Employment Agreement - Topps Co. Inc. and Arthur T. Shorin
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), effective as
of the 1st day of March, 1999, by and between THE TOPPS COMPANY, INC., a
Delaware corporation (the "Company"), and ARTHUR T. SHORIN, a resident of New
York (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Company are parties to an employment
agreement originally effective as of October 28, 1991 (the "Employment
Agreement");
WHEREAS, pursuant to Section 16 of the Employment Agreement, the parties
may amend the Employment Agreement by written instrument;
WHEREAS, the Executive and the Company desire to amend the Employment
Agreement to set forth the terms on which the Executive will serve as Chief
Executive Officer of the Company from March 1, 1999 through February 28, 2002;
WHEREAS, the Executive is willing to continue to serve the Company on the
terms and conditions herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
This Agreement shall have a three-year term, which shall commence as of the
date first above written and end on March2, 2002, unless terminated earlier as
provided in Section 6 hereof. Notwithstanding the foregoing, the term of this
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Agreement may be extended by mutual agreement of the parties in accordance with
subsection 7(d) hereof.
3. POSITION AND DUTIES
(a) The Executive shall serve as sole President and Chief Executive Officer
of the Company and shall perform such duties and exercise such supervision and
powers over and with regard to the business of the Company as are similar in
nature to those duties and services customarily associated with the position of
Chief Executive Officer, as well as such other similar duties and services as
may be reasonably prescribed from time to time by the Board of Directors of the
Company (the "Board"). The Executive shall perform such duties to the best of
his ability and in a diligent and proper manner.
(b) Subject to the next succeeding sentence, except during customary
vacation periods and periods of illness, the Executive shall, during his
employment hereunder, devote substantially his full business time and attention
to the performance of services for the Company. The Company hereby acknowledges
that the Executive shall be permitted to devote a reasonable amount of his
business time, consistent with his duties to the Company, to the management of
personal and family interests.
4. PLACE OF PERFORMANCE
In connection with the Executive's employment by the Company, the Executive
shall be based at the principal executive offices of the Company located in New
York, New York, except for reasonably necessary travel on the Company's business
and in connection with the performance of his duties hereunder.
5. COMPENSATION AND RELATED MATTERS
(a) Base Salary. During the term of this Agreement, the Company shall pay
to the Executive a base salary at a rate of $822,269 per annum, which may be
increased from time to time in the sole discretion of the Compensation Committee
of the Board ("Base Salary"). Base Salary shall be paid in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. Base Salary payments (including any increased Base Salary
payments) hereunder shall not in any way limit or reduce any other obligation of
the Company hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of the Company to pay the
Executive's Base Salary hereunder.
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(b) Expenses. During the term of this Agreement, the Executive shall be
entitled to receive prompt reimbursement from the Company of all reasonable
expenses incurred by the Executive in promoting the business of the Company and
in performing services hereunder, including all expenses of travel and
entertainment and living expenses while away from home on business or at the
request of and in the service of the Company, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company from time to time.
(c) Other Benefits. (i) Nothing contained herein shall affect adversely the
Executive's right to participate in any of the Company's employee pension,
profit sharing, tax-deferred savings and welfare benefit plans provided for
employees generally (other than severance plans), or in any executive
compensation arrangements (including, without limitation, Company-paid medical
insurance and medical expense reimbursement plans, and cash or equity-based
incentive compensation plans) in which any of the executive officers of the
Company are entitled to participate (collectively, the "Company Compensation
Plans"), but the benefits provided under this Agreement shall be in lieu of all
other benefits provided under any Company severance plan. During the term of
this Agreement, the Executive shall be entitled to participate in all Company
Compensation Plans on a basis which is no less favorable than for other senior
executive officers of the Company and thereafter, to the extent post-termination
benefits are required under the terms of the respective Company Compensation
Plans.
