EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT dated as of February 13, 2001 between Take-Two
Interactive Software, Inc., a Delaware corporation (the "Employer" or the
"Company"), and Xxxx X. Xxxxxxx (the "Employee").
W I T N E S S E T H :
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WHEREAS, the Employer desires to employ the Employee as its
Chief Financial Officer and to be assured of his services as such on the terms
and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment
on such terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer as Chief Financial Officer for a
three-year period commencing effective as of the date hereof (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" and, together with the Initial
Term, the "Term"), unless, more than ninety days prior to the expiration of the
Term, either the Employee or the Company gives written notice that employment
will not be renewed.
2. Employee Duties.
(a) From and after the date hereof and during the term of this
Agreement, the Employee shall have the duties and responsibilities of Chief
Financial Officer, reporting directly to the Chief Executive Officer 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 as Chief Financial Officer.
(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 in New York,
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 $300,000 per annum, 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 and may be increased (but not decreased) from time to
time at the discretion of the Board.
(b) The Employee shall be paid a bonus equal to $15,000 in
respect of each fiscal quarter in the event Employee successfully implements the
recommendations of the Audit Committee of the Board of Directors for that
quarter, which shall be mutually acknowledged and agreed in advance of each
quarter.
(c) The Employee shall be entitled to receive incentive
options (within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended) to purchase 200,000 shares of Common Stock under Employer's Stock
Option Plan (vesting as to one-quarter of the shares covered thereby on the six
month, twelve month, eighteen month and twenty-four month anniversaries of the
Effective Date) at an exercise price equal to the last sale price of the
Company's Common Stock on the date the Company's common stock resumes trading.
(d) The Employee shall be entitled to a signing bonus of
$20,000 payable upon the execution hereof.
(e) The Employee shall be entitled to an automobile allowance
of $800 per month. The Company will pay for insurance, parking and gasoline.
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(f) The Employee shall be entitled to receive $1 million in
life insurance, the premiums for which shall be paid by the Company.
4. Benefits.
(a) During the term of this Agreement, the Employee and the
Employee's family 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 Chief Executive Officer, or its senior executives in particular, or for
its employees in general, including without limitation, 401(k) benefits and
health and dental coverage. 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 less than four weeks vacation during any Employment Year).
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 reimbursed by the Employer.
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 and benefits through the effective date of
termination and as provided in Section 8(h), and the Employee shall have no
further obligations or duties to the Employer, except as provided in Section 7.
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(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, except for payment
of salary and benefits through the effective date of termination and as provided
in Section 8(h).
(c) In the event that Employee's employment with the Employer
is terminated by action taken by the Board without cause (including in the event
of a Change of Control), then the Employer shall have no further obligation or
duties to Employee, except for payment of the amounts described below and as
provided in Section 8(h), 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 and all benefits to the
Employee for twelve months following the effective date of termination. If such
termination occurs following a Change of Control (as defined herein), all
amounts payable to the Employee pursuant to this Section 6(c) shall be paid in
one lump-sum payment immediately upon termination. In the event of a Change of
Control, all of the options granted under this Agreement shall vest and become
immediately exercisable. In addition, in the event that that this Agreement is
not renewed after expiration of the Term, then the Company may elect either to
pay the Employee's Salary and benefits during the period set forth in Section
7(b) or waive the provisions of Section 7(b).
(d) For purposes of this Agreement, the Company shall have
"cause" to terminate the Employee's employment under this Agreement upon (i) the
willful failure by the Employee to substantially perform his duties under this
Agreement after reasonable written notice to cure, (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. In the absence of a legal opinion from the Company's counsel to
the contrary, no act or failure to act shall be considered willful unless done,
or omitted to be done, by the Employee not in good faith and without reasonable
belief that such action or omission was in the best interest of 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.
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(e) For purposes of this Agreement, a "Change of Control shall
mean (i) any consolidation or merger of Employer in which (x) Employer is not
the surviving corporation, (y) the shareholders of Employer do not constitute a
majority of the shareholders of the surviving corporation, or (z) shares of
Employer's Common Stock would be converted into cash; (ii) any sale, lease,
exchange or other transfer of all or substantially all of the assets of
Employer; or (iii) the acquisition of beneficial ownership of 50% or more of the
voting power of Employer's Common Stock by any person or group.
