EMPLOYMENT AGREEMENT
AGREEMENT dated May 6, 2005 between Take-Two Interactive
Software, Inc., a Delaware corporation (the "Employer" or the "Company"), and
Xxxx Xxxxxxx (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Employer and Employee entered into a letter Agreement
dated April 14, 2004 (the "Letter Agreement") which contemplates that Employer
and Employee would enter into this Agreement; and
WHEREAS, the Employer desires to employ the Employee as its
Chief Executive Officer and 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;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer for a three-year period commencing
effective as of February 1, 2005 (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 during the Initial Term
or any Renewal Term (as defined below) hereunder being hereinafter referred to
as an "Employment Year"). After the Initial Term, this Agreement may be renewed
by written agreement signed by both Employer and Employee for successive
one-year periods (each such period being referred to as a "Renewal Term").
2. Employee Duties.
(a) During the term of this Agreement, the Employee
shall have the duties and responsibilities of Chief Executive Officer and
President of the Employer, reporting directly to the Board of Directors of
Employer (the "Board"). It is understood that such duties and responsibilities
shall be reasonably related to the Employee's position.
(b) The Employee shall devote substantially all of
his business time, attention,
knowledge and skills faithfully, diligently and to the best of his ability, in
furtherance of the business and activities of the Company. The principal place
of performance by the Employee of his duties hereunder shall be the Company's
principal executive offices 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.
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3. Compensation.
(a) During the term of this Agreement, the Employer
shall pay the Employee a salary (the "Salary") at a rate of $750,000 per annum
in respect of each Employment Year, payable in equal installments bi-weekly.
Such Salary shall be reviewed annually 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 an annual cash bonus
equal to 100% of Employee's then current Salary in respect of each fiscal year,
commencing with the year ending October 31, 2005, provided that the Employee and
the Company achieve certain performance targets to be mutually agreed. The
actual bonus may be more or less than the target payment based upon a reasonable
assessment of Employee's performance against the mutually agreed targets and
results of operations of Employer. The bonus hereunder shall be paid within
sixty (60) days after the end of the applicable fiscal year.
(c) It is acknowledged that Employee previously
received options to purchase 300,000 shares of common stock pursuant to the
Letter Agreement. The Employee shall receive 75,000 shares of restricted stock
under the Company's Incentive Stock Plan vesting as to one-third of the shares
on each of the first, second and third anniversaries of the date hereof, subject
to stockholder approval of an increase in the number of shares available for
issuance under such plan.
(d) The Company shall provide a car to Employee and
shall pay the costs associated therewith, including a lease expense of $1,000
per month.
(e) The Employee shall be entitled to receive a $1
million life insurance policy, the premiums for which shall be paid by the
Company.
(f) In addition to the foregoing, the Employee shall
be entitled to such other cash bonuses and such other compensation in the form
of stock, stock options or other property or rights as may from time to time be
awarded to him by the Board during or in respect of his employment hereunder.
4. Benefits.
(a) During the term of this Agreement, the Employee
shall have the right to receive or participate in all benefits and plans which
the Company currently offers and which the Company may from time to time
institute during such period for its 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 or any other obligation payable to the Employee pursuant to this
Agreement.
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(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 (provided that in no event shall vacation time be fewer than
four (4) weeks per Employment Year). 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,
except for payment of Salary through the effective date of termination, and the
Employee shall have no further obligations or duties to the Employer, except as
provided in Section 7.
(b) In the event of (i) the death of the Employee or
(ii) by action of the Board and the inability of the Employee, by reason of
physical or mental disability, to continue substantially to perform his duties
hereunder for a period of 180 consecutive days, during which 180 day period
Salary and any other benefits hereunder shall not be suspended or diminished.
Upon any termination of the Employee's employment under this Section 6(b),
Employer shall pay to Employee (or Employee's estate), in a lump sum, any unpaid
compensation under Section 3 of this agreement through the date of termination,
including any pro-rated annual bonus to which Employee would have been entitled
had this Agreement not been terminated. Employee (or Employee's estate) may
exercise all options granted to Employee within the ninety (90) day period
following the date of termination to the extent such options are exercisable as
of the date of termination. Employer shall have no further obligations or duties
to the Employee (or to Employee's estate), and in the case of termination under
this Section by action of the Board, Employee shall have no further obligations
or duties to the Employer, except as provided in Section 7. Employer may obtain
disability insurance naming Employee as an insured and as beneficiary, for which
Employer shall pay all premiums.