(ii) During the term of this Agreement, the Executive shall not be eligible
to participate in the Company's group term life insurance program. The Executive
shall be eligible to participate in the Company's Long-Term Disability Insurance
Plan as in effect on the date of this Agreement (the "LTD Plan") until
attainment of age 65. For purposes of the LTD Plan, during the period prior to
attaining 65, the definition or other standard for determining disability, the
Executive's eligibility for long-term disability benefits, and the level of
coverage, time of commencement, duration of benefits, and offsets to benefits on
account of other disability benefits or other sources of income, shall all be
made by reference to the provisions and procedures of the LTD Plan.
(iii) The Company and the Executive agree that nothing in this Agreement
shall preclude the Company from amending or terminating any Company Compensation
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Plan whether now or hereinafter in effect, it being the intent of the parties
that the Executive shall continue to be entitled during the Executive's term of
employment to benefits under such Company Compensation Plans at least equal to
those under which he is covered as of the date of execution of this Agreement.
Nothing in this Agreement shall operate as, or be construed to authorize, a
reduction without the Executive's written consent of the level of such benefits;
in the event of any such reduction, by amendment or termination of any such
Company Compensation Plan, the Executive shall continue to be entitled to
receive from the Company during the term of this Agreement benefits at least
equal in value to the benefits to which the Executive would have been entitled
under such Company Compensation Plans if such reduction had not taken place.
(d) Bonus Compensation. For each fiscal year of the Company during the term
of this Agreement, the Executive shall be eligible for a target bonus
opportunity which is no less favorable than that provided for other senior
executive officers of the Company. Determination of the Executive's bonus shall
be based on the same objectives used for determining bonus payouts for other
senior executives of the Company.
(e) Option Awards. On March 1, 1999, the Compensation Committee of the
Board approved the grant to the Executive of an option (the "Option") to
purchase 250,000 shares of the Company's common stock. Except as otherwise
provided by this Agreement, such grant shall be governed by the terms and
conditions of The Topps Company, Inc. 1996 Stock Option Plan (the "Option Plan")
and of the related Option Agreement entered into by the Executive and the
Company as of March 1, 1999. Future grants of options to the Executive shall be
made under the Company's Option Plan at the discretion of the Compensation
Committee of the Board.
(f) Other Incentive Compensation Arrangements. During the term of this
Agreement, without limitation upon the rights otherwise conferred under this
Section, the Executive shall be entitled to participate in all newly-implemented
equity or cash-based incentive compensation arrangements on the same basis as
other senior executive officers of the Company.
(g) Funding of Existing Supplemental Pension Agreement. (i) To provide
funding for the Executive's existing supplemental pension agreement dated
May 19, 1986 (the "Supplemental Pension Agreement"), an irrevocable "rabbi"
trust was established on May 20, 1993 with Sanford B. Ehrenkranz, Esq. serving
as trustee (the "Rabbi Trust"). Such trust includes provisions that limit access
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of the Company and the Company's creditors to assets held thereunder, to the
maximum extent consistent with the Executive's not being in constructive receipt
of income with respect to assets contributed, under current ruling standards of
the Internal Revenue Service. The Company shall arrange for an updated actuarial
valuation to be performed and shall contribute cash or cash equivalents to such
trust with a value equal to the present value of the supplemental pension
benefits currently accrued for the Executive in respect of Company service
through December 31, 1998 under the Supplemental Pension Agreement, not later
than September 30, 1999. The Company shall thereafter make an annual cash
contribution prior to the end of the current and each succeeding fiscal year of
the Company in an amount sufficient to fully fund the present value of the
Executive's accrued supplemental pension benefit as of the end of the calendar
year which ends within such fiscal year, based on the lump sum amount that would
have been distributable to the Executive, assuming termination of employment had
occurred on such date. The Company shall provide annual written notice to the
Executive identifying the assets held under the Rabbi Trust and stating the fair
market value thereof within 45 days after the making of each such annual
contribution. The amount to be contributed from time to time shall be based on
an actuarial valuation of the Executive's accrued supplemental pension benefit
prepared by an independent actuary of a major actuarial consulting firm selected
by the Executive and agreeable to the Company and the fair market value of the
assets held under such trust as of the end of the calendar year for which such
contribution is being made. The trustees shall be instructed to invest trust
assets in a reasonable, prudent and conservative manner consistent with the
preservation of trust corpus.
