EXHIBIT 9
TERMINATION OF EMPLOYMENT AGREEMENT
Agreement dated March 11, 2002 entered into between and among XXXXXX XXXXXXXX,
an individual ("Executive"), 1515037 ONTARIO LTD., a corporation organized under
the law of Ontario, Canada with their addresses at 0 Xxxxx Xxxx Xxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxx X0X000 ("Ontario Ltd."), TOYMAX INTERNATIONAL, INC., a
Delaware corporation with its offices at 000 Xxxx 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 Executive agrees that payment by the Company of
US$200,000.00 to Ontario Ltd. shall constitute 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 represents and warrants
to the Company that he is the sole stockholder, officer and director of Ontario
Ltd. Executive acknowledges that the Company and Toymax International shall
terminate forthwith the life insurance, disability and accident insurance and
health insurance benefits referred to in the Employment Agreement. Such
$200,000.00 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.
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 competes with 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 and Ontario Ltd. each
acknowledges and agrees that all of the Trade Rights are the sole
property of Toymax International.
b. "WORKS FOR HIRE". Executive and Ontario Ltd. each 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 and Ontario Ltd. each 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 and Ontario Ltd.
each 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 and Ontario Ltd. each 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 and Ontario Ltd. 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 itself 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 and Ontario Ltd. may
invest their 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' (including Ontario Ltd.) 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 and Ontario Ltd. each acknowledges that the
provisions of this Section 4, and the period of time, the lack of
any specific geographic area given the international nature of the
business of the Company and its Affiliates, and 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.
b. 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
and Ontario Ltd. each 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 and Ontario Ltd. each
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.
c. 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 and Ontario Ltd. shall not, at any time
hereafter, use or disclose
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any Confidential Information to any Person other than to the Company
or its designees or except as may otherwise be required in
connection with the business and affairs of the Company, and in
furtherance of the foregoing Executive and Ontario Ltd. each agrees
that:
i. Executive and Ontario Ltd. 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 and Ontario Ltd. will take all such steps as may be
reasonably necessary to prevent the disclosure of Confidential
Information; and
iii. Executive and Ontario Ltd. will not utilize Confidential
Information without first having obtained the disclosing
party's written consent to such utilization.
d. 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 or Ontario Ltd 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 or Ontario Ltd. lawfully had in his or its
possession prior to the date of this Agreement;
iv. that, hereafter, through no act or omission on the part of the
Executive or Ontario Ltd., becomes information generally
available to the public.
e. 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 or Ontario Ltd. that relates to such
Confidential Information, including all copies and/or any other form
of reproduction and/or description thereof made by Executive or
Ontario Ltd. shall, at the disclosing party's or JAKKS' option, be
returned to the disclosing party or JAKKS or destroyed.
f. In the event that Executive or Ontario Ltd. 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 and Ontario Ltd. agrees to furnish only such
portion of the Confidential Information which is legally required to
be furnished.
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5. Miscellaneous.
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 or Ontario Ltd. at:
0 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X000
Fax: 000-000-0000
with a copy to: Xxxxx Raysman Xxxxxxxxx
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, 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.
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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.
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 County, New
York, United States of America, and to the jurisdiction of the
United States District Court for the Southern District 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 County of New York, State of New York, or such District, and
agrees that service of any summons, complaint, Notice or other
process relating to such proceeding may be effected in the manner
provided by 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
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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.
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.
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: Exec. VP/CFO
/s/ XXXXXX XXXXXXXX
--------------------------------
Xxxxxx Xxxxxxxx
1515037 ONTARIO LTD.
By: /s/ XXXXXX XXXXXXXX
--------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
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