EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of August
11, 2000 by and between ACCLAIM ENTERTAINMENT, INC. a Delaware corporation
("Company") and XXXXXX X. XXXXXXX ("Employee").
1. DEFINITIONS: The following terms shall, where the context allows,
have the following meanings whether such terms shall appear in lower case or
with the first letter of each word capitalized (the foregoing shall apply to all
other defined terms used herein):
(a) "Company Client" means any person, business or entity (collectively
"Person") to or through whom any Company Product or Service is sold or
brought to market prior to or during Employee's employment under this
Agreement.
(b) "Company Product or Service" means any product or service developed and/or
sold or otherwise provided by Company during or prior to Employee's
employment under this Agreement, and all other products and/or services
which are similar to such products or services, including, without
limitation, computer game software of all kinds.
(c) "Competitor" means any Person who is engaged in the development or sale of
products or services like or similar to any Company Product or Service
including, without limitation, the development or sale of computer game
software.
2. EMPLOYMENT:
(a) Acceptance of Employment by Company: Company hereby engages Employee
and Employee hereby agrees to provide to Company his full-time
services as Executive Vice President, Chief Financial Officer, in
accordance with the terms and conditions of this Agreement. Employee
will report to, and serve under the direction of the Co-Chairman/Chief
Executive Officer and the Co-Chairman/Senior Executive Vice President
or such other person(s) as may be designated by Company, however,
Employee shall serve as the highest-ranking financial officer of the
Company. Except during vacation period and reasonable periods of
absence due to sickness, personal injury or other disability
throughout the Term (as defined below) of this Agreement, Employee
shall devote his full working time and attention during normal
business hours to performing his services and duties hereunder to the
best of his ability and utilizing all of his skills, experience and
knowledge to advance the business and interests of the Company in a
manner consistent with the professional duties and responsibilities of
his position. Employee shall not, directly or indirectly, engage in or
participate in the operation or management of, or render any services
to, any other Person. Notwithstanding the foregoing to the contrary,
Employee shall not be prevented from investing and managing his assets
in such form or manner as will not unreasonably interfere with the
services to be rendered by Employee 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 or deliver lectures, fulfill
speaking engagements or teach or coach at educational institutions
whether or not for compensation where such positions do not
unreasonably interfere with the services to be rendered by Employee
hereunder and where the business of such firm, trust or corporation is
not in competition with Company's (or any of Company's affiliates)
business.
(b) Location of Employment: Employee shall render his services at
Company's offices presently located in Glen Cove, New York; provided,
however, that Employee shall render his
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services at such other locations from time-to-time as the proper
performance of Employee's duties may reasonably require.
3. TERM: Employee's employment hereunder shall be for a period of three
(3) years and shall commence on August 28, 2000 and continue through and
including August 27, 2003 (the "Term") unless sooner terminated as provided for
herein. Unless this Agreement is terminated or amended by written agreement, the
Term shall automatically be extended from year to year under the same terms and
conditions as shall be in effect on the last termination date. Employee agrees
that the covenants set forth in paragraph 6 (hereinafter "Restrictive
Covenants"), and all other provisions of this Agreement related to the
enforcement thereof, shall continue throughout the full Term of this Agreement,
surviving any termination of Employee's employment hereunder for any reason.
4. COMPENSATION, BENEFITS:
(a) Salary: Company shall pay to Employee during the Term, an annual
base salary (the "Salary") of Three Hundred Fifty Thousand Dollars ($350,000)
per annum. The Salary shall be reviewed by the Company annually and may be
increased if the Company, in its sole and absolute discretion, determines that
such an increase is advisable based on such factors as the Company shall
consider appropriate from time to time (it is understood that no such review
shall cause a decrease in Employee's Salary). Employee's Salary shall be payable
in accordance with the Company's customary employee payroll policy as in effect
from time to time. Such Salary, together with any other compensation which may
be payable to Employee hereunder shall be less such deductions as shall be
required to be withheld by applicable law and regulations and shall be pro-rated
for any period that does not constitute a full twelve (12) month period.