(ii) Actuarial assumptions used for funding and determining actuarial
equivalence of benefits shall be consistent with those used under the Company's
qualified pension plan.
(iii) The parties hereto agree that the Supplemental Pension Agreement
shall not be amended or terminated without the Executive's prior written consent
and that all of the Executive's benefits thereunder, whether now or hereafter
accrued, are fully vested and may not be reduced or eliminated for any reason,
notwithstanding any contrary provision of the Supplemental Pension Agreement.
(h) Vacations. During the term of this Agreement, the Executive shall be
entitled to the number of paid vacation days in each calendar year, and to
compensation in respect of earned but unused vacation days, determined in
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accordance with the Company's vacation policy as in effect immediately prior to
the execution of this Agreement.
(i) Services Furnished; Prequisites. During the term of this Agreement, the
Company shall furnish the Executive with office space, secretarial assistance
and such other facilities, services and perquisites as are being furnished to
the Executive immediately prior to the date of this Agreement or as shall be
suitable to the Executive's position and adequate for the performance of his
duties as set forth in Section 3 hereof.
6. TERMINATION
The Executive's employment hereunder may be terminated without any breach
of this Agreement only under the following circumstances:
(a) Death or Disability. (i) The Executive's employment hereunder shall
terminate upon his death.
(ii) If the Executive shall have been unable to perform his duties due to
physical or mental illness for a period of six consecutive months, or for a
period of six months within any twelve month period then, notwithstanding the
provisions of Section 2, the Company may at any time after the end of the
applicable period of nonperformance give to the Executive a Notice of
Termination (as defined in subsection 6(e) hereof) and his employment hereunder
shall terminate on the date provided in subsection (f) hereof.
(b) Cause. The Company may terminate the Executive's employment hereunder
at any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (A) the engaging
by the Executive in willful misconduct which is demonstrably and materially
injurious to the Company, or (B) the conviction of the Executive of a felony
involving moral turpitude with all appeals related to such conviction having
been exhausted. For purposes of this paragraph, no act, or failure to act, on
the Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. The Executive shall not be
deemed to have been terminated for Cause unless the Company shall have given or
delivered to the Executive (i) reasonable notice (the "Preliminary Notice")
setting forth, in reasonable detail the facts and circumstances claimed to
provide a basis for termination for Cause, (ii) an opportunity for the Executive
to cure any action alleged as the basis for termination under clause (A) above,
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(iii)a reasonable opportunity for the Executive, together with his counsel, to
be heard before the Board, and (iv) a Notice of Termination stating that, in the
good faith opinion of not less than a majority of the entire membership of the
Board, the Executive was guilty of conduct set forth in clauses (A) or (B)
above, and specifying the particulars thereof in detail. Upon receipt of the
Preliminary Notice, the Executive shall have thirty (30) days in which to appear
before the Board with counsel, or take such other action as he may deem
appropriate, and such thirty (30) day period is hereby agreed to as a reasonable
opportunity for the Executive to be heard.
(c) Termination by the Executive for Good Reason. The Executive may
terminate his employment hereunder at any time for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean (A) a failure by the Company to comply
with any material provision of this Agreement including, without limitation,
sub-section 13(c) hereof, which has not been cured within ten (10) days after
notice of such noncompliance has been given by the Executive to the Company,
(B) the assignment to the Executive by the Company of duties inconsistent with
the Executive's position, authority, duties, responsibilities or status with the
Company as in effect immediately after the date of execution of this Agreement
including, but not limited to, any reduction whatsoever in such position,
authority, duties, responsibilities or status, or a change in the Executive's
titles or offices, as then in effect, or any removal of the Executive from, or
any failure to reelect the Executive to, any of such positions, except in
connection with the termination of his employment on account of his death,
disability, or for Cause, (C) any reduction in compensation or benefits without
the Executive's prior written consent, (D) the requirement of excessive travel
on the part of the Executive, (E) a relocation by the Company of the Company's
principal executive offices or of the Executive's principal place of employment
to any location outside the Borough of Manhattan, (F) any other material change
in the conditions of employment if the Executive determines in good faith that
his customary duties can no longer be performed because of the change, (G) any
purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of
subsection 6(e) hereof or, in the case of a termination allegedly for "Cause",
which fails to satisfy the requirements of clauses (i) through (iv) of
subsection 6(b) hereof (and for purposes of this Agreement no such purported
termination shall be effective), or (H) the occurrence of a "Change in Control"
of the Company, as defined in Section 8 of the Option Plan, except that, (i) in
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determining whether a Change in Control has occurred, the fact that the Board
may have previously approved the acquisition of voting securities, or tender or
exchange offer for the purchase of the Company's common stock, shall be
disregarded and (ii) such event shall only be an event of Good Reason if a
Notice of Termination as a result of such event is given by the Executive to the
Company within 24 months after the occurrence thereof.
