPLOYMENT AGREEMENT
Agreement dated March 11, 2002 entered into between XXXXXX XXXXXXXXXX, an
individual with his address at 00 Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxx Xxxx
00000 ("Executive" or "SL"), TOYMAX INTERNATIONAL, INC., a Delaware corporation
with its offices at 000 X. Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, U.S.A.,
("Toymax International" or the "Company") and JAKKS PACIFIC, INC., a Delaware
corporation with its offices at 00000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxx,
X.X.X. ("JAKKS"). The parties to this Agreement may also sometimes be referred
to collectively as the "Parties" or singly as a "Party."
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Toymax International and Executive are parties to an employment
agreement dated as of January 1, 2000 providing for Executive's employment by
the Company as Executive Vice President (the "Employment Agreement").
WHEREAS, concurrently herewith JAKKS has acquired a majority of the outstanding
shares of capital stock of Toymax International from certain shareholders of
Toymax International, including Executive, pursuant to a Stock Purchase
Agreement dated February 10, 2002 (the "Stock Purchase Agreement"); and
WHEREAS, as a condition to such acquisition, Executive and Toymax International
agreed to terminate the Employment Agreement and Stock Options described herein.
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the Parties hereto hereby agree as follows:
1. Termination of Employment Agreement and Stock Options. Executive and
the Company agree that the Employment Agreement and all stock options,
including options granted to Executive under the Company's Stock Option
Plan referred to in the Employment Agreement, and any other rights to
acquire shares of stock or other securities of the Company and its
Affiliates, are hereby terminated as of the date hereof. The Company
agrees to pay and the Executive agrees to accept US$350,000.00 in full
and final settlement of all claims for salary, bonus, vacation pay or
any other form of compensation or benefit due to him from the Company
or any of its Affiliates or any equity or other interest in the Company
or any of its Affiliates, including but not limited to the payments
under the Executive Bonus Plan and Stock Appreciation Bonus referred to
in the Employment Agreement. Executive acknowledges that the Company
shall terminate forthwith the life insurance, disability and accident
insurance and health insurance benefits referred to in the Employment
Agreement. Such $350,000.00 payment shall be paid in twelve (12)
substantially equal monthly installments on the last day of each month
commencing with the month in which this Agreement is executed, less
required tax withholding.
2. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
a. "Affiliate" of a Person means another Person directly or
indirectly controlling, controlled by, or under common control
with, such Person; for this purpose, "control" of a Person
means the power (whether or not exercised) to direct the
policies, operations or activities of such Person by virtue of
the ownership of, or right to vote or direct the manner of
voting of, securities of such Person, or pursuant to agreement
or Law or otherwise.
b. "Competitive Product" means any product that is substantially
similar to a Product.
c. "Product" means any product developed, manufactured, sold or
marketed by the Company or its Affiliates during the period of
Executive's employment by the Company or its predecessors and
their respective Affiliates.
d. "Person" includes without limitation a natural person,
corporation, joint stock company, limited liability company,
partnership, joint venture, association, trust, Governmental
Authority, or any group of the foregoing acting in concert.
e. "Trade Right" means a patent, claim of copyright, trademark,
trade name, brand name, service xxxx, logo, symbol, trade
dress or design, or representation or expression of any
thereof, or registration or application for registration
thereof, or any other improvement, development or discovery,
invention, trade secret, process, system, technical
information, know-how, proprietary right or intellectual
property conceived, developed, created or made by Executive,
alone or with others, during the period of his employment by
the Company or its predecessors or their respective Affiliates
in connection with the design, manufacture and marketing of
the Products or otherwise in connection with the Company's
operations and conduct of its business.
3. Ownership of Trade Rights
a. ACKNOWLEDGMENT BY EXECUTIVE. Executive acknowledges and agrees
that all of the Trade Rights are the sole property of Toymax
International.
