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(b)
Employer and Employee shall hire an employee that is
mutually
satisfactory to Employer and
Employee to assist Employee in performing his duties
hereunder.
2.
Term of Employment . (a) The term of Employee’s
employment hereunder (“Term”) shall commence on July 1,
2003 and shall continue until June 30, 2006 unless terminated as
provided in Paragraph 10 of this Agreement.
(b)
At least six (6) months prior to the end of the Term, the Parties
shall begin discussions with respect to an extension of the Term of
this Agreement.
3.
Compensation .
(a)
Salary . As compensation for Employee’s services
during the Term, Employer shall pay Employee a salary at the rate
Three Hundred Fifty Thousand ($350,000) per year. The CEO or the
Compensation Committee of the Board of Directors of 4Kids
(“Compensation Committee”) shall have the right, but
not the obligation, to provide Employee with salary increases, from
time to time, in the sole discretion of the Compensation
Committee.
(b)
Withholding . All payments of compensation shall be made in
appropriate installments to conform with the regular payroll dates
for salaried personnel of Employer. Employer shall be entitled to
deduct from each salary payment, all deductions as may be required
by law, including, without limitation, deductions for federal,
state and local income taxes and FICA.
(c)
Fringe Benefits . During the Term, Employee shall be
entitled to participate in all insurance and other benefits as are
now, or hereafter may be, established by Employer and affiliates
for the benefit of all employees of Employer and affiliates,
subject, however, to the provisions of the various benefit plans
and programs in effect from time to time. Employee shall also be
entitled to such additional benefits as may be made available to
the senior executives of Employer and affiliates. The benefits
described herein and on the schedule attached hereto are the
benefits referred to as “Fringe Benefits”.
(d)
Vacation. Employee shall be entitled to accrued vacation at
the rate of four (4) weeks per calendar year during the Term. Such
vacation shall be taken at such times as shall be approved by the
CEO of 4Kids. Employer further acknowledges that Employee typically
spends four (4) to six (6) weeks each summer in Europe meeting with
European broadcasters and home video licensees. Employer and
Employee agree that fifty percent (50%) of such time shall be
deemed vacation.
(e)
Expenses. Employer shall reimburse Employee in conformity
with the expense reimbursement practices of Employer for the
reasonable, ordinary and necessary business expenses incurred by
Employee in the performance of Employee’s duties hereunder.
Employee shall submit all receipts, invoices and other such
documents evidencing such expenses as may be required by the policy
of Employer.
4.
Bonus Compensation . (a) For each full calendar year of the
Term, Employee shall be eligible to participate in the bonus pool
established by the Compensation Committee (the “Bonus
Pool”), which Bonus Pool shall be based upon a percentage
designated by the Compensation Committee of the profit before tax
of 4Kids and subsidiaries. The Compensation Committee and the CEO
of 4Kids, in their sole and absolute discretion, shall determine
the amount of the Bonus Pool, if any, to be awarded to Employee
based upon Employee’s performance during the calendar year in
question.
(b)(i)
Notwithstanding anything herein to the contrary, Employer shall pay
Employee a minimum bonus (“MB”) of not less than One
Hundred Fifty Thousand Dollars ($150,000) for each calendar year
during the Term subject to the following reduction: the MB with
respect to any calendar year during the Term shall be reduced by an
amount equal to fifty percent (50%) of the Annual Stock Option
Value (as defined below), if any, with respect to the applicable
calendar year for which the MB is to be paid (“Applicable
Calendar Year”). Nothing herein shall be deemed to prevent
Employee from receiving both an MB and a share of the Bonus
Pool.
(ii)
For purposes of this Agreement, the Annual Stock Option Value shall
equal (x) the Net Proceeds (as defined below) received by, or
credited to, Employee from the exercise by Employee of stock
options issued to Employee with respect to the Applicable Calendar
Year (“ACY Options”) and sale by Employee of the 4Kids
stock underlying such ACY Options during such Applicable Calendar
Year and (y) the Value Increase (as defined below), if any, of any
ACY Options granted to but not exercised by Employee during such
Applicable Calendar Year.
(iii)
For purposes of this Agreement, Net Proceeds shall be defined as
the sum received by, or credited to, Employee from the sale by
Employee during the Applicable Calendar Year of the 4Kids stock
underlying such ACY Options that have been exercised, after
deduction of the exercise price paid with respect to such exercised
stock options.
(iv)
For purposes of this Agreement, Value Increase shall be computed by
multiplying (x) the number of ACY Options granted to Employee
during the Applicable Calendar Year but not exercised by Employee
during such Applicable Calendar Year assuming that Employee were
fully vested in all such ACY Options granted by 4Kids to Employee
for such Applicable Calendar Year, by (y) the difference between
the grant price for such 4Kids stock options and the closing price
of 4Kids common stock as of the last day of trading for such
Applicable Calendar Year.
For example: if Employee were
granted 10,000 stock options for calendar
year 2003 with an exercise price
of $20 per share, Employee during 2003 sold 6,000 ACY Options for
Net Proceeds of $75,000 and the closing price of the 4Kids common
stock as of the last day of trading in 2003 was 26, the Annual
Stock Option Value would be equal to fifty percent (50%) of the sum
of (x) $75,000 (i.e., the Net Proceeds on the sale during 2003 of
the ACY Options), and (y) $24,000 (i.e., 4,000 ACY Options granted
but not exercised in 2003 multiplied by the difference between the
closing price on the last day of trading less the grant price for
the 2003 stock options = $24,000). In this example,
Employee’s MB for 2003 would be reduced by fifty percent
(50%) of the sum of $75,000 and $24,000 or by a total of
$49,500.
(d)
The amount of the Bonus Pool to be awarded to Employee and/or the
MB shall be paid to Employee no later than ten (10) business days
after completion of the annual audit of the financial statements of
4Kids which audit is generally completed by March 31 of the year
immediately succeeding the year to which the Bonus Pool and/or MB
pertains.
5.
Stock Options .
(a)
4Kids hereby grants to Employee options under the terms and
conditions of the Stock Option Plan of 4Kids (“SOP”) to
acquire twenty-five thousand (25,000) shares of the common stock of
4Kids. The date of grant shall be the date of the execution of this
Agreement. The exercise price of such stock options shall be
determined in accordance with the SOP. Fifty percent (50%) of such
stock options shall be vested as of the date of grant. The
remaining fifty percent (50%) of the stock options shall vest as of
the first anniversary of the date of grant of such stock options to
Employee. The rights and obligations of the Parties with respect to
any grant of stock options shall be set forth in the form Stock
Option Agreement to be entered into by Employee and
4Kids.
(b)
Employee shall also be eligible to receive additional grants of
stock options as determined in the sole discretion of the
Compensation Committee.
6.
Place of Employment . During the Term, Employee shall be
required to perform Employee’s duties at the principal office
of Employer in the New York City Metropolitan Area. Employee shall
undertake all reasonable travel required by Employer and affiliates
in connection with the performance of Employee’s duties
hereunder.
7.
Non-Competition and Protection of Confidential Information
.
(a)
Employee agrees that his position with Employer places him in a
position of confidence and trust with the clients and employees of
Employer. Employee acknowledges that inasmuch as the business of
Employer is carried on in several states of the United States
and
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