Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of May 27, 1999,
between Monogram Acquisition, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxxxxx, Xx. (the "Executive").
W I T N E S S E T H
WHEREAS, the Company is acquiring the business and substantially all
of the assets of Monogram International, Inc., a Florida corporation
("MONOGRAM") of which the Executive is a shareholder and employee, and Monogram
Products (HK) Ltd., a Hong Kong company and wholly owned subsidiary of Monogram
("PRODUCTS," Monogram and Products, jointly and severally, "Seller"), pursuant
to a certain Asset Purchase Agreement dated April 19, 1999 by and among Toymax
International, Inc., a Delaware corporation and sole shareholder of the Company
("TOYMAX"), the Company, Monogram Acquisition 1, LLC, a Delaware limited
liability company, Xxxxxxx Development Limited, a Hong Kong company, the Seller,
the Executive, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx (the
"PURCHASE AGREEMENT"); and
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 9 hereof, the period
of the Executive's employment under this Agreement shall be from May 27, 1999
through the earlier of May 27, 2002 or the Termination Date pursuant to Section
9 (the "Term") provided that the Term shall automatically be extended by one
additional year unless, at least 30 days prior to May 27, 2002 (the "Renewal
Date"), 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 President of
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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"). The Company shall provide the Executive with office facilities and
support which are necessary for the performance of the Executive's duties
hereunder.
(b) During the Term, the Executive shall perform and discharge
the duties that may be assigned to him by the Senior Vice President of Corporate
Strategy and New Business Development of Toymax or such other senior officer as
the Board of Directors of Toymax (the "Toymax Board") may designate 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;
provided, however, that the Executive shall not be assigned any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting relationships), authority, duties or
responsibilities, or any other action or actions by the Company which when taken
as a whole results in a significant diminution in the Executive's position,
authority, duties or responsibilities, excluding any isolated, immaterial and
inadvertent action not taken in bad faith by the Company.
(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.
4. COMPENSATION. For the Executive's services hereunder, the Company
shall pay the Executive during the period of the Executive's employment a salary
(the "Base Salary") at an annual rate of $230,000, payable in accordance with
the customary payroll practices of the Company. If the effective date of this
Agreement is not the first day of a pay period, the first and last salary
installments payable under this Agreement will be prorated based on the actual
working days that this Agreement was in effect during such pay period.
5. OTHER BENEFITS. During the Term, the Company shall provide the
Executive with the following benefits:
(a) STOCK OPTIONS. The Company shall grant to the Executive an
option (the "Options") to purchase 50,000 shares (the "Shares") of the common
stock of Toymax at an exercise price per share equal to the closing price of the
Shares on NASDAQ exchange on the date of this Agreement. The Options 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 Toymax International, Inc.'s amended and restated 1997 Stock
Option Plan.
(b) MEDICAL AND HEALTH INSURANCE BENEFITS. The Company shall,
at its own expense, provide the Executive and his eligible dependents with the
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medical, health and dental insurance coverage generally provided by the Company
to its other executives.
(c) 401(K) PLAN. The Executive shall be entitled to
participate in Toymax's 401(k) Plan in accordance with the terms and conditions
of such plan.
(d) DISABILITY AND ACCIDENT INSURANCE BENEFITS. The Company
shall provide the Executive with long term disability insurance (providing 60%
Base Salary replacement coverage), business travel accident and accidental death
and dismemberment insurance coverage.
(e) ADDITIONAL BENEFITS. The Company shall provide the
Executive all other insurance, retirement and employment benefits that are
furnished by the Company or Toymax to all their respective employees and
executives on the same or substantially similar terms and conditions as those
benefits are provided to those other employees and executives.
6. AUTOMOBILE ALLOWANCE. During the Term, the Company shall
reimburse the Executive for expenses, such as automobile lease or loan payments,
in an amount of six hundred dollars ($600) per month (the "Automobile
Payments"), plus such amount(s) as may be required to reimburse the Executive
for expenses (the "Automobile Expenses") such as registration, insurance,
repairs, maintenance, license fees, parking, gasoline and oil incurred by the
Executive incident to his use of an automobile in connection with his duties
hereunder.