(b) Benefits: In addition to the payments required by Paragraph 4 to be
paid to the Employee during the Term and to any benefits payable hereunder, the
Employee shall:
(i) be eligible to participate in all employee fringe benefits and any
pension and 401(k) plan that may be provided by the Company for its key
executive employees in accordance with the provisions of any such plans;
(ii) participate on the commencement of the Term of this Agreement at
the Company's sole expense in medical, dental, disability, life and accidental
death and dismemberment insurance plans that may be provided by the Company for
its key executive employees in accordance with the provisions of any such plans;
(iii) be entitled to sick leave and sick pay in accordance with any
Company policy and practice that may be applicable to key executive employees;
and
(iv) be eligible for participation in the Company's Employee Stock
Purchase Plan, effective with the next available enrollment period following
commencement of this Agreement; and
(c) Bonus:
(i) Employee shall receive a bonus in the amount of Fifty Thousand
Dollars ($50,000), payable upon commencement of the Term of this Agreement.
(ii) In addition to the sums payable to Employee pursuant to Paragraph
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4(c)(i), above, Employee shall during each fiscal year of Company during which
Employee is employed hereunder, be eligible to participate in the Company's
Annual Incentive Plan (the "AIP"). Based upon the successful completion of
stated goals as set forth by the Company in the AIP for the fiscal year in
question, employee shall be eligible to receive as a bonus up to 100% of his
Salary (it being understood that the calculation of the amount of such bonus
shall be as set forth in the AIP for such fiscal year). Company reserves the
right to amend, modify or cancel the AIP; provided that if Company does modify
the financial goals of the AIP for any Fiscal Year which were set by Company at
the commencement of such Fiscal Year, such modification will not affect the
calculation of Employee's AIP Bonus for such Fiscal Year, if any (in other words
Employee's AIP bonus, if any, shall be calculated pursuant to the financial
goals set at the commencement of the applicable Fiscal Year). For purposes of
this Agreement, and notwithstanding anything provided herein or in the AIP, the
Company guarantees that the Employee's bonus under the AIP for the first year of
the Term of this Agreement shall be no less than the amount of One Hundred
Seventy Five Thousand Dollars ($175,000) (the "Guaranteed AIP Bonus"), one-half
(1/2) of which amount shall be payable upon the commencement of the Term of this
Agreement and the balance of which amount shall be payable on the six-month
anniversary of the commencement of the term of this Agreement. Participation in
the AIP for Company's fiscal year ending August 31, 2000 will be prorated from
the Employee's first full month of employment. For purposes of clarification any
bonus under the AIP awarded Employee shall be first set off against the
Guaranteed AIP Bonus.
(d) Stock Options: Upon commencement of the Term of this Agreement,
Employee shall receive options to purchase Two Hundred Fifty Thousand (250,000)
shares of the Company's common stock. Except as otherwise provided herein, these
options will vest in equal installments over a three (3) year period commencing
on the date of this Agreement, in accordance with the provisions of the 1998
Stock Option Plan (the "Plan") of the Company. The option price will be at the
closing price of the Company's stock on the The NASDAQ SmallCap market on the
day the grant is officially approved by the Company's Compensation Committee,
but not later than the date of commencement of Employee's employment. Additional
options on the Company's common stock may be awarded to Employee at the
discretion of the Company and Company's Board of Directors. The award of any
options (including the options to be granted upon commencement of the Term
hereunder) and the exercise of such options shall be subject to the terms placed
on such options at the time the Board makes any such award and in accordance
with the provisions of Company's Plan, as such Plan may be amended from time to
time; provided, however, that if this Agreement is terminated pursuant to
Paragraph 8(c) or 8(e)(ii), below, Employee shall have the right to exercise any
options which may be properly vested pursuant to the Stock Option Plan during
the Severance Period (as such term is defined in Paragraph 8(c), below).
(e) Automobile Allowance: Company shall provide Employee with an
automobile allowance of $1,000 per month. Such allowance shall cover any leasing
expenses, gas, maintenance and insurance, all of which shall be Employee's sole
responsibility.
(f) Vacation: The Employee shall be eligible for four (4) weeks of
vacation each year (20 days). The Employee may carry over as much as ten (10)
days into his vacation bank to a maximum of ten (10) carryover days at any given
time.
