EMPLOYMENT AGREEMENT
AGREEMENT dated as of August 31, 1998 between Xxxx of All Games, Inc., an
Ohio corporation (the "Employer" or the "Company"), and Xxxxxx Xxxxxxxxx (the
"Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee as its President 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; and
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 five (5) year period commencing as of
the date of this Agreement (the "Effective Date") (any year commencing on
the Effective Date or any anniversary of the Effective Date being
hereinafter referred to as an "Employment Year") unless earlier terminated
pursuant to Section 6 hereof.
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall have
the duties and responsibilities of President reporting directly to the
Chief Executive Officer and the Board of Directors (the "Board") of
the Employer. 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 located at 0000 Xxxxxxxxxxxxx Xxxx, Xxxx, 00000, 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 may be increased
from time to time at the discretion of the Board.
(b) In addition to the foregoing, the Employee shall be eligible
for a quarterly incentive bonus (the "Bonus") up to an amount of
$25,000 per quarter, based on certain gross margin and earning targets
with respect to each quarter of the Company's fiscal year, as mutually
agreed to by the parties. Gross margin and earnings shall be
calculated in accordance with generally accepted accounting principles
applied on a basis consistent with those utilized in the preparation
of the Company's financial statements. Gross margin and earnings for
each quarter shall be determined no later than 45 days following the
end of such quarter and the Bonus attributable thereto shall be paid
to Employee within ten (10) business days following the date of such
determination, and shall be accompanied by a copy of the determination
of such amount, certified by the Chief Financial Officer or Controller
of Take-Two Interactive Software, Inc. (the "Parent") as having been
determined in accordance with the provisions of this Section 3(b).
(c) In addition to the foregoing, and subject to the terms and
conditions of the Parent's 1997 Stock Option Plan (the "Plan"), a copy
of which has been made available to the Employee, the Employee shall
be granted as a matter of separate agreement, and not in lieu of
Salary or any other compensation for services, the right and option
(the "Option"), in the form of incentive stock options to the extent
available, to purchase pursuant to the Plan all or any part of an
aggregate of up to 125,000 shares of the authorized but unissued
common stock, par value $.01 per share, of the Parent (the "Shares"),
at the exercise price of $5.625 per Share, exercisable during the five
(5) year period, with respect to any incentive stock options, or ten
(10) year period (with respect to all other options granted pursuant
hereto) commencing as of the date hereof and terminating on the close
of business on August 31, 2008 or August 31, 2003, respectively, as
follows: (i) 62,500 of the Shares are immediately vested and may be
purchased as of the date hereof and (ii) an additional 62,500 of the
Shares may be purchased commencing on the first anniversary hereof;
and then, only to the extent that the Employee is still eligible under
the terms of the Plan; provided, however, in the event that the
Employee is terminated by reason of death or disability pursuant to
Section 6(b) hereof or in the event of any transaction pursuant to
Section 4 of the Plan, any options not vested at the time of
termination pursuant thereto shall immediately vest.
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4. Benefits.
(a) During the term of this Agreement, the Employee shall have
the right to receive or participate in all benefits and plans, as set
forth on Schedule A hereto ("Benefits"), or as the Company and Parent
may from time to time institute during such period for its senior
management employees and for which the Employee is eligible. 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 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 available to the
Company's senior management employees. Such vacation 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.
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) the
inability of the Employee, by reason of physical or mental disability,
to continue substantially to perform his duties hereunder for a period
of 100 consecutive days, (the "Disability Period") during which
Disability 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), (y) any options granted pursuant
to Section 3(c) hereof and not yet vested shall immediately vest in
the Employee and (z) the Employer shall have no further obligations or
duties to the Employee, except payment of Salary
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and such incentive compensation and Benefits, if any, having accrued
to the Employee pursuant to Section 3(b) hereof through the date of
death or the expiration of the Disability Period, as applicable, and
as provided in Sections 5.