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(c) In the event that Employee's employment with the
Employer is terminated by action taken by the Board without cause (as defined
below), then the Employer shall have no further obligation or duties to
Employee, except for payment of the amounts described below, and Employee shall
have no further obligations or duties to the Employer, except as provided in
Section 7. In the event of such termination, the Employer shall continue to pay
Employee's then current Salary, health insurance, car allowance and life
insurance to the Employee for a period of twelve (12) months following
termination, all options and restricted stock granted to Employee shall
immediately vest, and Employee may exercise such options during the ninety (90)
day period following the date of termination. Employee shall not be required to
take any action in mitigation of Employer's obligations to Employee under this
Section.
(d) For purposes of this Agreement, the Company shall
have "cause" to terminate the Employee's employment under this Agreement upon
(i) the failure by the Employee to substantially perform his duties under this
Agreement, (ii) the engaging by the Employee in criminal misconduct (including
embezzlement and criminal fraud) which is materially injurious to the Company,
monetarily or otherwise, (iii) the conviction of the Employee of a felony or
(iv) gross negligence on the part of the Employee that is materially injurious
to the Company, monetarily or otherwise. 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) In the event that Employee's employment with the
Employer is terminated upon a Change in Control (as hereinafter defined), then
the Employer shall have no further obligation or duties to Employee, except for
payment of the amounts described below, and Employee shall have no further
obligations or duties to the Employer, except as provided in Section 7. In the
event of such termination, the Employer shall pay to the Employee (with
appropriate deductions for taxes) an amount equal to 1.5 times the total of
Employee's then current Salary and bonus (deemed earned). All amounts payable to
the Employee pursuant to this Section 6(e) shall be paid in one lump-sum payment
payable immediately upon such termination, and all options and shares of
restricted stock granted to Employee shall immediately vest and Employee may
exercise the options during the ninety (90) day period following the date of
termination.
(f) For purposes of this Agreement a "Change in
Control" shall be deemed to occur (i) upon the election of directors
constituting a change in a majority of the Board following the acquisition by
any person, entity or group of beneficial ownership of twenty percent (20%) or
more of either the outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors; (ii) upon a merger or
consolidation of the Company with any other corporation, which results in the
stockholders of the Company prior thereto continuing to represent less than 80
percent of the combined voting power of the voting securities of the Company or
the surviving entity after the merger; or (iii) upon the liquidation of the
Company or the sale of all, or substantially all, of the assets of the Company.
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(g) For the purposes of this Agreement, Employee
shall be deemed to have been terminated by action taken by the Board without
cause if the Company terminates his employment for any reason other than for
Cause in strict accordance with Section 6(d) above or if Employee terminates his
employment after (i) a material diminution in his title, status, position or
responsibilities or his reporting responsibility as specified in Section 2(a) or
the assignment to Employee of duties that are inconsistent with Employee's
title, position or responsibilities; (ii) a material diminution of Employee's
Salary, (iii) a material reduction in fringe benefits unless applicable
generally to all senior officers of the Company, or (iv) the Company's
requiring, without the written consent of Employee, that he be based at any
office or location outside the City of New York or the counties of Westchester,
Nassau or Suffolk, New York.
(h) In the event that this Agreement is not renewed
or the Employee is terminated without cause, the Company shall either (i) waive
the non-competition and non-solicitation provisions of Sections 7(b) and 7(c)
below or (ii) during the one-year term of such provisions, pay to Employee his
then-current annual Salary and car allowance and continue to provide Employee
with health insurance benefits. Employee shall return any vehicle of the Company
in his possession on or before the end of the one-year period following the term
of his employment.
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 general business practices not unique to
the Company but commonly practiced in the interactive entertainment industry and
such information which can be shown by the Employee to be in the public domain
or otherwise known to the public (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. Nothing in this Agreement shall prohibit Employee
from discussing or revealing Confidential Information with Employee's attorney
or as otherwise required by a court of competent jurisdiction or under
applicable law.
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(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, directly or indirectly, within any county (or adjacent county)
in any State within the United States or territory outside the United States in
which the Company is engaged in business during the period of the Employee's
employment or on the date of termination of the Employee's employment, engage,
have an interest in or render any services to any business (whether as owner,
manager, operator, licensor, licensee, lender, partner, stockholder, joint
venturer, employee, consultant or otherwise) competitive with the Company's
business activities.
(c) The Employee hereby agrees that he shall not,
during the period of his employment and for a period of one (1) year 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 then 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,
except that truthful testimony or other submission to a court or other
government authority shall not constitute disparagement hereunder.