b. "WORKS FOR HIRE". Executive acknowledges and agrees that for
all purposes of U.S. and foreign Copyright Laws the Trade
Rights and any inventions, discoveries, enhancements or
improvements to any tangible or intangible property, resulting
from the services performed by Executive for the Company or
its predecessors and their respective Affiliates (for the
purposes of this paragraph all of the foregoing is
collectively referred to as the "Work"), and any and all
elements thereof, shall be deemed to constitute "works for
hire" belonging to the Company within the meaning of Xxxxx 00,
Xxxxxx Xxxxxx Code, Section 101, and any comparable provisions
of the law of any other jurisdiction, such that all right,
title and interest therein, including, without limitation,
copyrights and exclusive rights under copyright, vest in
Toymax International. Executive hereby transfers and conveys
to Toymax International the exclusive, world-wide,
royalty-free, paid-up right to exploit, use, develop, license,
and sell products and services relating to or derived from the
Work; and the exclusive right, title and interest in and to
all inventions, improvements, patent applications and letters
patent, "know-how", and all intellectual property and other
rights, tangible or intangible, which relate to or are based
upon or derived from the Work; and to all information,
documents, and specifications that relate to the Work. If the
Work or any of the elements thereof is deemed not to be "works
for hire" within the meaning of Xxxxx 00, Xxxxxx Xxxxxx Code,
Section 101, then Executive hereby assigns and transfers to
Toymax International all right, title and interest in and to
the Work, including rights throughout the world for good and
valuable consideration, receipt of which Executive hereby
acknowledges. For the sole and exclusive purpose of perfecting
and documenting such limited assignment and transfer,
Executive hereby grants to JAKKS and Toymax International an
irrevocable power of attorney.
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4. Restrictive Covenants.
a. From and after the date hereof and until the first anniversary
of the date hereof, Executive shall not, directly or
indirectly through any Affiliate or other intermediary (a)
manufacture, produce, sell, market or otherwise promote any
Competitive Product or serve as a partner, member, manager,
director, officer or employee of, or consultant or advisor to,
or in any manner own, control, manage, operate or otherwise
participate or invest in, or be connected with any Person that
engages in the marketing or sale of Competitive Products, or
authorize the use of its name in connection therewith, or (b)
for himself or on behalf of any other Person, employ, engage
or retain any Person who at any time during the preceding
12-month period shall have been an employee of Toymax
International or JAKKS or their respective Affiliates, or
contact any supplier, customer or employee of Toymax
International, JAKKS or their respective Affiliates for the
purpose of soliciting or diverting any such supplier, customer
or employee from Toymax International, JAKKS or their
respective Affiliates. The foregoing provisions
notwithstanding, Executive may invest his funds in securities
of an issuer if the securities of such issuer are listed for
trading on a registered securities exchange or actively traded
in the over-the-counter market and Executive's and his
Affiliates' aggregate holdings therein represent less than 1%
of the total number of shares or principal amount of the
securities of such issuer then outstanding. Executive
acknowledges that the provisions of this Section 4, and the
period of time, lack of any specific geographic area given the
international nature of the business of JAKKS and its
Affiliates, including Toymax International and its Affiliates
and the scope and type of restrictions on his activities set
forth herein, are reasonable and necessary for the protection
of the Company and JAKKS and are an essential inducement to
JAKKS entering into the Stock Purchase Agreement and acquiring
shares of common stock of Toymax International from Executive
and the other shareholders selling their shares to JAKKS
pursuant to the Stock Purchase Agreement.
Executive acknowledges that the type of services that he has
performed for Toymax International and its Affiliates were of
an intellectual and technical character required the
disclosure of confidential and proprietary information of
Toymax International and its Affiliates to him and resulted in
the creation by him of information which is confidential and
proprietary to Toymax International and its Affiliates, and
accordingly that the restrictive covenants contained herein
are necessary in order to protect and maintain the business
and assets and goodwill of Toymax International whose shares
are being purchased by JAKKS. Executive acknowledges that the
business of Toymax International and its Affiliates extends
beyond the geographic area of the State of New York and
accordingly, it is reasonable that the restrictive covenants
set forth above are not limited by specific geographic area
but by the location of the customers of Toymax International
and its Affiliates. Executive acknowledges that the remedy at
law for any breach of this agreement by him will be inadequate
and that, accordingly, JAKKS and Toymax International shall,
in addition to all other available remedies (including without
limitation seeking such damages as it can show it has
sustained by reason of such breach), be entitled to injunctive
relief without being required to post bond or other security
and without having to prove the inadequacy of the available
remedies at law.
b. Executive acknowledges that he has received from the Company
and its Affiliates (a "disclosing party") during the period of
his employment by the Company information regarding the
Company's Products and its business and affairs which
constitutes confidential and proprietary information belonging
to the Company ("Confidential Information"), and he shall not,
at any time hereafter, use or disclose any Confidential
Information to any Person other than to the Company or its
designees or except as may
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otherwise be required in connection with the business and
affairs of the Company, and in furtherance of the foregoing
Executive agrees that:
i. Executive will receive, maintain and hold
Confidential Information in strict confidence and
will use the same level of care in safeguarding it
that it uses with his own confidential material of a
similar nature;
ii. Executive will take all such steps as may be
reasonably necessary to prevent the disclosure of
Confidential Information; and
iii. Executive will not utilize Confidential Information
without first having obtained the disclosing party's
written consent to such utilization.
