[Acclaim Letterhead]
October 2, 2000
Mr. Xxxx Xx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Dear Xxxx:
You are currently employed by Acclaim Entertainment, Inc. ("Acclaim"). Acclaim
desires that you continue your employment with Acclaim under the terms and
conditions set forth below effective from the date of your execution of this
Agreement:
1. Acclaim hereby employs you as a senior executive officer with the title
"Executive Vice President - Product Development." As Executive Vice President -
Product Development you shall be responsible for managing Acclaim's product
development studios, and developing Acclaim's product strategy jointly with the
Acclaim marketing and sales departments and the CEO/COO. By your signature
below, please acknowledge your acceptance of such employment on the terms and
conditions set forth herein, your agreement to be in charge of and responsible
for all of the duties normally associated with said position, your agreement
faithfully and to the best of your abilities to perform such other services
consistent with your position as a senior executive officer as may from time to
time be assigned to you by Acclaim's Chief Executive Officer ("CEO"), and/or
Acclaim's Chief Operating ("COO"), your agreement to report to, and serve under
the direction of the CEO or the COO, and your agreement to devote substantially
all of your business time, skill and attention to such services. Notwithstanding
anything to the contrary in this agreement, but subject to Exhibit B attached
hereto, you shall not be prevented from investing and managing your assets in
such form or manner as will not unreasonably interfere with the services to be
rendered by you hereunder, or from acting as a director, trustee, officer of, or
on a committee of, or a consultant to, any other firm, trust or corporation
where such positions do not unreasonably interfere with the services to be
rendered by you hereunder.
2. A. Commencing as of the date of this Agreement A. Acclaim shall pay to you,
and you shall accept from Acclaim, for your services, (i) a salary at the rate
of $300,000 per annum (the "BASE SALARY"), payable in accordance with Acclaim's
customary executive payroll policy as in effect from time to time, but not less
frequently than bi-weekly, and (ii) a bonus in an amount and payable as provided
in Part C of this Paragraph 2.
B. The Base Salary shall be reviewed by the Board annually and may be
increased if the Board, in its sole and absolute discretion, determines that
such increase is advisable based on such factors as the Board shall consider
appropriate from time to time.
C. You shall be eligible to participate in our Annual Incentive Plan (the
"Bonus Plan") (as such Bonus Plan may be modified at the discretion of Acclaim's
board of directors) and to receive thereunder a bonus (the "BONUS") with respect
to each fiscal year (or portion thereof) during your employment. Your Bonus for
fiscal 2001 is targeted at 40 - 75% of your then Base Salary. Any Bonus payable
to you shall be based on and subject to the achievement by Acclaim of certain
financial goals established by the Board in its sole and absolute discretion and
based on your individual contributions to Acclaim's overall success and team
performance, as determined by the Board in its sole and absolute discretion and
subject to Acclaim's Annual Incentive Plan; provided, however, that, subject to
the last sentence of this Part C, in no event shall the Bonus with respect to
fiscal 2001 be less than $160,000. A Bonus shall be payable (hereinafter the
"Bonus Payment Date") annually as promptly as practicable following the public
announcement of Acclaim's results of operations for the applicable fiscal year
and, in any event, not later than 30 days after the date on which Acclaim files
its annual report on Form 10-K (or any successor form thereto) for such fiscal
year (subject to the next sentence whether or not such payment date is during
the period of your employment). A Bonus shall not be payable to you if, prior to
the payment date for a Bonus, your employment hereunder shall have been
terminated by you without cause (and in violation of the terms of this
agreement) or by Acclaim for Cause (as defined in Part A of Paragraph 4).
D. Acclaim shall provide you with an automobile allowance of $950 per
month.
E. Acclaim shall grant you an option (the "OPTION") to purchase 200,000
shares of Acclaim's common stock, par value $0.02 per share (the "COMMON
STOCK"), exercisable at the fair market value of a share of Common Stock on the
date of grant on the first business day following your execution of this
agreement. Such Option shall be granted under, and subject to the terms of,
Xxxxxxx's 1998 Stock Incentive Plan (the "PLAN"). The Option shall be
exercisable in three installments of up to one third on the first anniversary,
up to two thirds on the second anniversary and as to all of the Option on the
third anniversary, of the date of grant and shall have the terms and conditions
further provided in the Option Certificate attached hereto as Exhibit A. To the
extent permitted by law and subject to the Plan, the Option shall be an
"incentive stock option" within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended. It is understood that Options granted pursuant
to this paragraph 2 E are in addition to any Options previously granted to you.