7 REIMBURSEMENT OF EXPENSES. During the Term, the Company shall pay
or reimburse the Executive for all reasonable travel (including hotel),
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. The Company acknowledges that the
Executive's position with the Company may require frequent travel from the
greater Tampa, Florida metropolitan area, and the Company agrees to pay or
reimburse such reasonable expenses incurred or paid by the Executive for such
travel in the performance of his duties hereunder.
8 VACATIONS. The Executive shall be entitled to four (4) weeks of
paid vacation during each fiscal year the Term or a PRO RATA portion thereof in
the event that the Executive's employment with the Company terminates prior to
the expiration of the Term; provided that no single vacation may exceed two
consecutive weeks in duration, and provided further that the Executive shall
provide the Company with appropriate contact information during his absence and
shall at all reasonable times be available by telephone. Unused vacation may not
be carried over to successive years.
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9. TERMINATION. The employment hereunder of the Executive may be
terminated prior to the expiration of the Term in the manner described in this
Section 9.
(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 the death of the Executive.
(c) RESIGNATION FOR GOOD REASON. The Executive shall have the
right to terminate his employment with the Company for Good Reason (as such term
is defined herein).
(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, limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, court or government (or political
subdivision or agency thereof).
(ii) "Good Cause" shall exist if, and only if, the Executive
(A) willfully and 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.
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(iii) "Good Reason" means the occurrence of any of the
following: (i) a material breach by the Company of one or more provisions of
this Agreement, provided that such Good Reason shall not exist unless the
Executive shall first have provided the Company with written notice specifying
in reasonable detail the factors constituting such material breach and such
material breach shall have not been cured by the Company within 30 days after
such notice or such longer period as may be reasonably necessary to accomplish
the cure, or (ii) the Company requiring the Executive to be based permanently at
any location other than within 50 miles of the Company's current executive
office location, except for requirements of temporary travel on the Company's
business not to exceed, per calendar year, the average of the Executive's
business related travel over the three (3) year period prior to the date hereof.
10. OBLIGATIONS OF 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 10.
(a) OBLIGATIONS OF THE COMPANY IN THE CASE OF TERMINATION
WITHOUT GOOD CAUSE OR FOR GOOD REASON. In the event that prior to the expiration
of the Term, the Company terminates the Executive's employment, without Good
Cause (pursuant to Section 9(d)) or upon termination of the Executive's
employment as a result of the voluntary resignation of the Executive for Good
Reason (pursuant to Section 9(c)), the Company shall provide the Executive with
the following:
(i) AMOUNT OF SEVERANCE PAYMENT. Except as provided in
Section 10(b) below, the Company shall pay the Executive the following (the
"Severance Payment"):
(A) a single lump sum cash payment, within 30 days
following the Termination Date, equal to the sum of: (i) any Base Salary,
vacation and unreimbursed expenses accrued but unpaid as of the Termination
Date; and (ii) the Base Salary otherwise payable to the Executive for the
shorter of: (y) the then remaining duration of the Term, or (z) the six (6)
month period following the Termination Date ("Post-termination Period"); and
(B) in the event that any portion of the Severance
Payment is calculated pursuant to Section 10(a)(i)(A)(ii)(z) above, each month
for the period following the Post-termination Period until the otherwise end of
the Term, the Company shall pay the Executive a sum equal to the difference, if
any, as determined and calculated on a monthly basis, between the Base Salary
and the then current salary of the Executive from other employment, if any.
(ii) MEDICAL AND HEALTH INSURANCE. The Company shall, at its
sole expense, provide the Executive (and his dependents) with coverage under
(and in accordance with the terms and conditions of) the Company's medical,
health and dental
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insurance plans, as in effect from time to time, for the otherwise remaining
duration of the Term; provided that to the extent such coverage may be
unavailable under such medical, health and dental insurance plans due to
restrictions imposed by the insurer(s) under such plans, the Company shall take
such action as may be required to provide equivalent benefits from other
sources.
