EXHIBIT 10.20
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 7, 1996, between Toy Biz,
International, Ltd. (the "Company") and ▇▇▇▇ Fine (the "Executive").
The Company wishes to employ the Executive, and the Executive wishes
to accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as President -Toy Biz International, Ltd. (reporting directly to
the Chief Executive Officer of the Company's parent company) or in such other
executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such other duties consistent with such position as may
be assigned to the Executive by the Board of Directors or the Chief Executive
Officer.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be.
1.3 Location. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company or in an office to be
established in the Lenox, Massachusetts area, subject to reasonable travel
requirements on behalf of the Company.
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2. Term of Employment.
2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on May 7, 1996 and shall end on December
31, 1999 or such later date to which the Term is extended pursuant to Section
2.2.
2.2 Special Curtailment. The Term shall end earlier than the original
December 31, 1999 termination date provided in Section 2.1, if sooner terminated
pursuant to Section 4. Nonextension of the Term shall not be deemed to be a
wrongful termination of the Term or this Agreement by the Company pursuant to
Section 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable bi-weekly in arrears, at the annual rate of not less than
$400,000, less such deductions or amounts to be withheld as required by
applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement. A Bonus
Pool (the "Bonus") will be established, as follows:
2% of F.O.B.-Hong Kong sales of TBI up to $25,000,000, plus 1% of
F.O.B.-Hong Kong sales of TBI over $25,000,000.
The Executive will make awards from the Bonus to himself and other Company
employees working directly for or with the Executive. Bonuses awarded will be
paid within ninety (90) days of calendar year-end and all awards will be subject
to the approval of the Company's management and auditors. The Bonus calculation
will start anew from the first dollar of the Company's F.O.B.-Hong Kong based
sales beginning on the commencement of the Term, and thereafter on each January
1 of the Term beginning January 1, 1997.
3.2 Bonus. In addition to the amounts to be paid to the Executive
pursuant to Section 3.1, the Executive will be eligible, upon the decision of
the Board of Directors and in the Board's sole discretion, to receive a
discretionary bonus with respect to each year of the Term in such amount as the
Board in its sole discretion may determine.
3.3 Business Expenses. The Company shall pay or
reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive during the Term in the
performance of the Executive's services under this Agreement,
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upon presentation of expense statements or vouchers or such other supporting
information as the Company customarily may require of its officers provided,
however, that the maximum amount available for such expenses during any period
may be fixed in advance.
3.4 Vacation. During the Term, the Executive shall be entitled to a
vacation period or periods taken in accordance with the vacation policy of the
Company during each year of the Term. Vacation time not used by the end of a
year shall be forfeited.
3.5 Fringe Benefits. During the Term, the Executive shall be entitled
to all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, group insurance or other so-called "fringe" benefit
plan which the Company provides to its employees generally, together with
executive medical benefits for the Executive, as from time to time in effect for
executives of the Company generally.
3.6 Additional Benefits. During the Term, the Executive shall be
entitled to such other benefits as are specified in Appendix I to this
Agreement.
4. Termination.
4.1 Death. If the Executive shall die during the Term, or if during
the Term the Executive shall become physically or mentally disabled, whether
totally or partially, such that the Executive is unable to perform the
Executive's services hereunder for a period aggregating one (1) month, the Term
shall terminate and no further amounts or benefits shall be payable hereunder.
4.2 Cause. In the event of gross neglect by the Executive of the
Executive's duties hereunder, conviction of the Executive of any felony,
conviction of the Executive of any lesser crime or offense involving the
property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, breach by the Executive of any
material provision of this Agreement, the Company may at any time by written
notice to the Executive terminate the Term and, upon such termination, this
Agreement shall terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder, except any as shall have been earned to
the date of such termination.
4.3 Severance. The Company may at any time give notice of
termination of Executive's services hereunder as of a date (not earlier than ten
(10) days from such notice) to be specified in such notice, and this Agreement
shall terminate on the date so specified; provided that, unless such notice is
given pursuant to Section 4.2, the Executive shall be entitled to receive his
salary and car allowance at the rates provided in
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Sections 3.1 and 3.6 hereof to the date on which termination shall take effect;
his salary and other benefits at the rates provided in Sections 3.1 and 3.6,
paid at the Company's option, in bi-weekly or monthly installments for a period
of (I) eighteen (18) months in the event such termination occurs during the one
(1) year period following commencement of the Term; and (II) twelve (12) months
in the event such termination occurs following the first anniversary and before
the expiration of the Term. In addition, the Executive shall receive a pro rata
portion of the Bonus for the year in which such termination occurs, which shall
be calculated by multiplying the F.O.B. sales value of accepted orders by the
Company as of the date of termination by the appropriate percentages as per
Paragraph 3.1 (the "Pro Rata Bonus"). Notwithstanding the foregoing, both
severance obligations and the Pro Rata Bonus shall be paid in the event of
termination as a result of a change of control involving the Company (which
shall be defined as a transaction, the resulting entity of which is not
controlled by the Company or its shareholders on the date hereof). Within ten
days of such termination, the Company shall pay Executive the Pro Rata Bonus.