c. The commitments set forth in paragraph 4(b) above shall not
extend to any portion of Confidential Information:
i. that is generally available to the public;
ii. that was known to Executive prior to disclosure
(excluding information regarding Toymax International
and its Affiliates which would otherwise be
Confidential Information that was disclosed to
Executive during the period of his employment by the
Company or its predecessors or their respective
Affiliates or that was disclosed to Executive in
connection with his acting as a director of the
Company or its predecessors or their respective
Affiliates, and excluding any other non-public
information concerning Products under development by
or for the Company or its Affiliates;
iii. that was not acquired, directly or indirectly and/or
in any manner, from Toymax International or any of
its Affiliates and which Executive lawfully had in
his possession prior to the date of this Agreement;
iv. that, hereafter, through no act or omission on the
part of the Executive, becomes information generally
available to the public.
d. At any time upon written request by JAKKS or the disclosing
party, (i) the Confidential Information, including any copies,
shall be returned to JAKKS or the disclosing party, and (ii)
all documents, drawings, specifications and any other material
whatsoever in the possession of the Executive that relates to
such Confidential Information, including all copies and/or any
other form of reproduction and/or description thereof made by
Executive shall, at the disclosing party's or JAKKS' option,
be returned to the disclosing party or JAKKS or destroyed.
e. In the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena,
civil investigative demand or similar process) to disclose any
of the Confidential Information, the Executive shall provide
JAKKS with prompt prior written notice of such requirement so
that it or the disclosing party may seek a protective order or
other appropriate remedy and/or waive compliance with the
terms of this Agreement. In the event that such protective
order or other remedy is not obtained, or JAKKS waives
compliance with the provisions hereof, the Executive agrees to
furnish only such portion of the Confidential Information
which is legally required to be furnished.
5. Miscellaneous.
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a. FEES AND EXPENSES. Each Party hereto shall bear such fees and
expenses as may be incurred by it in connection with this
Agreement.
b. NOTICES. Any Notice or demand required or permitted to be
given or made hereunder to or upon any 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 (confirmed orally), 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 JAKKS: 00000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
Fax: (000) 000-0000
with a copy to: Feder, Kaszovitz, Isaacson,
Weber, Xxxxx, Bass & Rhine LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
to Executive at:
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
with a copy to: Ettelman & Xxxxxxxxxx
000 Xxxxxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
or such other address as any Party hereto may at any time, or
from time to time, direct by Notice given to the other parties
in accordance with this Section. Except as otherwise expressly
provided herein, 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), three
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.
c. AMENDMENT. Except as otherwise expressly 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.
d. WAIVER. No course of dealing or omission or delay on the part
of any 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.
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e. 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. Each Party to this Agreement submits
to the jurisdiction of the courts of the State of New York,
located in New York and Nassau County, New York, United States
of America, and to the jurisdiction of the United States
District Court for the Southern and Eastern Districts of Xxx
Xxxx, Xxx Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx of America with
respect to any matter arising out of this Agreement, waives
any objection to venue in the Counties of New York or Nassau,
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
Paragraph 5(b) hereof.
f. 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.
g. 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.
h. FURTHER ASSURANCES. Each Party hereto shall promptly execute,
deliver, file or record such agreements, instruments,
certificates and other documents and perform such other and
further acts as any other Party hereto may reasonably request
or as may otherwise be reasonably necessary or proper, to
carry out the provisions of this Agreement.
i. 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.
j. ASSIGNMENT. The Executive's obligations under this Agreement
may not be assigned without the prior written consent of
JAKKS, and any purported assignment without such consent shall
be void and without effect.
k. 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.
l. 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.
m. 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.
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n. NO PRESUMPTIONS. Each Party hereto acknowledges that it has
participated, with the advice of counsel, 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 any other Party hereto drafted
or controlled the drafting of this Agreement.
o. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, commitments or
arrangements relating thereto.
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IN WITNESS WHEREOF, the individual parties and each of the corporate parties by
their respective duly authorized officers, have duly executed this Agreement as
of the date set forth in the Preamble hereto.
TOYMAX INTERNATIONAL, INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary
JAKKS PACIFIC, INC.
By: /s/ XXXX X. XXXXXXX
---------------------------
Name: Xxxx X. Xxxxxxx
Title: EVP/CFO
/s/ XXXXXX XXXXXXXXXX
------------------------------------
Xxxxxx Xxxxxxxxxx
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