(g) Expenses: Company will reimburse Employee for actual, ordinary and
necessary travel and accommodation costs, entertainment and other business
expenses incurred as a necessary part of discharging the Employee's duties
hereunder, subject to receipt of reasonable and appropriate documentation as
required from time-to-time by the Company.
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5. OWNERSHIP OF RESULTS AND PROCEEDS OF EMPLOYMENT: All results and
proceeds of Employee's employment ("Work Product") hereunder shall be considered
"work made for hire" and shall be owned exclusively throughout the world by the
Company (including all copyrights and patents therein and thereto, and all
renewals and extensions thereof) in perpetuity (except with respect to patents
or copyrights which shall be owned exclusively by Company for the duration of
any applicable patent or copyright), free of any claims whatsoever by Employee
or any other Person. Company shall have the sole and exclusive right to
copyright or patent the Work Product and documentation thereto, or other
reproductions embodying the Work Product thereof, and any other material capable
of copyright and/or patent protection created in connection with the Work
Product) in Company's name, as the owner and author thereof, and to secure any
and all registrations, renewals and extensions of such copyrights and patents in
Company's name or Employee's name as permitted pursuant to applicable statute.
If Company shall be deemed not to be the owner or author of any of the
aforementioned materials, this Agreement shall constitute an irrevocable
transfer to Company of ownership of copyright and/or patent therein (and all
renewals and extensions). Employee shall, upon Company's request, execute and
deliver to Company transfers of ownership of copyright (and all renewals and
extensions) or patent, as the case may be, in such materials and any other
documents as Company may deem necessary or appropriate to vest in Company the
rights granted to Company in this Agreement, and if Employee does not execute
any such above described transfers as required hereunder then Employee hereby
irrevocably appoints Company his attorney-in-fact for the purpose of executing
those transfers of ownership and other documents in his name.
6. CERTAIN COVENANTS OF EMPLOYEE: Without in any way limiting or
waiving any right or remedy accorded to Company or any limitation placed upon
Employee by law, Employee agrees as follows:
(a) Acknowledgment: Employee understands and agrees that Company is
engaged in the highly competitive business of computer software development;
that Company's success is highly dependent upon the protection of Company's
trade secrets and confidential information; that Company has invested
considerable resources of its time and money in developing its products,
services, staff, good will, procedures, clients, techniques, special training,
client lists, manuals, records, documents, and other trade secrets and
confidential information; and that upon and during employment under this
agreement Company has provided and will provide Employee access to and valuable
knowledge regarding Company's trade secrets and confidential information,
creating a relationship of confidence and trust between Company and Employee.
Employee acknowledges and agrees that the use of such trade secrets or
confidential information, or of Employee's expertise or leadership, for the
benefit of Company's Competitors would be greatly harmful to Company, and that
Company's willingness to enter into business with Employee and to provide
Employee access to its trade secrets and confidential information is conditioned
upon (i) the protection of Company's trade secrets and confidential information
for Company's sole and exclusive benefit, (ii) the retention of Employee's
expertise and leadership during the Term of this Agreement for the sole and
exclusive benefit of Company, and not for any competitor, and (iii) the
protection of Company against Employee's use for the benefit of any Competitor
of the valuable skills Employee will acquire, develop and/or refine by virtue of
employment with Company under this Agreement. Employee therefore agrees that the
covenants and confidentiality provisions set forth in this Agreement are
reasonable in scope, time, territory and type of activity and necessary for the
protection of Company's legitimate interests, and further agrees that the
knowledge of Company's confidential information and trade secrets to which he
will gain access by virtue of employment under this Agreement, constitute good,
sufficient and adequate consideration for the covenants and confidentiality
provisions set forth in this Agreement.