(iii) AUTOMOBILE ALLOWANCE. For the otherwise remaining
duration of the Term, the Company shall continue to reimburse the Executive for
the Automobile Payments, to the extent provided in Section 6 of this Agreement;
however, the Executive shall not be entitled to reimbursement for any Automobile
Expenses.
(b) OBLIGATIONS OF THE COMPANY IN CASE OF TERMINATION FOR GOOD
CAUSE. Upon termination of the Executive's employment for Good Cause (pursuant
to Section 9(a)), the Company shall have no payment or other obligations
hereunder to the Executive, except for the payment of any Base Salary, benefits
or unreimbursed expenses accrued but unpaid as of the date of such termination.
(c) OBLIGATIONS OF THE COMPANY IN CASE OF DEATH. If the
Executive dies, his employment with the Company will terminate immediately, and
the Company shall pay to the Executive's heirs or estate any Base Salary,
benefits or unreimbursed expenses accrued but unpaid as of the date of such
death.
11. COVENANT NOT-TO-COMPETE . During either (i) the Term and for a
period of two (2) years thereafter, or (ii) if the Executive is terminated
without Good Cause pursuant to Section 9(d) or if the Company does not offer to
the Executive a renewal or extension of this Agreement prior to the expiration
of the Term, during the Term (the "Covenant Period"):
(a) The Executive agrees that he will not, directly or
indirectly, as a partner, officer, employee, director, stockholder, proprietor,
other equity owner, consultant, representative, agent or otherwise own or
operate any business or Person, or otherwise become or be interested in, or
associate with or render assistance to any Person (other than the Company,
Toymax and any other Person directly or indirectly through one or more
intermediary persons, controlling, controlled by or under common control with
the Company ("Affiliates")), engaged in the geographic areas where the Company's
products are sold during the Term in (i) the business of marketing or selling
products, which are the same or substantially similar to any of the products
offered for sale by the Company on the Termination Date or (ii) a business which
is otherwise in competition with the business of the Company (such Person as
described in (i) and (ii), a "Competitor"). The foregoing provisions shall not,
however, prohibit the Executive from making passive investments in Persons that:
(i) do not require the devotion of any significant time or effort, and (ii) are
not Competitors; PROVIDED that such activities do not
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interfere in any respect with the proper performance of his duties and
responsibilities under Sections 1, 2 and 3.
(b) The Executive agrees that he will not, directly or
indirectly, during the Covenant Period, for his own benefit or for the benefit
of any other Person:
(i) (A) influence or attempt to influence any Person to
either terminate or adversely modify such Person's employment or other
professional relationship with the Company and/or its Affiliates or (B) employ,
consult or otherwise retain, directly or indirectly, any Person who is (or
during the twelve months prior thereto was) employed, advising, or otherwise
retained by the Company or its Affiliates;
(ii) Influence or attempt to influence a supplier or
customer of the Company or its Affiliates, or any other Person with whom the
Company or its Affiliates shall have dealt, to terminate or modify any written
or oral agreement or course of dealing with the Company or its Affiliates; or
(iii) Influence or contract with or attempt to influence or
contract with a supplier or customer of the Company or its Affiliates, or any
other Person with whom the Company or its Affiliates shall have dealt, for the
purpose of offering or selling any products which are identical, substantially
similar or comparable to the products offered by the Company or its Affiliates.
(c) The Executive recognizes and acknowledges that, in
connection with his employment with the Company, he will have access to valuable
trade secrets and confidential information of the Company and its Affiliates,
including, but not limited to, customer, supplier and mailing lists, business
methods and processes, advertising, marketing, promotional, pricing and
financial information and data relating to officers, employees, agents and
consultants (collectively, "Confidential Information") and that such
Confidential Information is being made available to the Executive only in
connection with the furtherance of his employment with the Company. The
Executive agrees that he will not at any time, directly or indirectly, use for
any purpose, disclose or make available to any Person any of such Confidential
Information, except that disclosure of Confidential Information will be
permitted in connection with the performance of his duties and: (i) if such
Confidential Information has previously become available to the public through
no fault of the Executive; (ii) if required by any court or governmental agency
or body or is otherwise required by law; or (iii) if expressly consented to in
writing by the Company. In the event that the Executive is requested or required
to disclose any of the Confidential Information pursuant to subsection (ii)
above, he shall provide the Company with prompt written notice of any such
request or requirement so that the Company will have a reasonable opportunity to
seek a stay or other protective order or other appropriate remedy prior to
disclosure by the Executive.
