EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 29, 1999 between Take-Two
Interactive Software, Inc., a Delaware corporation (the "Employer" or the
"Company"), and Xxxxx Xxxxxx (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee as its
Chief Financial Officer and to be assured of his services as such on the terms
and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such
employment on such terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer for a three-year period commencing
effective as of the date first written above (the "Effective Date") (such period
being herein referred to as the "Initial Term," and any year commencing on the
Effective Date or any anniversary of the Effective Date being hereinafter
referred to as an "Employment Year"). After the Initial Term, this Agreement
shall be renewable automatically for successive one year periods (each such
period being referred to as a "Renewal Term"), unless, more than ninety days
prior to the expiration of the Initial Term or any Renewal Term, either the
Employee or the Company give written notice that employment will not be renewed.
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall
have the duties and responsibilities of Chief Financial Officer of the Employer,
reporting directly to the Chief Executive Officer of Employer and the Board of
Directors of the Employer (the "Board"). It is understood that such duties and
responsibilities shall be reasonably related to the Employee's position.
(b) The Employee shall devote substantially all of his
business time, attention, knowledge and skills faithfully, diligently and to the
best of his ability, in furtherance of the business and activities of the
Company. The principal place of performance by the Employee of his duties
hereunder shall be the Company's principal executive offices although the
Employee may be required to travel outside of the area where the Company's
principal executive offices are located in connection with the business of the
Company.
3. Compensation.
(a) During the term of this Agreement, the Employer shall
pay the Employee a salary (the "Salary") at a rate of $233,000 per annum in
respect of each Employment Year, payable in equal installments bi-weekly, or at
such other times as may mutually be agreed upon between the Employer and the
Employee. Such Salary shall be subject to an annual review by the Board may be
increased from time to time at the discretion of the Board.
(b) The Employee shall be paid a bonus equal to (i) options
to purchase 20,000 shares of Common Stock in respect of each fiscal quarter
during the twelve month period ending October 31, 1999 provided that net income
per share in any such quarter exceeds the Company's net income per share in the
comparable quarter for the prior year and (ii) $20,000 for each fiscal quarter
commencing with the quarter ending January 31, 1999 provided that net income per
share in any such quarter exceeds the Company's net income per share in the
comparable quarter for the prior year. Any such options shall vest immediately
following the end of each fiscal quarter and shall be exercisable during a
five-year period at an exercise price equal to the fair market value of the
Common Stock on the date of grant.
(c) The Employee has been granted incentive options to
purchase 10,000 shares of Common Stock at an exercise price of $5.875 per share.
(d) The Employee shall be entitled to an automobile
allowance of $1,400 per month, which allowance includes insurance, parking and
gasoline.
(e) The Employee shall be entitled to receive $2 million in
life insurance, the premiums for which shall be paid by the Company.
(f) In addition to the foregoing, the Employee shall be
entitled to such other cash bonuses and such other compensation in the form of
stock, stock options or other property or rights as may from time to time be
awarded to him by the Board during or in respect of his employment hereunder.
4. Benefits.
(a) During the term of this Agreement, the Employee shall
have the right to receive or participate in all benefits and plans which the
Company may from time to time institute during such period for its employees and
for which the Employee is eligible, and shall automatically receive or
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participate in all benefits and plans that the Company's Chief Executive Officer
receives or participates in. Nothing paid to the Employee under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary or any other obligation payable to the Employee
pursuant to this Agreement.
(b) During the term of this Agreement, the Employee will be
entitled to the number of paid holidays, personal days off, vacation days and
sick leave days in each calendar year as are determined by the Company from time
to time, provided that Employee shall be entitled to at least five weeks of paid
vacation. Such vacation may be taken in the Employee's discretion with the prior
approval of the Employee, and at such time or times as are not inconsistent with
the reasonable business needs of the Company.
5. Travel Expenses. All travel and other expenses incident to
the rendering of services reasonably incurred on behalf of the Company by the
Employee during the term of this Agreement shall be paid by the Employer
provided that such expenses are preapproved by the Chief Executive Officer of
the Company. If any such expenses are paid in the first instance by the
Employee, the Employer shall reimburse him therefor on presentation of
appropriate receipts for any such expenses.
6. Termination. Notwithstanding the provisions of Section 1
hereof, the Employee's employment with the Employer may be earlier terminated as
follows:
(a) By action taken by the Board, the Employee may be
discharged for cause (as hereinafter defined), effective as of such time as the
Board shall determine. Upon discharge of the Employee pursuant to this Section
6(a), the Employer shall have no further obligation or duties to the Employee,
and the Employee shall have no further obligations or duties to the Employer,
except as provided in Section 7.
