Exhibit 10.26
[Fisher-Price, Inc. (U.S.A.) letterhead]
[FORM OF EMPLOYMENT AGREEMENT]
August 16, 1993
Executive name
Executive address
Executive city, province and zip code
Dear [Executive]:
This agreement will constitute a revision and amendment to the letter
agreement dated March 1, 1993 between [Executive] and Fisher-Price, Inc. a
Delaware corporation ("Fisher-Price").
You will continue to be employed by Fisher-Price as its [Title],
at a minimum base salary rate of U.S. $_______ per annum ("Base Salary").
You will participate in The Fisher-Price Executive Incentive Bonus Plan
dated June 28, 1991 ("Incentive Bonus Plan") at a "Target Incentive Factor" of
35%, a "Corporate/Unit Range of Ratings" of 0.00 to 2.50, and an "Individual
Range of Ratings" of 0.00 to 1.50. (All quoted phrases shall have the meanings
set forth in the Incentive Bonus Plan.) In addition, you will be issued
restricted Common Stock of Fisher-Price under The Long Term Incentive Plan of
1991 ("LTIP") equal to 25% of each actual cash payout to you (whether or not
deferred) under the Incentive Bonus Plan.
In addition, we shall grant you Fisher-Price restricted Common Stock in
accordance with the following schedule; provided you remain [Title] of
Fisher-Price:
_____ shares on March 1, 1994
_____ shares on March 1, 1995
_____ shares on March 1, 1996
Such grants to be adjusted in the event of any change in the Common Stock
of Fisher-Price by reason of any stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares.
For as long as you are a resident of Canada, Fisher-Price shall cause all
cash payments described herein to be paid to you to be paid in equivalent
Canadian currency by Fisher-Price Inc. a Canadian corporation with a principal
place of business in Mississauga, Ontario ("Fisher-Price - Canada"). In
addition, you shall be eligible to participate in all Fisher-Price - Canada
benefit programs, in accordance with the terms of such benefit programs, and
such additional Fisher-Price perquisite programs as may be specified by the
Chief Executive Officer of Fisher-Price.
In the event that we terminate your employment for reasons other than a
Change of Control as specified below, we shall pay you in a lump sum upon the
date of your termination, a payment equal to 18 months of your then annual
salary (not less than your Base Salary) a payment, in lieu of any payments or
stock due under the Incentive Bonus Plan and the LTIP, of 50% of your then gross
annual salary (not less than your Base Salary) for said 18 months, less
customary deductions for Federal and state tax withholding and F.I.C.A.
deductions or equivalent Canadian deductions, if any, as a severance
consideration; provided, however, that if your employment is involuntarily
terminated because of death, or any act, material in nature, constituting
embezzlement, fraud or any other willful misconduct involving moral turpitude,
this agreement shall terminate and you will be paid all salaried amounts and
benefits accrued through the date of termination and shall not be entitled to
any other payments. Your right to the payments described in this paragraph
shall be conditioned upon your signing an effective waiver of any claims under
the Age Discrimination in Employment Act (and its Canadian equivalent), and
under any other United States and Canadian federal, state, and Provincial
employment discrimination laws.
If there is a Change of Control of Fisher-Price and you elect to resign
from Fisher-Price or your employment is terminated within eighteen (18) months
after said Change of Control (a "Qualified Termination"), Fisher-Price shall
pay you in a lump sum, within 10 days of your termination of employment, an
amount equal to the product of (x) three, and (y) the sum of your then annual
salary (not less than your Base Salary) and the incentive payment calculated
under the Incentive Bonus Plan (designated "EIB Award" in said Plan), as in
effect immediately prior to the Change of Control, using a Corporate/Unit
Rating of 1.50 and an Individual Rating of 1.50, as those terms are used in
the Incentive Bonus Plan as in effect immediately prior to the Change of
Control. The above payments shall be reduced by customary Federal and state
withholding taxes, as required by law. In addition, for three years after a
Qualified Termination, Fisher-Price shall continue to provide you with medical
insurance no less favorable than that provided to you immediately prior to the
Change of Control on terms
2
no less favorable (including co-payments and deductibles)
to you than the terms existing immediately prior to the Change of Control.