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(d) The Executive agrees that any and all publications,
inventions, software, formulae, reports or other work product directly or
indirectly produced, created, developed or otherwise prepared by the Executive
while employed by the Company and related to the business of the Company and/or
its Affiliates (collectively, "Materials") and any copyrights, patents,
trademarks, trade names, service marks or similar registrations or any
applications therefore (collectively, "Intellectual Property Rights") obtained
or made at any time during the Term or thereafter with respect to such Materials
shall be the sole and exclusive property of the Company. Upon request of the
Board or an officer of the Company, the Executive promptly shall execute any and
all applications, assignments or other instruments which the Board or such
officer shall reasonably deem necessary or advisable in order to apply for and
obtain an Intellectual Property Right for the Materials in the United States and
throughout the world and to assign to the Company all right, title and interest
in and to such Materials and Intellectual Property Rights. The Company shall
bear the cost of preparation and filing of all such applications, assignments
and instruments in the appropriate governmental offices in the United States and
any foreign country.
(e) The Executive acknowledges and agrees that: (i) this
Section 11 is necessary for the protection of the legitimate business of the
Company; (ii) the restrictive covenants set forth in this Section 11 (the
"Restrictive Covenants") are reasonable in geographical and temporal scope and
in all other respects; (iii) the Executive's expertise and services to be
provided hereunder are unique; and (iv) the Executive has received adequate
consideration for the execution, delivery and performance of this Agreement.
(f) If a court of competent jurisdiction finally determines
that any of the Restrictive Covenants, or any part or parts thereof, are invalid
or unenforceable for any reason, the parties hereto agree, and it is their
desire, that such court shall substitute a judicially enforceable limitation in
its place, and that the Restrictive Covenant, in its modified form, shall then
be valid and enforceable as if originally set forth herein and the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
force and effect, without regard to the invalid or unenforceable parts.
(g) The provisions of this Section 11 shall survive the
termination of this Agreement.
(h) The parties agree that a violation of this Section 11 will
cause irreparable damage to the Company, and the Company shall be entitled
(without any requirement of posting a bond or other security), in addition to
any other rights and remedies which it may have, at law or in equity, to seek an
injunction enjoining and restraining the Executive from doing or continuing to
do any such act or any other violations or threatened violations of this Section
11.
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12. RETURN OF PROPERTY. In the event of the termination of the
Executive's employment with the Company, regardless of the reason for such
termination, the Executive shall immediately return to the Company all
documents, Materials, information and other property of the Company (including,
but not limited to, keys, records, notes, data, memoranda, models and equipment)
whether or not such property constitutes Confidential Information including,
without limitation, any computerized, duplicated, copied or other records,
extracts or summaries of any such information. The provisions of this Section 12
shall survive the termination of this Agreement.
13. SEVERABILITY. If any provision of this Agreement for any reason
shall be held, by a court of competent jurisdiction, to be illegal, invalid or
unenforceable, the parties hereto agree that such illegality, invalidity or
unenforceability shall not render the entire Agreement illegal, invalid or
unenforceable, and it is their desire, that such court shall amend or modify
this Agreement, and that this Agreement, in its modified form, shall be
enforceable and valid to the maximum extent permitted by applicable law, and
each other provision hereof shall not thereby be affected and shall be given
full force and effect, and the parties shall cooperate in good faith to further
modify this Agreement so as preserve to the maximum extent possible the intended
benefits to be received by the parties.
14. 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.
15. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any rules
respecting the conflicts of laws.
16. 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
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notice given in accordance with this Section 16: (a) if to the Company, to 000
X. Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 and (b) if to the Executive, to
00000 00xx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000.