(d) Termination by the Executive on account of Retirement. The Executive
may terminate his employment without Good Reason at any time. Provided the
Executive complies with his obligations under Sections 11 and 12 of the
Agreement, such termination shall be treated as on account of Retirement with
the consent of the Board.
(e) Notice of Termination. Any termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances, if any, claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated for Cause, the date specified in the
Notice of Termination, and (iii) if the Executive's employment is terminated by
reason of the expiration of the term of this Agreement under Section 2 hereof,
the date of such expiration, and (iv) if the Executive's employment is
terminated for any other reason, thirty (30) days after Notice of Termination is
given.
7. COMPENSATION UPON TERMINATION
The compensation and benefit arrangements set forth in this Section 7 shall
be paid or provided for by the Company upon termination of the Executive's
employment under the circumstances indicated.
(a) Compensation and Benefits Provided in All Events. The following
payments or benefits shall be provided by the Company to the Executive or his
Beneficiaries (as defined in subsection 7(b) below) upon termination of
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employment from the Company for any reason:
(i) his Base Salary through the Date of Termination;
(ii) any unpaid bonus compensation in respect of the Company's fiscal
year ended on or immediately prior to the Date of Termination;
(iii) all supplemental pension benefits which have accrued through the
Date of Termination under the Supplemental Pension Agreement in the manner
elected by the Executive in accordance with the terms of the Supplemental
Pension Agreement. Payments to the Executive or his Beneficiaries shall be
made first from the Rabbi Trust, to the extent assets are then available to
be paid from the Rabbi Trust in accordance with the provisions thereof, and
thereafter by the Company, to the extent of any insufficiency;
(iv) all benefits to which the Executive is then entitled under the
provisions of each Company Compensation Plan in which the Executive is a
participant on the Date of Termination; and
(v) all rights afforded under the provisions of, the Company's by-laws
and Certificate of Incorporation relating to indemnification as in effect
on the date hereof, under the provisions of the Company's insurance
arrangements in effect on the date hereof for the benefit of its directors
and officers, each on the same basis provided as for all other former
senior executives of the Company, and under Section 15 of this Agreement.
Except as specifically provided below, the Company's sole obligation to the
Executive or his Beneficiaries upon any termination of employment shall be to
provide the foregoing benefits.
(b) Benefits Payable on Death. If the Executive's employment is terminated
on account of his death, the Company shall pay to the beneficiary or
beneficiaries who have been identified in a written notice delivered to the
Company by the Executive prior to his date of death (his "Beneficiaries") in a
lump sum payment, within 30 days thereafter, an amount equal to $500,000. If no
written notice designating the Executive's beneficiaries has been received by
the Company prior to his date of death, the Executive's estate shall be treated
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as his "Beneficiary" for all purposes of this Agreement.