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(b) Limited Non-Competition. Employee expressly covenants and agrees
that during the Term of this Agreement and for a period of one (1) year
following the termination of his employment with Company, for any reason, with
or without cause, Employee shall not, directly or indirectly, alone or in
concert with others, compete with Company in any manner or form, including but
not limited to serving in the capacity of employee, agent, consultant, owner,
investor, stockholder, partner, and/or independent contractor for any
Competitor, nor will Employee, except for or on behalf of Company, solicit or
attempt to solicit clients, business or patronage for the development or sale of
any product or service of Company. Employee acknowledges and agrees that the
computer software development industry in which Company is engaged is not
confined to any particular geographic market, but rather is global in geographic
scope, and that the absence of a restricted geographic scope to the limited
covenant of non-competition set forth herein is therefore reasonable and
necessary for the protection of Company's assets, trade secrets, confidential
information, good will and other legitimate business interests. Further, the
absence of a restricted geographic scope for the limited covenant of
non-competition set forth herein shall not be invoked as or provide a defense to
the enforceability of this Agreement or any provision hereof. Notwithstanding
the foregoing to the contrary, Employee shall have the right to own as a passive
investment up to one percent (1%) of any Competitor, provided such Competitor is
a public company. Further notwithstanding the foregoing to the contrary, if this
Agreement is terminated pursuant to paragraph 8 (c), then the first sentence of
this paragraph 6(b) shall not apply to such termination.
(c) Limited Non-Solicitation of Company Clients. Employee expressly
covenants and agrees that for the one (1) year period following the termination
of his employment with Company, for any reason, with or without cause, Employee
shall not, directly or indirectly alone or in concert with others, solicit or
induce, or attempt to solicit or induce any Company Client, or any former
Company Client who, in the twelve (12) month period prior to the effective date
of such termination was an Company Client, to obtain or secure computer software
or its development from or through a Competitor. Further notwithstanding the
foregoing to the contrary, if this Agreement is terminated pursuant to paragraph
8 (c), then the first sentence of this paragraph 6(c) shall not apply to such
termination.
(d) Limited Non-Solicitation of Company Employees. Employee expressly
covenants and agrees that for the one (1) year period following the termination
of his employment with Company, for any reason, with or without cause, Employee
shall not, directly or indirectly, alone or in concert with others, recruit,
solicit or induce, or attempt to recruit, solicit or induce any employee,
officer, consultant, representative, independent contractor or advisor of
Company to terminate, alter, or modify their employment or relationship with
Company.
(e) Proprietary Information:
(i) Employee further acknowledges and agrees that the success
of the Company depends, among other things, upon maintaining strict secrecy with
respect to its trade secrets and confidential information relating to the
design, development and marketing of its products and services, including
without limitation "know-how" trade secrets, details of supplier's,
manufacturer's, Employee's, employee or distributor's contracts, pricing
policies, financial data, operational methods, marketing and sales information
or strategies, product development techniques or plans, or any strategies
relating thereto, technical processes, designs and design projects, and other
proprietary information of the Company or any parent, subsidiary or affiliate of
Company (hereinafter individually referred to as a "Protected Company") and to
which trade secrets and confidential information Employee may acquire knowledge
of or have access to during the course of his
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employment by the Company. Such trade secrets and confidential information as
described above are hereinafter referred to as "Proprietary Information". For
the purpose of this Agreement, Proprietary Information also includes, without
limitation, any and all information not lawfully and generally available to the
public concerning the Company, and any Protected Company or any of its
respective products, services, clients, affairs, personnel or suppliers. In
addition, in the course of its business, the Company may receive confidential
disclosures of the trade secrets and confidential information of other persons
and entities. In such event, when instructed by the Company, Employee shall
receive and treat the trade secrets and confidential information of such other
persons and entities with the same obligation and degree of care as Employee
treats the Proprietary Information of the Company.
(ii) Employee shall use his best efforts to exercise utmost
diligence, as an individual as well as part of a working group, to protect and
guard the Proprietary Information of the Company and any Protected Company.
Employee agrees not to disclose to any Person not employed by the Company or not
engaged to render services to a Protected Company either during or after his
employment, nor to use, for himself or another, during or after his employment,
without the Company's written consent, any Proprietary Information obtained by
him during his employment, whether developed by him or not, and Employee agrees
to hold all Proprietary Information in strict confidence; provided, however,
that this provision shall not preclude the Employee from making, upon advice of
counsel, any disclosure required by any applicable law or using or disclosing
information known generally to the public (other than information known
generally to the public as a result of any violation of this Paragraph 6(e) by
or on behalf of the Employee).