F. You shall be entitled to participate, on the same basis, subject to the
same qualifications, as other similarly situated executive officers of Acclaim,
in any pension, profit sharing, stock purchase (including the Acclaim Employee
Stock Purchase Plan), stock option, savings, bonus, disability and life
insurance, health insurance, dental insurance, hospitalization, and other fringe
benefit plans and policies in effect with respect to similarly situated
executive officers of Acclaim generally. Annual grants, if any, of stock options
to you to purchase shares of Common Stock shall be subject to the sole
discretion of the Compensation Committee of the Board. In addition to any life
insurance which may be provided under Acclaim's current health insurance
benefits, Acclaim shall provide you during the term of this Agreement, at its
cost, with term life insurance in the amount of $1,000,000, payable to your
designees.
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G. Acclaim shall reimburse you for all reasonable out-of-pocket expenses
incurred by you in connection with the performance of your duties hereunder,
upon presentation of appropriate documentation therefor.
H. During your employment, you shall be entitled to paid vacations of 20
business days per annum, with a maximum of 10 consecutive business days to be
taken at any one time, and otherwise in accordance with Acclaim's vacation
policies in effect from time to time. You are entitled to carry over to the next
year up to a maximum of ten business days at any one time.
3. A. If during the Term of this agreement you should die, then this agreement
shall be deemed to have automatically terminated as of the date of your death.
Your estate shall be entitled to (1) any unpaid Salary accrued prior to the date
of such death and (2) a prorated Bonus (prorated based on the number of months
expired from the commencement of the Fiscal Year in which your death occurs
until the date of death), if any, pursuant to the Bonus Plan (or any successor
plan, if any) which would otherwise have been payable to you for the Fiscal Year
in which you die (such amount, if any, shall be payable to your estate by the
Bonus Payment Date). Thereafter Acclaim shall have no further obligation under
this Agreement except as may be provided hereunder or under the Plan, under any
other applicable benefit plan or insurance plan then carried by Acclaim.
B. If during the Term of this agreement you become Disabled (as such term
is defined below) and such disability has lasted for a period of 180 days in any
consecutive 12 month period and no reasonable accommodation (as such term is
defined in the Americans With Disabilities Act) is available or can be
furnished, then following such period Acclaim shall have the right to terminate
this agreement or suspend the Term at Acclaim's election by giving you not less
than 30 days written notice. In the event Acclaim elects to suspend the Term
hereof and Acclaim's obligations hereunder, then such suspension shall be for
the duration of such disability and the Term shall be automatically extended by
a number of days equal to the total number of days of the suspension, or such
fewer number of days of which Acclaim may advise you in writing. You may only
return to work following such disability upon submission to Acclaim of a
certificate from the physician mutually selected by you and Acclaim (provided
that neither party shall unreasonably withhold their approval) as aforesaid
certifying that you are able to return to work. No suspension shall in any
manner suspend or otherwise impair Acclaim's rights under this agreement. During
the period that you are Disabled and prior to any Termination or suspension by
Acclaim, you shall retain your status and continue to receive your full
compensation (Salary and Bonus, if any). As used in this agreement, the term
"Disabled" shall mean your inability to substantially perform your duties and
responsibilities under this agreement by reason of a non-intentionally
self-inflicted medical disability, including physical illness, as certified by a
physician appointed by Acclaim.
4. A. Acclaim shall have the right to terminate your employment pursuant to
this agreement for Cause. "CAUSE" for termination means (i) any act of fraud,
embezzlement, or other misappropriation or any other act or omission by you that
amounts to a willful breach of your fiduciary duty to Acclaim, (ii) your
conviction of a felony, (iii) a neglect of your material duties as specified in
paragraph 1 of this Agreement, (iv) your willful refusal to carry out the
reasonable instructions of the CEO or COO, (v) the happening of any event which,
under the provisions of any federal, state or foreign laws applicable to Acclaim
or its activities, disqualifies you from acting in any capacity provided for
herein, including, without limitation, any event which disqualifies you under
the Securities Act of 1933 or the Securities Exchange Act of 1934 or (vi) your
default of any material obligations under this agreement; provided however, that
the Company shall have give you written notice specifying any event or breach
specified in clauses (iii), (iv) and (vi) above and permitted you to cure any
such breach within the period of 20 days after receipt of such notice if such
breach is capable of being cured and you have failed to cure such breach within
such 20 days. If your employment is terminated by Acclaim for Cause, Acclaim's
obligations to you shall terminate immediately, except as expressly provided in
Part B of Paragraph 7 hereof.