(c) Benefits Payable Upon Disability. If the Company terminates the
employment of the Executive under subsection 6(a)(ii) by reason of disability,
the Company shall pay to the Executive, the amount of long-term disability
benefits required to be maintained under subsection 5(c)(ii) hereof, if any, for
so long as the Executive is disabled and remains entitled to benefits under the
LTD Plan. Upon the Date of Termination because of disability, there shall be
pro-rata vesting of the Executive's bonus compensation for the year of
termination and the Executive shall be paid a pro-rata bonus in a cash lump sum
within five days from the Date of Termination, determined by multiplying the
bonus paid or payable to the Executive for the prior fiscal year by a fraction,
the numerator of which is the number of days from the beginning of the fiscal
year in which the Date of Termination occurs until the Date of Termination, and
the denominator of which is 365 (a pro-rata bonus determined in this manner is
referred to in Section 7(e)(A)(III) below as a "Pro-Rata Bonus"). Prior to
termination for disability, full compensation and benefits shall continue to be
provided to the Executive. After the Date of Termination, the Executive's
medical coverage under the Company Compensation Plans shall continue to be
provided at Company expense for the duration of disability, or until earlier
attainment of age 65.
(d) Benefits Payable upon Failure to Extend Beyond Initial Term. If the
Executive's employment as President and Chief Executive Officer has continued
through the end of the initial term of this Agreement (the "Expiration Date")
and the Company has not, at least 90 days prior to the Expiration Date, offered
the Executive a two-year extension of the term of this Agreement with (i) the
same position and responsibilities as previously in effect, (ii) a minimum
increase in Base Salary equal to the percentage increase in the Consumer Price
Indexes for All Urban Consumers (CPI-U) for New York-Northern, N.J., All Items
from March 1, 1999 to February 28, 2002, (iii) other employment terms, benefits
and conditions (including severance pay and the benefits provided under this
subsection 7(d) hereof) which are not less favorable than those in effect
immediately prior to the Expiration Date, or the economic equivalent thereof,
and (iv) a signing bonus of $500,000 in lieu of an option grant equivalent to
that made to the Executive on March 1, 1999 (a "Minimum Renewal Offer"), then
the Company shall continue to provide the Executive with the following benefits
for a period of two years following the Expiration Date:
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(I) payment of Base Salary, on the date such salary would normally
have been payable, at the rate in effect immediately prior to the
Expiration Date;
(II) payment of annual bonus compensation at a rate at least equal to
the highest annual bonus compensation paid to the Executive with
respect to the three fiscal year period ended on the Expiration
Date, not later than ninety (90) days after the end of each such
fiscal year; and
(III) provision for the Executive and his dependents, if any, at the
Company's expense, of health insurance benefits at the same level
and on the same basis as such benefits were provided to the
Executive and any dependents prior to the Expiration Date.
If the Company provides the Executive with the Minimum Renewal Offer
and the Executive does not accept such offer, then the Company shall provide the
Executive with the benefits described in subsection 7(d)(I), (II), and (III)
hereof, but only for a period of one year following the Expiration Date.
(e) If (x) Executive's employment shall be terminated, other than (i)
by reason of the expiration of the term of this Agreement under Section 2
hereof, (with or without the making of a Minimum Renewal Offer) or (ii) pursuant
to subsections 6(a)(i), 6(a)(ii), 6(b) or 6(d) hereof, or (y) the Executive
shall terminate his employment for Good Reason, then the Executive shall be
entitled to the following additional benefits described under paragraphs (A),
(B), (C) and (D) below:
(A) The Company shall pay to the Executive as severance pay, in a cash
lump sum, on the fifth day following the Date of Termination the following
amounts, which shall not be discounted to take into account present value:
(I) the Executive's full Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given;
(II) a payment made as liquidated damages equal to three times the sum
of (a)the annual Base Salary, at the rate in effect at the time
Notice of Termination is given, and (b) the highest annual bonus
compensation paid to the Executive with respect to any of the
three fiscal years ended coincident with or immediately prior to
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the Date of Termination; and
(III) if the Executive's Date of Termination coincides with the end of
the Company's fiscal year, a full bonus for the year of
termination (in lieu of the bonus called for by
subsection 7(a)(ii) above), based on the targets set for the
Company's fiscal year in which the termination occurs and the
degree of attainment of performance objectives for such fiscal
year, as determined by the Compensation Committee of the Board in
good faith, or if the Executive's Date of Termination occurs
prior to the end of any Company fiscal year, a Pro-Rata Bonus.