(b) In the event of (i) the death of the Employee or (ii)
by action of the Board and the inability of the Employee, by reason of physical
or mental disability, to continue substantially to perform his duties hereunder
for a period of 180 consecutive days, during which 180 day period Salary and any
other benefits hereunder shall not be suspended or diminished. Upon any
termination of the Employee's employment under this Section 6(b), the Employer
shall have no further obligations or duties to the Employee.
(c) In the event that Employee's employment with the
Employer is terminated by action taken by the Board without cause, including
termination upon a Change in Control (as hereinafter defined), then the Employer
shall have no further obligation or duties to Employee, except for payment of
the
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amounts described below, and Employee shall have no further obligations or
duties to the Employer, except as provided in Section 7. In the event of such
termination, the Employer shall continue to pay to the Employee his Salary,
bonus and benefits during the 18 months following the date of termination. If
such termination occurs upon a Change in Control, all amounts payable to the
Employee pursuant to this Section 6(c) shall be paid in one lump-sum payment
payable immediately upon such termination and all options granted to Employee
pursuant to Section 3(c) shall vest.
(d) For purposes of Paragraph 6(c), a "Change in Control"
shall be deemed to occur if Xxxx X. Xxxxx is no longer Chief Executive Officer
of the Company.
(e) For purposes of this Agreement, the Company shall have
"cause" to terminate the Employee's employment under this Agreement upon (i) the
failure by the Employee to substantially perform his duties under this
Agreement, (ii) the engaging by the Employee in criminal misconduct (including
embezzlement and criminal fraud) which is materially injurious to the Company,
monetarily or otherwise, (iii) the conviction of the Employee of a felony or
(iv) gross negligence on the part of the Employee. The Company shall give
written notice to the Employee, which notice shall specify the grounds for the
proposed termination and the Employee shall be given thirty (30) days to cure if
the grounds arise under clauses (i) or (v) above.
(f) Notwithstanding the foregoing, if Xxxx X. Xxxxx is no
longer Chief Executive Officer of the Company as a result of a change of control
of the Company, the Employee shall have the right to terminate his employment
and receive 1.5 times the amount of his annual compensation.
7. Confidentiality; Noncompetition.
(a) The Employer and the Employee acknowledge that the
services to be performed by the Employee under this Agreement are unique and
extraordinary and, as a result of such employment, the Employee will be in
possession of confidential information relating to the business practices of the
Company. The term "confidential information" shall mean any and all information
(verbal and written) relating to the Company or any of its affiliates, or any of
their respective activities, other than such information which can be shown by
the Employee to be in the public domain (such information not being deemed to be
in the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, personnel lists, financial information, research
projects, services used, pricing, customers, customer lists and prospects,
product sourcing, marketing and selling and servicing.
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The Employee agrees that he will not, during or for a period of two years after
the termination of employment, directly or indirectly, use, communicate,
disclose or disseminate to any person, firm or corporation any confidential
information regarding the clients, customers or business practices of the
Company acquired by the Employee during his employment by Employer, without the
prior written consent of Employer; provided, however, that the Employee
understands that Employee will be prohibited from misappropriating any trade
secret at any time during or after the termination of employment.
(b) The Employee hereby agrees that he shall not, during
the period of his employment and for a period of one (1) years following such
employment, directly or indirectly, within any county (or adjacent county) in
any State within the United States or territory outside the United States in
which the Company is engaged in business during the period of the Employee's
employment or on the date of termination of the Employee's employment, engage,
have an interest in or render any services to any business (whether as owner,
manager, operator, licensor, licensee, lender, partner, stockholder, joint
venturer, employee, consultant or otherwise) competitive with the Company's
business activities.
(c) The Employee hereby agrees that he shall not, during
the period of his employment and for a period of one (1) years following such
employment, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company's business activities
including, without limitation, the solicitations of the Company's customers, or
persons listed on the personnel lists of the Company. At no time during the term
of this Agreement, or thereafter shall the Employee directly or indirectly,
disparage the commercial, business or financial reputation of the Company.
(d) For purposes of clarification, but not of limitation,
the Employee hereby acknowledges and agrees that the provisions of subparagraphs
7(b) and (c) above shall serve as a prohibition against him, during the period
referred to therein, directly or indirectly, hiring, offering to hire, enticing,
soliciting or in any other manner persuading or attempting to persuade any
officer, employee, agent, lessor, lessee, licensor, licensee or customer who has
been previously contacted by either a representative of the Company, including
the Employee, (but only those suppliers existing during the time of the
Employee's employment by the Company, or at the termination of his employment),
to discontinue or alter his, her or its relationship with the Company.