(f) The Employee may terminate his employment with the Company
with or without Good Reason upon thirty (30) days written notice, which notice,
in the case of a termination with Good Reason, shall specifically set forth the
nature of such Good Reason. The term "Good Reason" shall mean (i) the
substantial and material diminution in the Employee's duties, responsibilities,
reporting relationship or position, (ii) without the Employee's consent, the
relocation of the Employee's principal office location more than fifty (50)
miles from its current location, or (iii) any material and continuing breach of
this Agreement by the Company. Notwithstanding the occurrence of any such event
or circumstance above, such occurrence shall not be deemed to constitute Good
Reason hereunder if, within the thirty-day notice period, the event or
circumstance giving rise to Good Reason has been fully corrected by the Company.
In the event of a termination with Good Reason, the Employee shall be entitled
to the same payment and benefits as provided in Section 6(c) above for a
termination without cause. In the event of a termination without Good Reason,
Employee shall be entitled to payment of salary and benefits through the
effective date of termination and as provided in Section 8(h), and shall have
the duties and obligations in Section 7.
(g) In the event of any termination of employment under this
Section 6, the Employee shall be under no obligation to mitigate amounts payable
hereunder by seeking other employment or otherwise and there shall be no offset
against amounts due to the Employee hereunder on account of subsequent
employment or otherwise.
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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 is 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 will be prohibited from misappropriating any
trade secret at any time during or after the termination of employment; and
provided, further, that Employee may disclose Confidential Information if
required by a court or regulatory agency but shall provide notice to the Company
to permit the Company to obtain a protective order.
(b) The Employee hereby agrees that he shall not, during the
period of his employment and for a period of twelve months 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
venture, employee, consultant or otherwise) competitive with the Company's
business activities. In the case of the expiration of the Term or the
termination of this Agreement pursuant to Section 6(c) or by the Employee for
Good Reason pursuant to Section 6(f), the provisions of this Section 7(b) shall
apply only for so long as the Company continues paying the Salary in effect as
of the date of termination.
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(c) The Employee hereby agrees that he shall not, during the
period of his employment and for a period of twelve months 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, significant employee, agent, lesser, 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 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;
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(f)(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
(f)(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 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.
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(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:
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(a) Notices. All notices relating to this Agreement shall be
in writing and shall be either personally delivered, sent by telecopy (receipt
confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other address or to
the attention of such other person as the recipient has specified by prior
written notice to the sending party. Notice shall be effective when so
personally delivered, one business day after being sent by telecopy or five days
after being mailed.
To the Employer:
Take Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
To the Employee:
Xxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
XxXxXxx, Xxx Xxxxxx 00000
(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. 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. Each party shall
pay the cost of his or its legal fees and expenses incurred in connection with a
legal proceeding brought to enforce the terms of this Agreement. If Employee
prevails in such legal proceeding, the Company shall reimburse Employee for all
reasonable legal fees and expenses incurred by Employee in connection with any
such legal proceeding.
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(e) Warranty. Employee hereby warrants and represents as
follows:
(e)(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.
(e)(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.
(e)(iii) Employee will not disclose any trade secrets relating
to the business conducted by any previous employer.
(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.
(h) Indemnification. The Employer shall indemnify and hold
harmless the Employee against any and all judgments, amounts incurred in
settlement, fees and expenses reasonably incurred by Employee (including
reasonable attorney's fees) in connection with or arising out of (i) in defense
of any action, suit or proceeding in which he is a party; (ii) or any claim
asserted or threatened against him, in either case by reason of or relating to
his being or having been an employee, officer or director of the Company, except
in so far as such indemnification is prohibited by law. The foregoing is in
addition to any indemnification and exculpation provisions contained in the
Company's Certificate of Incorporation and Bylaws and shall survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
Take-Two Interactive Software, Inc.
By: /s/ Xxxx Xxxxx
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Name:
Title:
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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