(iii) Proprietary Information shall at all times, both during the
term of this Agreement and at all times thereafter, be and remain the property
of Company for its sole and exclusive use and benefit, and Employee shall
deliver all documents containing or reflecting such information to Company at
any time upon request of Company, and in any event shall deliver all such
documents to Company upon the termination of his employment regardless of
whether or not expressly requested to do so at the time employment pursuant to
this Agreement ceases. Upon leaving the employment of the Company, Employee
shall not take with him any of the Company's Proprietary Information.
(f) Breach of Covenants. Employee acknowledges and agrees that the
services to be rendered by him hereunder are of a special, unique, extraordinary
and intellectual character which gives them peculiar value. In the event of any
breach of any covenant or promise set forth herein, Employee agrees that Company
shall be entitled to seek judicial remedies in any appropriate court for the
redress of such breach, including, without limitation, the right to seek
injunctive relief. Employee further acknowledges that it will be difficult, if
not impossible, to measure in money the damage that will be suffered by the
Company in the event that Employee fails to comply with the covenants and
restrictions set forth in this Section 6 and that in such event the Company will
not have an adequate remedy at law. Therefore, Employee agrees that the Company
in such event shall be entitled to injunctive relief, both temporary and
permanent, to enforce such covenants or restrictions, or any of them, in any
court having jurisdiction thereof, in addition to such other equitable and legal
remedies which may be available to it, and in the event that any action or
actions should be instituted in equity to enforce any restriction or covenant
hereunder, no party will raise the defense that there in an adequate remedy at
law.
7. RIGHTS AND REMEDIES UPON BREACH: If Employee breaches any of the
provisions of the Restrictive Covenants, Company shall have the following rights
and remedies, each of which rights and remedies shall be independent of the
other and severally enforceable:
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(a) Specific Performance: The right and remedy to have the Restrictive
Covenants specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company.
(b) Severability of Covenants: If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
(c) Blue-Pencilling: If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographical scope of such provision, such court shall have the power to reduce
the duration or scope of such provision and, in its reduced form, such provision
shall then be enforceable.
(d) No Waiver, Cumulative Remedies: The failure of any party to this
Agreement to seek redress for a violation of or to insist upon the strict
performance of any covenant or condition of this Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from having
the effect of an original violation. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights or remedies the
parties may have by law, statute, ordinance or otherwise.
8. TERMINATION/SUSPENSION/CHANGE OF CONTROL:
(a) Termination Upon Death or Disability:
(i) If during the Term of this Agreement Employee should die,
then this Agreement shall be deemed to have automatically terminated as of the
date of Employee's death. Employee's estate shall be entitled to (I) any unpaid
Salary accrued prior to the date of such death and (2) a prorated AIP bonus
(prorated based on the number of months expired from the commencement of the
Fiscal Year in which Employee is terminated until the date of such termination),
if any, pursuant to the AIP (or any successor plan, if any,) which would
otherwise have been payable to Employee for the Fiscal Year in which Employee
dies (such amount, if any, shall be payable to Employee when such AIP bonuses
are otherwise payable for such fiscal year), but no later than 120 days
following the expiration of the Fiscal Year in which Employee dies.
(ii) If during the Term of this Agreement Employee becomes
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 Company shall have
the right to terminate this Agreement or suspend the Term at Company's election.
In the event Company elects to suspend the Term hereof and Company'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 Company
may advise Employee in writing. Employee may only return to work following such
disability upon submission to Company of a certificate from the physician
selected by the Company as aforesaid certifying that Employee is able to return
to work. No suspension shall in any manner suspend or otherwise impair Company's
rights under this Agreement. During the period that Employee is Disabled
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and prior to any Termination or suspension by Company, Employee shall retain his
status and continue to receive his full compensation (Salary plus prorated AIP).
As used in this Agreement, the term "Disabled" shall mean Employee's inability
to substantially perform his duties and responsibilities under this Agreement by
reason of a non-intentionally self-inflicted medical disability, including
mental or physical illness, as certified by a physician appointed by the
Company.