17. 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.
18. LITIGATION EXPENSES. In the event of any litigation or other
proceeding between the Company and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights hereunder, the Company
shall reimburse the Executive for all reasonable costs and expenses relating to
such litigation or other proceeding, including reasonable attorney's fees and
expenses, provided that such litigation or proceeding results in any
(i) settlement requiring the Company to make a payment to
the Executive, or
(ii) judgment, order, finding, award, determination or other
resolution in favor of the Executive, provided such result is not subsequently
reversed on appeal or in a collateral proceeding.
19. COMPLETE UNDERSTANDING. This Agreement supersedes any prior
contracts, understandings, discussions and agreements, written or oral, 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.
20. MODIFICATION; WAIVER.
(a) This Agreement may be amended, canceled or waived if, and
only if, such amendment, cancellation or waiver is in writing and signed, in the
case of an amendment or cancellation, 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 of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
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21. 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.
22. RECURRING WORDS. As used in this Agreement, (a) the word
"including" is always without limitation, (b) the word "days" refers to calendar
days, including Saturdays, Sundays and holidays, and (c) words in the singular
number include words in the plural number and vice versa.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become binding when each party hereto shall have received
counterparts hereof signed by the other party hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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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.
Monogram Acquisition, Inc.
________________________________ By:_____________________________
Witness Name:
Title:
________________________________ ________________________________
Witness Xxxxxxx X. Xxxxxxx. Jr.
Toymax International, Inc. hereby unconditionally guarantees the payment and
performance by the Company of all of the Company's obligations under the
foregoing Employment Agreement.
TOYMAX INTERNATIONAL, INC.
By:_____________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: President
Date: May 27, 1999
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TOYMAX INTERNATIONAL, INC.
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "AGREEMENT"), dated as of August __, 1999, by
and between Toymax International, Inc. (the "COMPANY"), a Delaware corporation
having an address at 000 X. Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, and
Xxxxxxx X. Xxxxxxx, Xx. (the "GRANTEE"), having an address at 00000 00xx Xxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxx 00000.
In accordance with Sections 1 and 5 of the Toymax International, Inc.
Amended and Restated 1997 Stock Option Plan (the "PLAN") and subject to the
terms of the Plan and this Agreement, the Company hereby grants to the Grantee
an option (the "OPTION") to purchase all or any part of an aggregate of Fifty
Thousand (50,000) shares of the Common Stock, $.01 par value per share (the
"SHARES") of the Company. The Option granted hereby is intended to constitute an
Incentive Stock Option, within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "CODE").
To evidence the Option and to set forth its terms, the Company and the
Grantee agree as follows:
1. CONFIRMATION OF GRANT. The Company hereby evidences and confirms its
grant of the Option to the Grantee as of the date of this Agreement. The Option
is intended to be an "incentive stock option" within the meaning of Section 422
of the Code.
2. NUMBER OF SHARES. This Option shall be for an aggregate of Fifty
Thousand (50,000) Shares.
3. EXERCISE PRICE. The exercise price shall be [$ ] per share (the
"EXERCISE PRICE"). The Exercise Price shall not be less than 100% (110% if the
Grantee is a 10% Shareholder) of the Fair Market Value of one share of Common
Stock on the date hereof. The total exercise price for all Shares subject to the
Option is [$ ].
4. TERM AND EXERCISABILITY OF THE OPTION. The Option shall expire on May
27, 2009 (which date shall not be more than 10 years (five years if the Grantee
is a 10% Shareholder) from the date of this Agreement), and may be exercised
prior to its expiration at such times and for such number of whole Shares as
follows:
(a) On or after September 15, 1999, the Option is exercisable for up
to 40% of the total number of Shares subject to this Option;
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(b) On or after May 27, 2000, the Option is exercisable for up to
60% of the total number of Shares subject to this Option;
(c) On or after May 27, 2001, the Option is exercisable for up to
80% of the total number of Shares subject to this Option; and
(d) On or after May 27, 2002, the Option is exercisable for up to
100% of the total number of Shares subject to this Option.