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B. If, during the Term, there shall occur a "Change in Control" (as defined
below) of Acclaim and, within one year thereafter, there shall occur a change in
your "Circumstances of Employment" (as defined below), you may terminate your
employment pursuant to this agreement by written notice to Acclaim, or its
successors or assigns, and you shall be entitled to receive the benefits
provided in Part A of Paragraph 7 hereof; provided, however, that you shall
first have given Acclaim written notice specifying such change in your
Circumstances of Employment and Acclaim is permitted to cure any such breach
within the period of 15 days after receipt of notice of such breach and Acclaim,
or its successors or assigns, has failed to cure such breach within such 15
days.
A "CHANGE IN CONTROL" shall be deemed to occur upon (a) the sale by Acclaim
of all or substantially all of its assets to any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), the
consolidation of Acclaim with any person, or the merger of Acclaim with any
person as a result of which merger Acclaim is not the surviving entity as a
publicly held corporation, or (b) the sale or transfer or issuance of shares of
Common Stock by Acclaim and/or any one or more of its stockholders (other than
Xxxxxxx X. Xxxxxxxxx or Xxxxx X. Xxxxxxxxxx), as the case may be, in one or more
transactions, related or unrelated, to one or more persons as a result of which
any person and its "affiliates" (as hereinafter defined), other than Xxxxxxx X.
Xxxxxxxxx or Xxxxx X. Xxxxxxxxxx, shall own more than 35% of the outstanding
Common Stock, unless such sale or transfer has been approved in advance by the
Board. An "AFFILIATE" shall mean any person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, any other person.
Your "CIRCUMSTANCES OF EMPLOYMENT" shall be deemed to have changed if there
shall have occurred any of the following events: (a) a material reduction or
change in your duties or reporting responsibilities; (b) a material breach by
Acclaim, or its successors or assigns, of any provision of this agreement; (c) a
material reduction in the fringe benefits made available by Acclaim, or its
successors or assigns, to you; (d) a material diminution in your status, working
conditions or economic benefits; or (e) a reduction in your Base Salary.
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C. If during the Term Acclaim, or its successors or assigns, terminates
your employment without cause by written notice to you, you shall be entitled to
(i) receive from Acclaim, or its successors or assigns, the Base Salary that
otherwise would have been payable to you for the 12 month period commencing with
the termination of your employment, at the same intervals as such payments would
have been made had your employment not been terminated; (ii) receive from
Acclaim, or its successors or assigns, upon the date of termination of your
employment, unreimbursed business expenses and any other monies payable to you
under any employee benefit plan, in each case earned through the date of your
termination; (iii) you shall be entitled to a prorated Bonus (prorated based on
the number of months expired from the commencement of the Fiscal Year in which
you are terminated until the date of such termination), if any, pursuant to the
Bonus Plan (or any successor plan, if any) which would otherwise have been
payable to you for the Fiscal Year in which you are terminated hereunder (such
amount, if any, shall be payable to you by the Bonus Payment Date; (iv)
notwithstanding anything to the contrary contained in the Plan, all options
granted to you under the Plan, including the Option granted to you hereunder,
shall become immediately vested and exercisable in full and terminate on the
earlier to occur of (a) three (3) years from the date of your termination and
(b) the date on which such option would otherwise terminate; and (v) for the 12
month period commencing with the termination of your employment, your medical
and dental benefits provided by Acclaim, or its successors or assigns, as such
benefits existed immediately prior to such termination pursuant to this Part C
of Paragraph 4; provided, however, if you should die at any time after the
termination of your employment pursuant to this Part C of Paragraph 4, the
amounts or benefits payable or provided to you under this Part C of Paragraph 4
shall cease.
5. Concurrently with the signing of this agreement, you have entered into
Acclaim's standard Non Competition, Non Solicitation and Non Disclosure
Agreement and Work-for-Hire Agreement, attached hereto as Exhibit B.
6. Acclaim shall indemnify you (and your legal representatives or other
successors) to the fullest extent permitted by the laws of the State of Delaware
and its existing certificate of incorporation and by-laws, and you shall be
entitled to the protection of any insurance policies Acclaim may elect to
maintain generally for the benefit of officers, against all costs, charges and
expenses whatsoever incurred or sustained by you (or your legal representatives
or other successors) in connection with any action, suit or proceeding to which
you (or your legal representatives or other successors) may be made a party by
reason of your being or having been an officer or employee of Acclaim and its
subsidiaries and affiliates including, without limitation, any joint venture or
partnership in which Acclaim or any of its subsidiaries has an interest.