(B) Except as provided in subparagraph (C) below, the Company shall,
for a period of three years from the Date of Termination, at the Company's
expense, allow the Executive to continue to participate in all Company
Compensation Plans in which the Executive was entitled to participate
immediately prior to the Date of Termination (or pay to the Executive the
after-tax economic equivalent thereof), and shall continue to maintain for the
Executive all life and long-term disability insurance benefits required to be
provided under subsection 5(c)(ii) hereof, and all related executive
perquisites, including a suitable office and secretary located in midtown
Manhattan.
(C) The Company shall provide the Executive with three years of
additional service credit for pension purposes under the Executive's
Supplemental Pension Agreement. In addition, compensation paid or payable
pursuant to subsections 7(e)(A)(I) and (III) above shall be treated as paid in
the month immediately preceding the Date of Termination, compensation paid or
payable pursuant to subsection 7(e)(A)(II) above shall be treated as paid
ratably over the thirty-six months following the Date of Termination and all
such compensation shall be counted in determining final average compensation
under such Agreement. The present value of the Executive's aggregate accrued
benefit under the Supplemental Pension Agreement taking into account such
additional service credit and compensation shall be determined within thirty
days of the Date of Termination by the actuary engaged pursuant to subsection
5(g) and hereof and by using the actuarial assumptions prescribed by subsection
5(g) hereof. Such value shall be paid to the Executive in a cash lump sum within
fifteen days thereafter, notwithstanding any contrary provision of the
Supplemental Pension Agreement. Such payments shall be made first from the Rabbi
Trust, to the extent assets are then available to be paid from the Rabbi Trust
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in accordance with the provisions thereof, and thereafter by the Company, to the
extent of any insufficiency. Upon the making of such payments in full, the
Company shall have no further obligation to the Executive relating to the
Supplemental Pension Agreement, either under the terms of such Agreement or
under this Agreement.
(D) All stock options held by the Executive which have not previously
become exercisable shall immediately vest and become exercisable upon such
termination, and shall thereafter remain exercisable in accordance with their
terms.
(f) The Company's obligation to make the payments provided for in this
Agreement, or otherwise to perform its obligations hereunder, shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. The
Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by the Executive as the result of employment by another
employer after the termination of his employment hereunder or otherwise.
(g) (i) In all events, if any payments to the Executive from the
Company, or any vesting of options, whether occurring pursuant to Section 7
hereof or otherwise made to the Executive by the Company (the "Payments"), are
or will be subject to the tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "IRC") (the "Excise Tax") (or any similar tax that
may hereafter be imposed), the Company shall pay to the appropriate taxing
authorities on behalf of the Executive at the time specified in
subsection 7(g)(iii) below an additional amount (the "Gross-Up Payment") such
that the net amount retained by him, after reduction by all Excise Taxes, and
all federal, state and local income taxes on the Payments and the Gross-Up
Payment, shall be equal to the net amount which would have been retained by him
had no part of the Payments been subject to the Excise Tax. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amount of such Excise Tax, (A) all payments or benefits received or to be
received by the Executive in connection with his termination of employment
(whether pursuant to the terms of this Agreement or any Company Compensation
Plan), shall be treated as "parachute payments" within the meaning of IRC
Section 280G(b)(2), and all "excess parachute payments" within the meaning of
IRC Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless
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(i) the Executive otherwise agrees in writing that IRC Section 4999 is not
applicable, or (ii) in the opinion of tax counsel selected by the Company's
independent auditors, and acceptable to the Executive ("Counsel"), such payments
or benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of IRC
Section 280G(b)(4) in excess of the base amount within the meaning of IRC
Section 280G(b)(3), or are otherwise not subject to the Excise Tax, (B) the
amount of the Payments which shall be treated as subject to the Excise Tax shall
be equal to the lesser of (1) the total amount of the Payments or (2) the amount
of excess parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (A), above), and (C) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of IRC Sections 280G(d)(3) and (4).