All severance payments shall cease upon Executive beginning work as an employee
or consultant for any other entity, regardless of whether the Executive is
terminated for cause or otherwise.
5. Protection of Confidential Information; Non-Competition.
5.1 In view of the fact that the Executive's work for the Company will
bring the Executive into close contact with many confidential affairs of the
Company and its affiliates not readily available to the public, and plans for
future developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all confidential
matters of the Company and its affiliates, including, without limitation, "know
how", trade secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects, and other
business affairs of the Company and its affiliates, learned by the Executive
heretofore or hereafter, and not to disclose them to anyone outside of the
Company, either during or after the Executive's employment with the Company,
except in the course of performing the Executive's duties hereunder or with the
Company's express written consent; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's or its
affiliates' businesses and all property associated therewith,
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which the Executive may then possess or have under the Executive's control.
5.2 During the Term, and for a period of one (1) year after he ceases
to be employed by the Company under this Agreement or otherwise, if such
cessation arises as a result of a circumstance described in Section 4.2, the
Executive shall not, directly or indirectly, enter the employ of, or render any
services to, any person, firm or corporation engaged in any business competitive
with the business of the Company or of any of its subsidiaries or affiliates;
the Executive shall not engage in such business on the Executive's own account;
and the Executive shall not become interested in any such business, directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any other relationship or
capacity provided, however, that nothing contained in this Section 5.2 shall be
deemed to prohibit the Executive from acquiring, solely as an investment, up to
five percent (5%) of the outstanding shares of capital stock of any public
corporation, or during such one (1) year period, taking a position with a
business the main business of which is the sale of retail products to customers.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of the preceding paragraph, and the Executive hereby agrees to account for and
pay over such Benefits to the Company. Each of the rights and remedies
enumerated above shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
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5.5 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Company, all expenses (including reasonable attorneys' fees) of
the Company in such action, suit or other proceeding shall (on demand of the
Company) be paid by the Executive. In the event the Company fails to obtain a
judgment for money damages or an injunction in favor of the Company, all
expenses (including reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive) be paid by the
Company.
6. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, Invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of Its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign
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countries; (c) sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of the Executive's inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within one
(1) year after the termination of the Executive's employment by the Company, if
is to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert any rights
to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
7. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as
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follows (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company, to:
Toy Biz, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
If to the Executive, to:
▇▇▇▇ Fine
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10. General.
10.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in New York.
10.2 The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
10.3 This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either
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party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
11. Subsidiaries and Affiliates.
11.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TOY BIZ INTERNATIONAL, LTD.
By: _______________________________________
Executive:
_____________________________________(SEAL)
▇▇▇▇ Fine
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APPENDIX I
Additional Benefits:
1. The Executive shall be entitled to an automobile allowance of
________________________________ ($____________) per month, payable in
accordance with the Company's regular policy.
2. The Executive shall be entitled to stock options commensurate with
the Executive's position, but in no event less than thirty thousand (30,000)
stock options. The exercise price for such options shall be the closing price of
the stock on the date of the grant, but in no event less than $18.00 per share.
3. Within thirty (30) days following the commencement of the term,
Executive shall be paid a one time only signing bonus of Seventy-Five Thousand
Dollars ($75,000), subject to normal and customary tax withholding.
4. Provided that a closing occurs prior to the expiration or
termination of the term of this Agreement, and upon submission of sufficient
proof (as hereafter described), Executive shall be paid a one time bonus of up
to, but not exceeding, One Hundred Eighty Thousand Dollars ($180,000),
reflecting loss upon a sale of Executive's primary residence located in Lenox,
Massachusetts. Sufficient proof of loss shall be defined as that amount
determined to be loss upon sale of such principal residence and indicated or to
be indicated on Executive's federal income tax return for the tax year in which
such transaction occurs.
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