For purposes of determining your eligibility (but not the time of
commencement of benefits) for retiree medical benefits you shall be considered
to have remained employed until three years after your date of termination
and to have retired on the last day of such period. Upon a Change of Control,
all shares of restricted Common Stock held by you shall become free of all
restrictions and fully vested and all non-statutory options shall become
immediately exercisable and fully vested. In the event it shall be determined
that any payment or distribution by Fisher-Price for your benefit (whether paid
or payable or distributed or distributable pursuant to the terms of this
agreement or otherwise, but determined without regard to any additional payments
required pursuant to this sentence) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by you with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then you shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by you of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
you retain an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
A "Change of Control" shall be deemed to have occurred if:
a. Any "Person", which shall mean a "person" as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than Fisher-Price, any trustee or
other fiduciary holding securities under an employee benefit plan of
Fisher-Price, or any company owned, directly or indirectly, by the
stockholders of Fisher-Price in substantially the same proportions as
their ownership of stock of Fisher-Price), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 under the Exchange Act),
directly or indirectly, of securities of Fisher-Price representing 30%
or more of the combined voting power of Fisher-Price's then
outstanding voting securities;
b. during any period of 24 consecutive months, individuals, who at the
beginning of such period constitute the Board of Directors of
Fisher-Price (the "Board"), and any new director whose election by the
Board, or whose nomination for election by
3
Fisher-Price's stockholders, was approved by a vote of at least
two-thirds (2/3) of the directors (other than in connection with
a contested election) before the beginning of the period cease for
any reason to constitute at least a majority thereof:
c. the stockholders of Fisher-Price approve (1) a plan of complete
liquidation of Fisher-Price or (2) the sale or disposition by
Fisher-Price of all or substantially all of Fisher-Price's assets
unless the acquirer of the assets or its directors shall meet the
conditions for a merger or consolidation in subparagraphs (d)(1) or
(d)(2); or
d. the consummation of a merger or consolidation of Fisher-Price with any
other company other than:
1. such a merger or consolidation which would result in the voting
securities of Fisher-Price outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 70% of the combined voting power of Fisher-Price's or
such surviving entity's outstanding voting securities immediately
after such merger or consolidation; or
2. such a merger or consolidation, which would result in the
directors of Fisher-Price who were directors immediately prior
thereto, continuing to constitute at least 50% of the directors of
the surviving entity immediately after such merger or
consolidation.
In this paragraph d., "surviving entity" shall mean only an entity in which
all of Fisher-Price's stockholders immediately before such merger or
consolidation become stockholders by the terms of such merger or
consolidation, and the phrase "directors of Fisher-Price who were directors
immediately prior thereto" shall include only individuals who were
directors of Fisher-Price at the beginning of the 24 consecutive month
period preceding the date of such merger or consolidation, or who were new
directors (other than any director nominated in connection with a contested
election, or a director designated by a Person who has entered into an
agreement with Fisher-Price to effect a transaction described in paragraphs
c.2, d.1 or d.2 of this Section) whose election by the Board, or whose
nomination for election by Fisher-Price's stockholders was approved by
a vote
4
of at least two-thirds (2/3) of the directors before the beginning of
such period.
Except as otherwise provided herein, all individual United States or
Canadian Federal, State and Provincial Excise taxes are your responsibility.
Fisher-Price's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any setoff, counterclaim, recoupment, defense or other claim, right
or action which Fisher-Price may have against you or others. In no event shall
you be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to you under any of the provisions of the
Agreement and such amounts shall not be reduced whether or not you obtain other
employment. Fisher-Price agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which you may reasonably incur as
a result of any contest (regardless of the outcome thereof) by Fisher-Price, by
you or others, of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof.
If you agree to continue your employment for Fisher-Price upon the terms
and conditions set forth in this letter, please sign and date both copies where
indicated and return one copy to me.
Very truly yours,
FISHER-PRICE, INC.
/s/ Ronald J. Jackson
---------------------------
Ronald J. Jackson
Chairman, President and CEO
Accepted and Agreed:
- -----------------------
Executive Name
- -----------------------
Dated
5