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal, state and local taxes at the highest marginal
rate of federal, state and local income taxation, respectively, in the calendar
year in which the Gross-Up Payment is to be made. In the event that the Excise
Tax is at any time determined by Counsel or by the Internal Revenue Service
("IRS") to exceed the amount taken into account hereunder at the time of the
termination of the Executive's employment or thereafter (including, without
limitation, by reason of (A) a preliminary determination by the parties that no
Gross-Up Payment was due under this subsection 7(g) or (B) a determination which
otherwise underestimates the amount of the Gross-Up Payment due under this
subsection 7(g)), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus all interest and penalties payable with respect to
such excess) at the time the amount of such excess is finally determined. In the
event that the Excise Tax is subsequently determined by Counsel or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment
made, the Executive shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Gross-Up Payment that would not have been paid if such Excise Tax had been
correctly applied in initially calculating such Gross-Up Payment, plus interest
on the amount of such repayment at the rate provided in IRC
Section 1274(b)(2)(B). Notwithstanding the foregoing, in the event any portion
of the Gross-Up Payment to be refunded to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be required
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until actual refund or credit of such portion has been made to the Executive,
and interest payable to the Company shall not exceed interest received or
credited to the Executive by such tax authority for the period it held such
portion. The Executive and the Company shall mutually agree upon the course of
action to be pursued (and the method of allocating the expenses thereof) if the
Executive's good faith claim for refund or credit is denied.
(ii) A Gross-Up Payment shall be made not later than the thirtieth
day, or as soon thereafter as is reasonably practicable, following the date the
Executive becomes subject to payment of the Excise Tax; provided, however, that
if the amounts of such payment cannot be finally determined on or before such
day, the Company shall pay to the appropriate taxing authorities on such day an
estimate, as determined in good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such payment (together with
interest at the rate provided under IRC Section 1274(b)(2)(B)) as soon as the
amount can be determined but no later than the sixtieth day after the date the
Executive becomes subject to the payment of the Excise Tax, without the
Executive's written consent.
(iii) The Gross-Up Payment (or portion thereof) provided for in
subsection 7(g)(i) above shall be paid to the appropriate taxing authorities on
behalf of the Executive not later than the required deposit date for taxes
withheld in respect of the Payments; provided, however, that if the amount of
such Gross-Up Payment (or portion thereof) cannot be finally determined on or
before the date on which payment is due, the Company shall pay to the
appropriate taxing authorities on behalf of the Executive by such date an amount
estimated in good faith by Counsel to be the minimum amount of such Gross-Up
Payment and shall pay the remainder of such Gross-Up Payment (together with
interest at the rate provided in IRC Section 1274(b)(2)(b)) as soon as the
amount thereof can be determined, but in no event later than 45 calendar days
after payment of the related Payments. In the event that the amount of the
estimated Gross-Up Payment exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth business day after written demand by the Company for
payment (together with interest at the rate provided in IRC
Section 1274(b)(2)(B)).
8. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
The Company shall, within 10 days of the presentation of a statement
therefor, reimburse the Executive for the amount of any and all reasonable legal
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fees payable to attorneys retained by the Executive in his sole discretion and
reasonable expenses incurred by the Executive in connection with (i) preparation
of this Agreement, (ii) ascertaining his rights in the event of any termination
of employment other than a voluntary termination of employment which is not for
Good Reason, or (iii) obtaining or enforcing in good faith any right or benefit
provided to the Executive by the Company pursuant to or in accordance with this
Agreement. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to the Executive by the Company pursuant to
or in accordance with this Agreement will not be taken into account by the
Company in determining the aggregate compensation paid or payable to the
Executive under this Agreement, except to the extent the amount reimbursed is
required to be taken into account in determining the amount of any Excise Tax or
for purposes of complying with any other requirement of federal, state or local
law.