(b) Termination for Cause: Company shall have the right to terminate
Employee's 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 Employee that amounts to a willful breach of
Employee's fiduciary duty to Company or its direct or indirect clients, (ii)
Employee's conviction of a felony or any crime involving moral turpitude under
state or federal law, or the equivalent under foreign law, (iii) Employee's
material breach of any rules or regulations of employment, or any policies
related thereto, which may be adopted or amended from time to time by Company of
which Employee has been given written notice and which are consistent with this
Agreement, (iv) Employee's refusal to perform satisfactorily Employee's duties
and obligations under this Agreement, (v) any other acts or omissions by
Employee constituting neglect or dereliction of Employee's duties hereunder,
(vi) Employee's willful refusal to carry out the reasonable instructions of the
Board, either of the Co-Chairmen of Company or such other person as either of
the Co-Chairmen have determined, (vii) the happening of any event which, under
the provisions of any federal, state or foreign laws applicable to Company or
its activities, disqualifies Employee from acting in any capacity provided for
herein, including, without limitation, any event which disqualifies Employee
under the Securities Act of 1933 or the Securities Exchange Act of 1934, or
(viii) Employee's default of any material obligations under this Agreement
(other than those specified in clauses (i) through (vi) above); provided
however, that the Company shall have given Employee written notice specifying
any event or breach specified in clauses (iii) through (vi) and (viii) above and
permitted Employee 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 Employee has
failed to cure such breach within such 20 days; provided, further, however that
the Company shall not be obligated to provide Employee with notice and
opportunity to cure more than one event or breach under each of clauses (iii)
through (vi)and (viii) above. If Employee's employment is terminated by Company
for Cause, Company's obligations to Employee shall terminate immediately;
provided that Company shall pay to Employee any unpaid salary and unpaid
vacation accrued prior to such termination and reimburse Employee for any
approved business expenses incurred by Employee prior to such termination.
(c) Termination Without Cause by Company or for Cause by Employee: If the
Company terminates this Employment Agreement without cause by written notice to
the Employee, or if Employee's employment hereunder is terminated by Employee
pursuant to Paragraph 8(e) hereunder, the Employee shall be entitled to receive
from the Company, (i) any unpaid Salary, unpaid vacation pay, unreimbursed
business expenses and any other monies payable to the Employee under any
employee benefit plan, in each case earned through the date of the Employee's
termination; (ii) from and after the effective date specified in the Company's
notice of termination and for a period of twelve (12) months thereafter (the
"Severance Period"), the Salary (it being understood, for the avoidance of
doubt, that Employee shall not be entitled to receive any bonuses of any type
during the Severance Period); (iii) continued coverage under Company's then
available medical, dental, life and disability benefits for the 12-month period
commencing with Employee's termination of employment; (iv) Employee shall be
entitled to a prorated bonus (prorated based on the number of months expired
from the commencement of the Fiscal Year in which Employee is terminated until
the date of such termination), if any, pursuant to the AIP (or any successor
plan, if any,) which would otherwise have been payable to Employee for the
Fiscal Year in which Employee is terminated hereunder (such amount, if any,
shall be payable to Employee when such AIP bonuses are otherwise payable for
such
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fiscal year), but no later than 120 days following the expiration of the Fiscal
Year in which Employee is terminated, and (v) notwithstanding anything to the
contrary contained in the Stock Option Plan (as defined in Paragraph 4(d)
hereinabove), all options previously granted to Employee shall become
immediately vested and exerciseable in full for a period of 180 days from
Employee's termination. If the Employee should die at any time after the
termination of this Employment Agreement pursuant to this Paragraph 8(c), the
amounts or benefits payable or provided to the Employee under this Paragraph
8(c) shall cease and the provisions of Paragraph 8(a) shall apply; provided,
further, that the Employee shall not be entitled to receive any bonuses of any
type and provided, further that any payments made to the Employee pursuant to
this Paragraph 8(c) shall be offset by any compensation that the Employee may
receive from employment that the Employee may obtain at any time following the
termination of this Employment Agreement without any regard to when such
compensation is paid and, in connection therewith, the Employee shall be
required to refund to the Company any amounts which shall constitute an
overpayment made by the Company to the Employee under this Paragraph 8(c) as a
result of any compensation that the Employee may obtain at any time following
the termination of this Employment Agreement pursuant to this Paragraph 8(c).
Fiscal Year as used in this Agreement means the fiscal year of Company.