(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 (i) payment of Salary and such incentive compensation, if
any, having accrued to the Employee (or having vested, in the case of
the Options) as provided in Section 3 hereof through the date of
termination and as provided in Section 5, and (ii) payment of Salary
and health and life insurance benefits as indicated on Schedule A
hereto for 30 months following the date of such termination or the
remaining term of this Agreement, whichever is less, and Employee
shall have no further obligations or duties to the Employer, except as
provided in Section 7.
(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, (iv) gross negligence on
the part of the Employee resulting in material harm to the Company or
(v) willful other misconduct of the Employee in the performance of his
duties hereunder resulting in harm to the Company. 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
(iv) above.
(e) Notwithstanding anything to the contrary contained in this
Section 6, in the event that the Employee terminates his employment
for any reason during the term of this Agreement (other than in the
event of death), the provisions of Sections 7(b) (non-compete) and
7(c) (non-solicitation) (the "Restrictive Covenants") shall be
extended from one (1) year to 30 months after the date of termination;
provided, however, in no event shall the period of the Restrictive
Covenants be extended beyond the six (6) year anniversary of the
Effective Date.
7. Confidentiality; Noncompetition. In addition to and supplementing
the covenants contained in Section 5.2 of the Agreement and Plan of Merger
(the "Merger Agreement"), dated August 22, 1998, among the Parent, JAG
Acquisition Corp., Xxxx of All Games, Inc. and Employee, the Employer and
Employee agree as follows:
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(a) The Employer and the Employee acknowledge that the services
to be performed by the Employee under this Agreement may result in the
Employee being in possession of confidential information relating to
the business practices of the Company and the Parent. The term
"confidential information" shall mean any and all information (verbal
and written) relating to the Company, the Parent or any of their
respective affiliates, or any of their respective activities, other
than such information which can be shown by the Employee to be 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: existing and proposed projects, source codes, object codes,
forecasts, assumptions, trade secrets, personnel lists, financial
information, research projects, services, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and
servicing. The Employee agrees that he will not, at any time during or
after the termination of his employment, directly or indirectly, use,
communicate, disclose or disseminate to any person, firm or
corporation any confidential information.
(b) The Employee hereby agrees that he shall not, during the
period of his employment and for a period of one (1) year following
such employment (subject to Sections 6(c) and 6(e) hereof), directly
or indirectly, within any county (or adjacent county) in the States of
Ohio and New York or 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
Parent's or the Company's business activities engaged in business
during the period of the Employee's employment or on the date of
termination of the Employee's employment.
(c) The Employee hereby agrees that he shall not, during the
period of his employment and for a period of one (1) year following
such employment (subject to Sections 6(c) and 6(e) hereof), directly
or indirectly, take any action which constitutes an interference with
or a disruption of any of the Parent's or Company's business
activities including, without limitation, the solicitations of the
Parent's or Company's customers, or persons listed on the personnel
lists of the Parent or 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
Parent or 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,
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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 Parent or Company, including the Employee, to discontinue or
alter his or its relationship with the Parent or 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 or Parent which are in the possession of the
Employee including all copies thereof, shall be promptly returned to
the Company.
(f) 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.
(g) 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.
(h) The rights and remedies enumerated in Section 7(g) shall be
in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
(i) 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.
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(j) 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 prior written notice to the sending party.
Notice shall be effective when so personally delivered, one business
day after being sent by telecopy or three (3) days after being mailed.
To the Employer:
Xxxx of All Games, Inc.
0000 Xxxxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With copies to:
Take-Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Chief Executive Officer
Telecopier:
and
Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telecopier: 000-000-0000
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To the Employee:
Xxxxxx Xxxxxxxxx
Xxxx of All Games, Inc.
0000 Xxxxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Telecopier:
With a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxx, P.L.L.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
(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 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; provided that the
provisions of Section 5.2 of the Merger Agreement shall also apply to
Employee. 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 City, New York, or in the
state and county in which such violation may occur, at Employer's
election.
(e) Employee 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.
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(f) Company Warranty. The Company hereby warrants and represents
that the execution of this Agreement and the discharge of the
Company's obligations hereunder will not breach or conflict with any
other contract, agreement, or understanding between the Company and
any other party or parties.
(g) 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.
(h) 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.
XXXX OF ALL GAMES, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Chairman of the Board
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