Notwithstanding the foregoing provisions of this Paragraph 4, (i) any
portion of the Option which is not otherwise exercisable at the time of the
Grantee's termination of employment with the Company shall not become
exercisable after such termination, (ii) no exercise shall be effective to the
extent it would require the delivery of fractional Shares, and (iii) the Option
shall not become exercisable in any calendar year to the extent that the
aggregate Fair Market Value of all Incentive Stock Options for shares of Common
Stock (including the Option) granted to the Grantee (determined as of the
respective date or dates of grant of such Incentive Stock Options) which become
exercisable for the first time in such calendar year would exceed $100,000.
5. EXERCISE OF OPTION. On or after the date any portion of the Option
becomes exercisable, but prior to the expiration of the Option in accordance
with Paragraph 4 above, the portion of the Option which has become exercisable
may be exercised in whole or in part by the Grantee (or his or her permitted
successor) upon delivery of the following to the administrative committee of the
Plan (the "COMMITTEE"):
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased;
(b) cash (or other consideration acceptable to the Committee, in its
sole discretion) in an amount (or, in the case of other consideration,
having a combined value) equal to the aggregate Exercise Price of the
Shares then being purchased;
(c) additional cash in an amount reasonably requested by the
Committee to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Grantee in connection with the exercise of this
Option, unless, in accordance with Section 18 of the Plan and subject to
the prior approval of the Committee, which may be withheld by the
Committee in its sole discretion, the Grantee satisfies such obligations,
in whole or in part by (i) causing the Company to withhold Shares
otherwise issuable pursuant to the exercise of the Option, or (ii)
delivering to the Company shares of Common Stock already owned by the
Grantee.
(d) a letter, if requested by the Committee, in such form and
substance as
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the Committee may require, in its sole discretion, setting forth the
investment intent of the Grantee, or his or her permitted successor, as
the case may be.
Notwithstanding the foregoing, the Grantee (or any permitted successor)
shall take whatever additional actions, including, without limitation, the
furnishing of an opinion of counsel, and execute whatever additional documents
the Committee may, in its sole discretion, deem necessary or advisable in order
to carry out or effect one or more of the obligations or restrictions imposed by
the Plan, this Agreement or applicable law.
Upon satisfaction of the conditions and requirements of Paragraph 5
hereof, the Company shall deliver to Grantee (or his or her permitted successor)
a certificate or certificates for the number of Shares in respect of which the
Option shall have been exercised (less any Shares withheld pursuant to clause
(c) of this Paragraph 5).
The acceptance of any Shares upon exercise of the Option shall constitute
an agreement by the Grantee (i) to notify the Company if any or all of such
Shares are disposed of by the Grantee within two (2) years from the date the
Option was granted or within one (1) year from the date the Shares were issued
to the Grantee pursuant to the exercise of the Option, and (ii) to remit to the
Company, at the time of and in the case of any such disposition, an amount
sufficient to satisfy the Company's federal, state and local withholding tax
obligations, if any, with respect to such disposition, whether or not, as to
both (i) and (ii), the Grantee is in the employ of the Company at the time of
such disposition.
6. LIMITATION UPON TRANSFER. This Option and all rights granted hereunder
shall not be transferred by the Grantee, other than by will or by the laws of
descent and distribution, shall not be assigned, pledged or hypothecated in any
way, and shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer this Option, other than by will or by the laws of
descent and distribution, or to assign, pledge or hypothecate or otherwise
dispose of this Option or of any rights granted hereunder contrary to the
provisions hereof, or upon the levy of any attachment or similar process upon
this Option or such rights, this Option and such rights shall immediately become
null and void. The Option shall be exercised during the Grantee's lifetime only
by the Grantee or by the grantee's legal representative.
7. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION FOR CAUSE. If the
Grantee's employment with the Company terminates, the Option, to the extent then
exercisable, shall remain exercisable to the extent set forth in Sections 10 and
11 of the Plan; PROVIDED, HOWEVER, that no part of the Option shall be
exercisable after the expiration of the Option pursuant to Paragraph 4 hereof.
