Exhibit 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into between Xxxxxx
X. XxXxxxxx ("Executive") and GameStop Corp. (the "Company"), collectively
referred to as the "Parties," with an "Effective Date" of April 11, 2005.
1. Executive's Position/Duties. During the term of this Agreement, Executive
will be employed as the Vice Chairman and Chief Operating Officer of the
Company, and shall have all of the duties and responsibilities of that position.
Executive shall be considered a key employee of the Company and shall be
entitled to all the Company benefits afforded to key employees. Executive agrees
to dedicate all of his working time (during normal working hours other than
during excused absences such as for illness or vacation), skill and attention to
the business of the Company, agrees to remain loyal to the Company, and not to
engage in any conduct that creates a conflict of interest to, or damages the
reputation of, the Company. Executive shall abide by the Company's Code of
Ethics and Code of Ethics for Senior Financial Officers.
2. Term of Employment. The term of this Agreement shall be for a period of three
years. Executive's employment under this Agreement will commence on the
Effective Date, and will continue for a period of three years, unless terminated
earlier in accordance with the provisions of this Agreement. At the expiration
(but not earlier termination) of the term (including any renewal term), the term
of this Agreement shall automatically renew for an additional period of one
year, unless either party has given the other party written notice of
non-renewal at least six months prior to such expiration.
3. Compensation.
a. Base Salary. During the term of this Agreement, the Company shall
provide Executive with a base salary of no less than five hundred thirty-five
thousand dollars ($535,000.00) per year, paid in accordance with the Company's
normal payroll policies ("Base Salary").
b. Bonuses/Distributions. Each year during the term of this Agreement, the
Company shall provide Executive with a bonus based on the formula and targets
established under and in accordance with the Company's Supplemental Compensation
Plan. Executive may receive additional bonuses at the discretion of the Board of
Directors of the Company (the "Board").
c. Benefits. Executive shall be entitled to all benefits, including, but
not limited to, stock and stock option benefits, insurance programs, pension
plans, vacation, sick leave, expense accounts, and retirement benefits, as
afforded other management personnel or as determined by the Board.
d. Expenses. The Company shall reimburse Executive for reasonable expenses
incurred in the performance of his duties and services hereunder and in
furtherance of the business of the Company, in accordance with the policies and
procedures established by the Company.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 1
4. Termination of Employment. Executive's employment with the Company may be
terminated as follows:
a. Death. In the event of Executive's death, Executive's employment will be
terminated immediately.
b. Disability. In the event of Executive's Disability, as defined below,
Executive's employment will be terminated immediately. "Disability" shall mean a
written determination by a physician mutually agreeable to the Company and
Executive (or, in the event of Executive's total physical or mental disability,
Executive's legal representative) that Executive is physically or mentally
unable to perform his duties of Vice Chairman and Chief Operating Officer under
this Agreement and that such disability can reasonably be expected to continue
for a period of six consecutive months or for shorter periods aggregating 180
days in any 12-month period.
c. Termination by the Company for Cause. The Company shall be entitled to
terminate Executive's employment at any time if it has "Cause," which shall mean
any of the following: (i) conviction of, or plea of nolo contendere to, a felony
or any crime involving fraud or dishonesty; (ii) willful misconduct that results
in a material and demonstrable damage to the business or reputation of the
Company; (iii) breach by Executive of any of the covenants contained in Sections
7, 9(c), 9(d) or 9(e) below; or (iv) willful refusal by Executive to perform his
obligations under this Agreement or the lawful direction of the Board that is
not the result of Executive's death, Disability, physical incapacity or
Executive's termination of the Agreement, and that is not corrected within
thirty (30) days following written notice thereof to Executive by the Company,
such notice to state with specificity the nature of the willful refusal.
d. Without Cause. Either the Company or Executive may terminate Executive's
employment at any time without cause upon written notice.
e. Termination by Executive with Good Reason. Executive shall be entitled
to terminate his employment within 12 months after any of the following events
(each of which shall constitute "Good Reason"):
(i) a "Change in Control" of the Company, as defined below;
(ii) a reduction in Executive's compensation or a material reduction in
Executive's benefits;
(iii) a material reduction in his responsibilities for the Company; or
(iv) the Company requires Executive to move to another location of the
Company or any affiliate of the Company and the distance between
Executive's former residence and new job site is at least 50 miles
greater than the distance between Executive's former residence and
former job site.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 2
"Change in Control" of the Company shall be deemed to have occurred if:
(i) any Person becomes the "beneficial owner" (as defined in Rule 13d-3 or
otherwise under the Securities Exchange Act of 1934, as amended (the
"Act")), directly or indirectly (including as provided in Rule
13d-3(d)(1) of the Act), of greater than fifty percent (50%) by vote
of the voting stock of the Company following any disposition,
transaction, transfer or otherwise, including by judgment or decree or
otherwise, without the prior written consent of Executive. "Person"
means an individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other
entity or any successor or assign to any of the foregoing, and in the
case of this clause (i), a "Person" shall not be deemed to include a
Person (i) a majority of whose board of directors immediately
following such disposition, transaction, transfer or otherwise is
comprised of individuals constituting the Board immediately prior to
such disposition, transaction, transfer or otherwise or (ii) for which
a majority of the outstanding shares of such Person immediately
following such disposition, transaction, transfer or otherwise are
held by the stockholders of the Company immediately prior to such
disposition, transaction, transfer or otherwise;
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof. Any Person becoming a member of the Board subsequent
to such date whose election, or nomination for election, is, at any
time, approved by a vote of at least a majority of the members
comprising the Incumbent Board shall be considered as though he were a
member of the Incumbent Board;
(iii)the Company consummates a transaction, whether through a merger, asset
sale, reorganization or otherwise, which results in (i) any Person, or
Persons acting as group for purposes of Section 13(d)(3) of the Act,
holding at any time after such combination, greater than fifty percent
(50%) by vote of the voting stock of the surviving entity, determined
by reference to the voting stock of the surviving entity, (ii) the
sale, lease or other transfer or disposition of all or substantially
all of the assets of the Company, in any such case, where the buyer or
surviving entity in such transaction is not controlled by the Company,
or (iii) the Board as of the date immediately before such combination,
constituting less than a majority of the Board of Directors of the
combined entity; or
(iv) the Incumbent Board determines that, following the date of this
Agreement, a Person who is neither a stockholder of the Company nor a
member of the Incumbent Board has obtained the possession, directly or
indirectly, of the power to direct or cause the direction of the
management
EXECUTIVE EMPLOYMENT AGREEMENT - Page 3
and policies of the Company, whether through the ownership of voting
securities, by contract or otherwise.