9. INDEMNIFICATION
The Company shall indemnify the Executive (and his legal representatives or
other successors) to the fullest extent permitted (including payment of expenses
in advance of final disposition of the proceeding) by the laws of the State of
Delaware, as in effect at the time of the subject act or omission, or the
Certificate of Incorporation and By-Laws of the Company as in effect at such
time or on the date of this Agreement, whichever affords or afforded greater
protection to the Executive; and the Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers, against all costs, charges and
expenses whatsoever incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company or any of its
subsidiaries. If any action, suit or proceeding is brought or threatened against
the Executive in respect of which indemnity may be sought against the Company
pursuant to the foregoing, the Executive shall notify the Company promptly in
writing of the institution of such action, suit or proceeding and the Company
shall assume the defense hereof and the employment of counsel and payment of all
fees and expenses.
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10. TAXES
The Company shall deduct from all amounts payable under this Agreement all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.
11. CONFIDENTIALITY
Unless otherwise required by law or judicial process, the Executive shall
retain in confidence after termination of the Executive's employment with the
Company pursuant to this Agreement all confidential information known to the
Executive concerning the Company and its business for the shorter of one (1)
year following such termination or until such information is publicly disclosed
by the Company or otherwise becomes publicly disclosed other than through the
Executive's actions.
12. COVENANTS NOT TO COMPETE OR INTERFERE
During the term of this Agreement and for a period ending one (1) year from
and after the termination of the Executive's employment hereunder, the Executive
will not, other than on behalf of the Company, directly or indirectly, as a sole
proprietor, member of a partnership, or stockholder, investor, officer or
director of a corporation, or as an employee, agent, associate or consultant of
any person, firm or corporation:
(a) Solicit or accept business (i) from any clients of the Company or
its affiliates, (ii) from any prospective clients whose business the Company or
any of its affiliates is in the process of soliciting at the time of the
Executive's termination, or (iii) from any former client which had been doing
business with the Company within one (1) year prior to the Executive's
termination;
(b) Solicit any employee of the Company or its affiliates to terminate
such employee's employment with the Company; or
(c) Engage in any business of the type performed by the Company in the
geographic areas where the Company is actively doing business or soliciting
business at the time of the Executive's termination. Nothing contained in this
Section shall prohibit the Executive from making investments in or from serving
as an officer or employee of a firm or corporation which is not directly or
indirectly engaged in the same type of business as the Company. Notwithstanding
the first sentence of this Section 12, the prohibition described in this
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clause (c) shall not apply if the Executive's employment is terminated by the
Company without Cause or is terminated by the Executive for Good Reason.
It is the desire and intent of the parties that the provisions of this
Section 12 shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section 12 shall be adjudicated
to be invalid or unenforceable, this Section 12 shall be deemed amended to
delete therefrom the portion thus adjudicated to be invalid or unenforceable,
such deletion to apply only with respect to the operation of this Section 12 in
the particular jurisdiction in which such adjudication is made.
13. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) Unless otherwise occurring by operation of law, the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company (a "Successor Company") to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place;
provided, however, that no such succession shall relieve the Company of its
obligations hereunder unless the assumption of this Agreement by a Successor
Company is approved in writing by the Executive.
14. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or (unless otherwise
specified) when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
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If to the Executive:
Mr. Arthur T. Shorin
c/o The Topps Company, Inc.
One Whitehall Street
New York, New York 10004-2109
If to the Company:
The Topps Company, Inc.
Attn.: Chief Financial Officer
One Whitehall Street
New York, New York 10004-2109
or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. SURVIVORSHIP
The respective rights and obligations of the parties hereunder,
including, without limitation, the rights and obligations set forth in
Sections 5 through 9 and 11 through 18 of this Agreement, shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
16. MISCELLANEOUS
The parties hereto agree that this Agreement contains the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of the Executive, other than the Supplemental Pension Agreement
(except as specifically provided herein) and the Company Compensation Plans. The
parties further agree that the provisions of this Agreement may not be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the parties hereto. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Except as set forth in the
Supplemental Pension Agreement or the Company Compensation Plans, no agreements
or representations, oral or otherwise, express or implied, with respect to the
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subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
17. VALIDITY
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
18. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused its name to be ascribed to
this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
THE TOPPS COMPANY, INC.
By: _____________________________
Name:
Title:
_________________________________
Arthur T. Shorin, Executive
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