(d) Designation of Beneficiary: The parties hereto agree that the Employee
shall designate, by written notice to the Company, a beneficiary to receive the
payments described in Paragraph 4 in the event of his death. The designation of
any such beneficiary may be changed by the Employee from time to time by written
notice to the Company. In the event the Employee fails to designate a
beneficiary as herein provided, any payments which are otherwise to be made to a
designated beneficiary under Paragraph 4 shall be made to the Employee's estate.
(e) Termination by Employee for Cause/Change in Control: If, during
Employee's employment, (i) Company shall materially breach a material term of
this agreement or (ii) there shall occur a "Change in Control" (as defined
below) of Company and, within one year thereafter, there shall occur a change in
Employee's "Circumstances of Employment" (as defined below), then Employee may
terminate his employment pursuant to this Agreement by written notice to Company
and Employee shall be entitled to receive the benefits provided in paragraph
8(c)(i) through (v) above; provided, however, that Employee shall first have
given Company written notice specifying the specific nature of such breach or
such change in Employee's Circumstances of Employment as case may be, and
Company has not cured any such breach or Change in Circumstances within the
period of 20 days after receipt of notice of such aforementioned notice.
(i) A "Change in Control" shall be deemed to occur upon (a) the
sale by Company 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 Company with any person, or the merger of Company
with any person as a result of which merger Company is not the surviving entity
as a publicly held corporation, or (b) the sale or transfer or issuance of
shares of Common Stock by Company 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.
(ii) Employee's "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
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Employee's duties or reporting responsibilities; (B) a material breach by
Company of any provision of this Agreement; (C) a material reduction in the
fringe benefits made available by Company to Employee, unless such reduction is
also applicable to all senior executive officers of Company generally; (D) a
material diminution in Employee's status, working conditions or economic
benefits; or (E) a reduction in Employee's Salary or AIP.
9. EMPLOYEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES:
(a) Right to Enter Into Agreement: Employee has the right and is free to
execute this Agreement, to grant the rights granted by him to the Company
hereunder, and to perform each and every term and provision hereof.
(b) Breach Under Other Agreement or Arrangement: Neither the execution and
delivery of this Agreement nor the performance by Employee of any of his
obligations hereunder will constitute a violation, breach, or default under, any
agreement, arrangement or understanding, or any other restriction of any kind,
to which Employee is a party or by which Employee is bound.
(c) Services Rendered Deemed Special, Etc.: Employee acknowledges and
agrees that the services to be rendered by him hereunder are of a special,
unique, extraordinary and intellectual character which gives them peculiar
value, the loss of which cannot be adequately compensated for in an action at
law and that a breach of any term, condition or covenant hereof will cause
irreparable harm and injury to Company and in addition to any other available
remedy Company will be entitled to seek injunctive relief.
(d) Indemnity: Employee agrees and does hereby indemnify save and hold
Company harmless from and against any and all damages, liabilities, costs,
losses and expenses (including legal costs and reasonable attorney's fees)
arising out of or in connection with any claim, demand or action by a third
party which is inconsistent with any of the warranties, representations or
agreements made by Employee in this contract Employee agrees to reimburse
Company, on demand, for any payment made by Company at any time with respect to
any such demand, liability, costs, loss or expense to which the foregoing
indemnity applies; provided, such payment arises from a final judgment or
arbitration or a settlement made with Employee's prior consent, which consent
Employee shall not unreasonably withhold. Company shall notify Employee in
writing of any such claim, demand or action promptly after Company has been
formally advised thereof and Employee shall have the right, at his expense to
participate in the defense thereof with counsel of his choice. Notwithstanding
the foregoing to the contrary, Employee shall not be liable to indemnify Company
as provided above to the extent that any above referenced claim is covered by
any insurance policies Company may elect to maintain generally for the benefit
of officers or in connection with any proceeding to which Employee (or
Employee's legal representatives or other successors) may be made a party by
reason of Employee's being or having been an officer or Employee of Company and
its subsidiaries and affiliates including, without limitation, any joint venture
or partnership in which Company or any of its subsidiaries has an interest as
long such actions were within the scope of Employees duties hereunder.