7. A. If your employment hereunder is terminated by you pursuant to Part B of
Paragraph 4 hereof, Acclaim shall (a) pay to you the Base Salary that would
otherwise have been payable to you for the 12-month period commencing with your
termination of employment, at the same intervals as such payments would have
been made had your employment not been terminated; (b) accord to you Acclaim's,
or its successors or assigns, then available medical and dental benefits for the
12-month period commencing with your termination of employment; (c)
notwithstanding anything to the contrary contained in the Plan, all options
granted to you under the Plan , including the Option granted to you hereunder,
shall become immediately vested and exercisable in full and terminate on the
earlier to occur of (i) three (3) years from the date of your termination and
(ii) the date on which such option would otherwise terminate; and (d) you shall
be entitled to a prorated Bonus (prorated based on the number of months expired
from the commencement of the Fiscal Year in which you are terminated until the
date of such termination), if any, pursuant to the Bonus Plan (or any successor
plan, if any) which would otherwise have been payable to you for the Fiscal Year
in which you are terminated hereunder (such amount, if any, shall be payable to
you by the Bonus Payment Date.
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B. If your employment hereunder is terminated (i) by your voluntary action
for any reason except as contemplated by Part B of Paragraph 4 or (ii) by
Acclaim for Cause, Acclaim shall pay, in lieu of any other payments hereunder,
your Base Salary that has actually accrued to the date of termination. Upon the
making of such payments pursuant to this Part B, Acclaim shall have no further
obligation to you.
8. The term of this agreement shall commence as of the date of your execution of
this Agreement and continue for a period two years (the "Term") unless sooner
terminated as provided for herein. Unless this agreement is terminated by either
party at the end of the Term or amended by written agreement, the Term shall
automatically be extended from year to year ("Extended Term(s)") under the same
terms and conditions as shall be in effect on the last termination date.
Whenever the word "Term" is used in this agreement, it shall refer to the Term
and any Extended Terms, except as to matters applicable only to the Initial Term
or an Extended Term. Further at the expiration of the Term, notwithstanding
anything to the contrary contained in the Plan, all options previously granted
to you under the Plan, including the Option granted hereunder, which have vested
as of the date of the expiration of the Term shall be exercisable in full and
terminate on the earlier of (a) three (3) years from the date of such expiration
and (b) the date on which such option would otherwise terminate.
9. All notices hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested; if intended for Acclaim, such notices
shall be addressed to it at One Acclaim Plaza, Glen Cove, New York 11542,
Attention: Xxxxxxx X. Xxxxxxxxx, with a copy to Xxxxxxxx & Colin LLP, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxx, Esq., or at
such other address of which Acclaim shall have given notice to you in the manner
herein provided; and, if intended for you, such notices shall be mailed to you
at your address first set forth above or at such other address of which you
shall have given notice to Acclaim in the manner herein provided.
10. This agreement constitutes the entire understanding among the parties with
respect to the matters referred to herein and no waiver of or modification to
the terms hereof shall be valid unless in writing signed by the party to be
charged and only to the extent therein set forth. All prior and contemporaneous
agreements and understandings with respect to the subject matter of this
agreement are hereby terminated and superseded by this agreement.
11. If any provision of this agreement is held to be invalid, illegal or
unenforceable in any respect for any reason, the balance of this agreement shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.
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12. This agreement shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, administrators, executors, personal
representatives, successors and assigns.
13. This agreement shall be construed under the laws of the State of New York
applicable to agreements wholly to be executed and to be performed therein.
14. Any dispute, claim, controversy or claim arising out of, relating to or in
connection with this agreement, or the breach, termination or validity thereof,
shall be brought exclusively in any Federal or State court in the State of New
York, County of New York. Both parties hereto expressly and irrevocably submit
to the jurisdiction of said courts and irrevocably waive any objection which
either of them may now or hereafter have to the laying of venue of any action,
suit or proceeding arising out of or relating to this agreement brought in such
courts, irrevocably waive any claim that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum and further
irrevocably waive the right to object, with respect to such claim, action, suit
or proceeding brought in any such court, that such court does not have
jurisdiction over such party. The parties hereto hereby irrevocably consent to
the service of process by registered mail, postage prepaid, or by personal
service within or without the State of New York. Nothing contained herein shall
affect the right to serve process in any manner permitted by law.
15. Acclaim shall be entitled to withhold from amounts payable to you hereunder
such amounts as may be required by applicable law.
16. Notwithstanding anything else contained herein to the contrary, upon your
termination for any reason you shall receive an amount equal to the then
remaining balance of the Unused Vacation, payable in one lump sum within ten
(10) business days after the termination of your employment. "Unused Vacation"
shall mean the balance of 60 vacation days (the amount of vacation days that
have previously been earned by you which you presently have not used) less the
number of such aforementioned vacation days hereafter used by you prior the
termination or expiration of your agreement with Acclaim.
Please sign this agreement below to indicate your agreement with and acceptance
of the terms set forth above.
Very truly yours,
ACCLAIM ENTERTAINMENT, INC.
By /s/
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
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Agreed to and Accepted:
/s/
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XXXX XX
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