(e) Upon the termination of the Employee's employment for
any reason whatsoever, all documents, records, notebooks, equipment, price
lists, specifications, programs, customer and prospective customer lists and
other materials which
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refer or relate to any aspect of the business of the Company which are in the
possession of the Employee including all copies thereof, shall be promptly
returned to the Company.
(f) (i) The Employee agrees that all processes,
technologies and inventions ("Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during his employment by Employer shall
belong to the Company, provided that such Inventions grew out of the Employee's
work with the Company are related in any manner to the business (commercial or
experimental) of the Company or are conceived or made on the Company's time or
with the use of the Company's facilities or materials. The Employee 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 countries; (c) sign all papers
necessary to carry out the foregoing; and (d) give testimony in support of his
inventorship;
(ii) If any Invention is described in a patent
application or is disclosed to third parties, directly or indirectly, by the
Employee within two years after the termination of his employment by the
Company, it is to be presumed that the Invention was conceived or made during
the period of the Employee's employment by the Company; and
(iii) The Employee agrees that he will not assert any
rights to any Invention as having been made or acquired by him prior to the date
of this Agreement, except for Inventions, if any, disclosed to the Company in
writing prior to the date hereof.
(g) The Company shall be the sole owner of all products and
proceeds of the Employee's services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Employee may acquire, obtain, develop or create in connection with and during
the term of the Employee's employment hereunder, free and clear of any claims by
the Employee (or anyone claiming under the Employee) of any kind or character
whatsoever (other than the Employee's right to receive payments hereunder). The
Employee 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, or title and interest in or to any such properties.
(h) The parties hereto hereby acknowledge and agree that
(i) the Company would be irreparably injured in the event of a breach by the
Employee of any of his obligations under this Section 7, (ii) monetary damages
would not be an adequate
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remedy for any such breach, and (iii) the Company shall be entitled to
injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach.
(i) The parties hereto hereby acknowledge that, in addition
to any other remedies the Company may have under Section 7(h) hereof, the
Company shall have the right and remedy to require the Employee 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 Employee as the result of any transactions constituting a breach of any of
the provisions of Section 7, and the Employee hereby agrees to account for any
pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in Section
7(h) and 7(i) 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.
(k) If any provision contained in this Section 7 is
hereafter 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.
(l) If any provision contained in this Section 7 is found
to be unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope or other provision and in its reduced form
any such restriction shall thereafter be enforceable as contemplated hereby.
(m) It is the intent of the parties hereto that the
covenants contained in this Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought (the Employee hereby acknowledging that said restrictions
are reasonably necessary for the protection of the Company). Accordingly, it is
hereby agreed that if any of the provisions of this Section 7 shall be
adjudicated to be invalid or unenforceable for any reason whatsoever, said
provision shall be (only with respect to the operation thereof in the particular
jurisdiction in which such adjudication is made) construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
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8. General. This Agreement is further governed by the
following provisions:
(a) Notices. All notices relating to this Agreement shall
be in writing and shall be either personally delivered, sent by telecopy
(receipt confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other address or to
the attention of such other person as the recipient has specified by prior
written notice to the sending party. Notice shall be effective when so
personally delivered, one business day after being sent by telecopy or five days
after being mailed.
To the Employer:
Take Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
To the Employee:
Xxxxx Xxxxxx
With, in either case, a copy in the same manner to:
Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(b) Parties in Interest. Employee may not delegate his
duties or assign his rights hereunder. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(c) Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto
(including the letter agreement dated January 16, 1998) with respect to the
employment of the Employee by the Employer and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever. Any modification or termination of this Agreement will be effective
only if it is in writing signed by the party to be charged.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Employee agrees
to and hereby does submit to jurisdiction before any state or federal court of
record in New
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York County or in the state and county in which such violation may occur, at
Employer's election.
(e) Warranty. Employee hereby warrants and represents as
follows:
(i) That the execution of this Agreement and the
discharge of Employee's obligations hereunder will not breach or conflict with
any other contract, agreement, or understanding between Employee and any other
party or parties.
(ii) Employee has ideas, information and know-how
relating to the type of business conducted by Employer, and Employee's
disclosure of such ideas, information and know-how to Employer will not conflict
with or violate the rights of any third party or parties.
(iii) Employee will not disclose any trade secrets
relating to the business conducted by any previous employer and agrees to
indemnify and hold Employer harmless for any liability arising out of Employee's
use of any such trade secrets.
(f) Severability. In the event that any term or condition
in this Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein.
(g) Execution in Counterparts. This Agreement may be
executed by the parties in one or more counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
TAKE TWO INTERACTIVE SOFTWARE, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
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