10. NOTICES: Any notice, consent or other communication under this
Agreement (hereinafter "Notice") shall be in writing and shall be delivered
personally, sent by facsimile transmission (and confirmed in writing) or
overnight courier (regularly providing proof of delivery) or sent by registered,
certified, or express mail and shall be deemed given when so delivered
personally, sent by facsimile transmission and confirmed in any other manner
permitted in this Paragraph 10 or overnight courier, or if mailed two (2) days
after the date of deposit in the United States mail as provided herein. Notices
shall be addressed to Employee at 000 Xxxxxxxxx Xxxxx, Xxxxxxxx,
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Connecticut , with copies to: Xxxx X. Xxxxxx, Xxxxxxxx & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000. Notices shall be addressed to Company at
Xxx Xxxxxxx Xxxxx, Xxxx Xxxx, Xxx Xxxx 00000, Attention: Chief Executive
Officer, and to Xxxxxxxxx, Xxxxxxxxx & Xxxxxxxxx, LLP, 0000 Xxxxxxx Xxxx Xxxx,
Xxxxx 000, Xxx Xxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxxxx, Esq. Either
party may change its address for Notices hereunder by notice to the other party
in accordance with this Paragraph 10.
11. ASSIGNMENT: Subject to paragraph 8(e), Company shall have the right, at
its election, to assign any of its rights or obligations hereunder, in whole or
in part to any parent, subsidiary, affiliated, or related company, or to any
person, firm, or corporation owning or acquiring a substantial portion of
Company's or Company's stock or assets, and, to the extent of such assignment,
Company and/or Company shall thereafter be relieved of their obligations
hereunder. Employee shall not have the right to assign any of his rights or
obligations hereunder, except for family gifts or transfers of compensation
payable under paragraph 4 to heirs, beneficiaries, or otherwise by operation of
law, in accordance with Company's policies, practices and procedures.
12. FURTHER INSTRUMENTS: Employee shall furnish Company with any further
instruments, in such form and substance as shall be approved or designated by
Company, which Company may reasonably require or deem necessary, from time to
time, in its discretion, to evidence, establish, protect, enforce, defend or
secure to Company any or all of its rights, titles, properties or interests or
more fully to effectuate or carry out the purposes, provisions or intent of this
Agreement. In this connection, Employee hereby irrevocably constitutes and
appoints Company as its lawful attorney-in-fact to execute, acknowledge and
deliver all such further instruments and to do all acts and things contemplated
by this paragraph.
13. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION: This Agreement
contains the entire agreement between the parties with respect to Employee's
employment by Company, superseding all existing agreements between them
concerning Employee's employment. This Agreement may not be amended, modified,
superseded, canceled, or waived except by a written instrument signed by the
party to be charged. The headings in this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
14. COMPANY INDEMNITY: Company shall indemnify Employee (and Employee's
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 Employee shall be entitled to the protection of any insurance
policies Company may elect to maintain generally for the benefit of officers,
against all costs, charges and expenses whatsoever incurred or sustained by
Employee (or Employee's legal representatives or other successors) in connection
with any action, suit or proceeding to which Employee (or Employee's legal
representatives or other successors) may be made a party by reason of Employee's
being or having been an officer or Employee of Company and its subsidiaries and
affiliates including, without limitation, any joint venture or partnership in
which Company or any of its subsidiaries has an interest.
15. GOVERNING LAW: Subject to paragraph 14, this Agreement shall
interpreted with, and governed by, the laws of the State of New York, without
regard to conflicts of law doctrines. Any claim, dispute or disagreement in
respect of this Agreement may be brought only in the courts of the State of New
York, in Nassau County or the federal courts within the State of New York and in
Nassau County, which courts shall have exclusive jurisdiction thereof. Any
process in any action or proceeding commenced in such courts may, among other
methods, be served upon the parties hereto, as
11
applicable, by delivering or mailing the same, via registered or certified mail,
return receipt requested, addressed to Company or Employee, as applicable, at
the addresses set forth or designated pursuant to paragraph 10, above. Any such
service by delivery or mail shall be deemed to have the same force and effect as
personal service within the State of New York.
WHEREFORE, the parties hereto have executed this Agreement as of the day
and year first above written.
ACCLAIM ENTERTAINMENT, INC.
By: /s/ XXXXX XXXXXXX 8-11-00
-------------------------------
Name:
Its:
/s/ XXXXXX X. XXXXXXX
---------------------
XXXXXX X. XXXXXXX
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