(d) For purposes of clarification, but not of
limitation, the Employee hereby acknowledges and agrees that the provisions of
subparagraphs 7(b) and (c) above shall serve as a prohibition against him,
during the period referred to therein, directly or indirectly, hiring, offering
to hire, enticing, soliciting or in any other manner persuading or attempting to
persuade any officer, employee, agent, lessor, lessee, licensor, licensee or
customer who has been previously contacted by a representative of the Company,
including the Employee, (but only to the extent such person or entity was so
associated with the Company during the time of the Employee's employment by the
Company, or at the termination of Employee's employment), to discontinue or
alter his, her or its relationship with the Company.
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(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;
(ii) If any Invention is described in a patent
application or is disclosed to third parties, directly or indirectly, by the
Employee within two years after the termination of his employment by the
Company, it is to be presumed that the Invention was conceived or made during
the period of the Employee's employment by the Company; and
(iii) The Employee agrees that he will not
assert any rights to any Invention as having been made or acquired by him prior
to the date of this Agreement, except for Inventions, if any, disclosed to the
Company in writing prior to the date hereof.
(g) The Company shall be the sole owner of all
products and proceeds of the Employee's services hereunder, including, but not
limited to, all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Employee may acquire, obtain, develop or create in connection with and during
the term of the Employee's employment hereunder, free and clear of any claims by
the Employee (or anyone claiming under the Employee) of any kind or character
whatsoever (other than the Employee's right to receive payments hereunder). The
Employee shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company may from time to time deem
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its right, or title and interest in or to any such properties.
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(h) The parties hereto hereby acknowledge and agree
that (i) the Company would be irreparably injured in the event of a material
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 material breach of
any of the provisions of Section 7, and the Employee hereby agrees to account
for any pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in
Section 7(h) and 7(i) shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
(k) If any provision contained in this Section 7 is
hereafter construed to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(l) If any provision contained in this Section 7 is
found to be unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope or other provision and in its reduced form
any such restriction shall thereafter be enforceable as contemplated hereby.
(m) It is the intent of the parties hereto that the
covenants contained in this Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought (the Employee hereby acknowledging that said restrictions
are reasonably necessary for the protection of the Company). Accordingly, it is
hereby agreed that if any of the provisions of this Section 7 shall be
adjudicated to be invalid or unenforceable for any reason whatsoever, said
provision shall be (only with respect to the operation thereof in the particular
jurisdiction in which such adjudication is made) construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
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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 five days
after being mailed.
To the Employer:
Take-Two Interactive Software, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
To the Employee:
Xxxx Xxxxxxx
00 Xxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
and to the Employee's attorney
Xxxxxxx X. X'Xxxxxx
0 Xxxxxxxx Xxxxx
Xxxx Xxxx, XX 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.Other than the terms of the
options granted to Employee with the Letter Agreement and as set forth in
Section 6 of a Separation Agreement dated June 4, 2003, 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
(including the Letter Agreement) 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.
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(d) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York. Employee
agrees to and hereby does submit to jurisdiction before any state or federal
court of record in New York County or in the state and county in which such
violation may occur, at Employer's election. Any claim, dispute or disagreement
in respect of this Agreement shall be brought only in New York State Courts
located in New York County or the United States District Court for the Southern
District of New York. If any legal action or other proceeding is brought for the
enforcement of this Agreement, the successful or prevailing party or parties
shall be entitled to recover all costs, disbursements and allowances, including
reasonable attorney's fees incurred in any way to that action or proceeding
(hereafter "Costs"), in addition to any other relief to which he or it may be
entitled. In the event each party hereto prevails on a certain issue or issues,
then the prevailing party on each such issue shall be entitled to recover all
Costs incurred with respect to the issue(s) on which the party prevailed, with
the amount of such Costs to be calculated on a pro-rata basis if there is no
other reasonable way to ascertain them.
(e) Warranty. Employee hereby warrants and represents
as follows:
(i) That the execution of this Agreement and
the discharge of Employee's obligations hereunder will not breach or conflict
with any other contract, agreement, or understanding between Employee and any
other party or parties.
(ii) Employee has ideas, information and
know-how relating to the type of business conducted by Employer, and Employee's
disclosure of such ideas, information and know-how to Employer will not conflict
with or violate the rights of any third party or parties.
(iii) Employee will not disclose any trade
secrets relating to the business conducted by any previous employer and agrees
to indemnify and hold Employer harmless for any liability arising out of
Employee's use of any such trade secrets.
(f) Severability. In the event that any term or
condition in this Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein.
(g) Execution in Counterparts. This Agreement may be
executed by the parties in one or more counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other
parties hereto. Employer agrees to pay simultaneously with the execution of this
Agreement, Employee's reasonable attorney's fees incurred in connection with
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 X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
/s/ Xxxx Xxxxxxx
--------------------------------------
Xxxx Xxxxxxx
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