EMPLOYMENT AGREEMENT
AGREEMENT dated as of August 1, 1998 between Take-Two
Interactive Software, Inc., a Delaware corporation (the "Employer" or the
"Company"), and Xxxxxxx X. Xxxxxxxx (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee as its
Chief Operating 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 Operating 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
$25,000 in respect of the fiscal year ending October 31, 1998 and a bonus equal
to $10,000 per quarter thereafter; provided that the net income per share in any
such quarter exceeds the Company's net income per share in the comparable
quarter for the prior year. Subject to the discretion of the Board, the Employee
shall also be paid a bonus equal to $20,000 for the fiscal year ended
October 31, 1999.
(c) The Employee shall be entitled to receive
non-qualified options to purchase 30,000 shares of Common Stock at an exercise
price of $2.50 per share and incentive options to purchase 120,000 shares of
Common Stock at an exercise price of $5.0625 per share (vesting as to one-half
of the shares covered thereby on March 1, 1999 and 2000).
(d) The Employee shall be entitled to receive a
car allowance in the amount of $500 per month.
(e) 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 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, not to be less than five weeks in the aggregate. Such
vacation
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may be taken in the Employee's discretion with the prior approval of the
Employer, 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, except for payment of Salary through the effective date of
termination, 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. Employer
may obtain disability insurance naming Employee as an insured, which Employee
shall pay for.
(c) In the event that Employee's employment with
the Employer is terminated by action taken by the Board without cause, then the
Employer shall have no further obligation or duties to Employee, except for
payment of the 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 Salary to the
Employee for the remainder of the Initial Term, or the remainder of the current
Renewal Term if this Agreement has been renewed; provided, however, that if such
termination occurs during the third year of the Initial Term or the final year
of any Renewal Term, the Employer shall also pay to the Employee an amount equal
to the total Salary and bonus received by the Employee during the 12 months
prior to the date of termination. In the event that this Agreement is not
renewed, the Company may either waive the provisions of Section 7(b) or pay the
Salary to the Employee during the term of the non-compete provision of
Section 7(b).
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(d) 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.
(e) In the event that Employee's employment
with the Employer is terminated 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 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 pay the Employee
an amount equal to 1.5 times the total Salary and bonus received by the Employee
during the 12 months prior to the date of termination. All amounts payable to
the Employee pursuant to this Section 6(e) shall be paid in one lump-sum payment
payable immediately upon such termination, and all options granted to Employee
shall vest.
(f) For purposes of this Agreement a "Change in
Control" shall be deemed to occur upon the election of directors constituting a
change in a majority of the Board.
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. 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
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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 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
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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 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
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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.
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
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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:
Xxxxxxx X. Xxxxxxxx
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 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.
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(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:
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Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
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Xxxxxxx X. Xxxxxxxx
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