Notwithstanding the foregoing, the Grantee hereby acknowledges and agrees that
in accordance with Section 10 of the Plan, all or part of the Option granted
hereunder may be forfeited upon his or her termination of employment with the
Company if the Board of Directors of the Company (the "BOARD") determines that
the Grantee incurred or is to incur a termination for cause.
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The Board shall have the power to determine, in its sole discretion, what
constitutes a termination for cause, whether the Grantee has incurred or is to
incur a termination for cause, and the date as of which any such forfeiture
occurs.
8. EFFECT OF BREACH OF EMPLOYMENT OR OTHER AGREEMENT. The Grantee hereby
acknowledges and agrees that in accordance with Section 10 of the Plan, all or
part of the Option granted hereunder may be forfeited upon the determination by
the Board that the Grantee has violated any provision of an employment or
confidentiality or non-disclosure agreement. The Board shall have the power to
determine, in its sole discretion, what constitutes a breach of an employment or
confidentiality or non-disclosure agreement, whether the Grantee has breached
such an agreement and the date upon which such breach occurs.
9. EFFECT OF TERMINATION OR AMENDMENT OF PLAN. No suspension, termination,
modification, or amendment of the Plan or this Agreement may, without the
express written consent of the Grantee, adversely affect the rights of the
Grantee under this Option.
10. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of this Option shall
not in any way affect the right or power of the Company to make adjustments,
reclassifications, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
11. RIGHTS AS A SHAREHOLDER. The Grantee shall have the rights of a
shareholder with respect to the Shares covered by the Option only upon becoming
the holder of record of those Shares.
12. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates for Shares pursuant to the exercise of the Option, unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority, and the requirements of any exchange upon which Shares
are traded. The Company shall in no event be obligated to register any
securities pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulation or
requirement. The Company may require, as a condition of the issuance and
delivery of such certificates and in order to ensure compliance with such laws,
regulations, and requirements, that the Grantee make such covenants, agreements,
and representations as the Company, in its sole discretion, considers necessary
or desirable.
13. NO OBLIGATION TO EXERCISE OPTION. The granting of the Option shall
impose no obligation upon the Grantee to exercise the Option.
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14. AGREEMENT NOT A CONTRACT OF EMPLOYMENT OR OTHER RELATIONSHIP. This
Agreement is not a contract of employment, and the terms of employment of the
Grantee or other relationship of the Grantee with the Company or any of its
subsidiaries or affiliates shall not be affected in any way by this Agreement
except as specifically provided herein. The execution of this Agreement shall
not be construed as conferring any legal rights upon the Grantee for a
continuation of an employment or other relationship with the Company or any of
its subsidiaries or affiliates, nor shall it interfere with the right of the
Company or any of its subsidiaries or affiliates to discharge the Grantee and to
treat him or her without regard to the effect which such treatment might have
upon him or her as a Grantee.
15. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered, or express mail, postage prepaid, return receipt
requested, or by a reputable overnight delivery service. Any such notice shall
be deemed given when received by the intended recipient.
16. GOVERNING LAW. Except to the extent preempted by Federal law, this
Agreement shall be construed and enforced in accordance with, and governed by,
the laws of the State of New York.
17. RECEIPT OF PLAN. Grantee acknowledges receipt of a copy of the Plan,
and represents that Grantee is familiar with the terms and provisions thereof,
and hereby accepts this Option subject to all the terms and provisions of this
Agreement and of the Plan. Grantee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee or the
Board upon any questions arising under this Agreement or the Plan.
18. DEFINITIONS . All capitalized terms not otherwise defined herein shall
have the meanings set forth in the Plan.
IN WITNESS WHEREOF, the Company and the Grantee have duly executed this
Agreement as of the date first written above.
TOYMAX INTERNATIONAL, INC.
__________________________ __________________________________
Witness Xxxxxxx Xxxxx, Secretary
__________________________ __________________________________
Witness
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__________________________ __________________________________
Witness Xxxxxxx X. Xxxxxxx, Xx.
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