5. Compensation and Benefits Upon Termination.
a. If Executive's employment is terminated by reason of death or
Disability, the Company shall pay Executive's Base Salary, in accordance with
the payroll policies of the Company, through the date of Executive's death or
Disability (in the event of Executive's death, the payments will be made to
Executive's beneficiaries or legal representatives).
b. If Executive's employment is terminated by Executive without Good Reason
or by the Company for Cause, the Company will pay to Executive all Base Salary,
at the rate then in effect, through the date of Executive's termination of
active employment.
c. If, during the term of this Agreement, Executive terminates his
employment for Good Reason, or the Company terminates Executive's employment
without Cause, the Company will pay to Executive all compensation under this
Agreement, at the rate then in effect, through the date of Executive's
termination, and the following paragraphs (i) through (vi) shall apply:
(i) Base Salary and Payment Schedule. The Company shall pay Executive an
amount equal to the greater of: (A) Executive's Base Salary otherwise
payable through the term of this Agreement; or (B) Executive's Base
Salary for one year. Such payment shall be made to Executive in a lump
sum within 30 days following the date of Executive's termination of
employment.
(ii) Bonus. The Company shall pay Executive an amount equal to the average
of the Executive's last three (3) gross annual bonuses multiplied by
the greater of (A) one or (B) the number of years (including any
fraction thereof) otherwise remaining through the term of this
Agreement. Such payment shall be made to Executive in a lump sum
within 30 days following the date of Executive's termination of
employment.
(iii)Medical Benefits. Upon Executive's termination, Executive will be
eligible to elect individual and dependent continuation group health
and (if applicable) dental coverage, as provided under Section
4980B(f) of the Internal Revenue Code ("COBRA"), for the maximum COBRA
coverage period available, subject to all conditions and limitations
(including payment of premiums and cancellation of coverage upon
obtaining duplicate coverage or Medicare entitlement). If Executive or
one or more of Executive's covered dependents elects COBRA coverage,
then the Company shall pay the cost of the COBRA coverage for the
eighteen (18) month period following Executive's termination date.
Executive (or dependents, as applicable) shall be responsible for
paying the full cost of the COBRA coverage (including the two
percentage administrative charge) after the earlier of (A) the
expiration of eighteen months following
EXECUTIVE EMPLOYMENT AGREEMENT - Page 4
Executive's termination date, or (B) eligibility for coverage under
another employer's medical plan.
(iv) Vacation. Executive shall be entitled to a payment attributable to
Base Salary for unused vacation accrued. Such payment shall be made to
Executive in a lump sum within 30 days following the date of
Executive's termination of employment.
(v) Cancellation of Restrictions. The obligations of Executive under
Sections 9(c), 9(d) and 9(e) below shall be immediately terminated and
cancelled and be of no further force or effect.
(vi) Section 280G Limitation. Notwithstanding anything to the contrary
contained herein, the maximum amount payable pursuant to this Section
5(c) shall be the maximum amount payable to Executive without
triggering an excise tax under Section 280G of the Internal Revenue
Code of 1986, as amended, or any successor provision thereto.
6. Stock and Options.
Release of Stock Restrictions. The Company hereby agrees and acknowledges
that in the event of Executive's death or Disability, or upon the Company's
termination of Executive's employment without Cause or Executive's termination
of his employment for Good Reason, all restrictions imposed by the Company with
respect to all shares of stock and all stock options issued to Executive during
his employment with the Company shall lapse and be of no further force or
effect. The Company hereby further agrees and acknowledges that all shares of
stock issued to Executive have been or will be registered under the Securities
Act of 1933, as amended (the "Securities Act"). The Company further agrees to
use all best efforts to deliver to Executive as soon as is practicable,
certificates registered in Executive's name evidencing all previously unvested
shares, which stock certificates shall contain no restrictive legend except as
may be required under the Securities Act.
7. Confidentiality/Settlement of Existing Rights.
a. In order to induce Executive to enter into this Agreement, and in order
to enable Executive to provide services on behalf of the Company, during the
term of this Agreement, the Company will provide Executive with access to
certain trade secrets and confidential or proprietary information belonging to
the Company, which may include, but is not limited to, the identities, customs,
and preferences of the Company's existing and prospective clients, customers,
tenants or vendors; the identities and skills of the Company's employees; the
Company's methods, procedures, analytical techniques, and models used in
providing products and services, and in pricing or estimating the cost of such
products and services; the Company's financial data, business and marketing
plans, projections and strategies; customer lists and data; tenant lists and
data, vendor lists and data; training manuals, policy manuals, and quality
control manuals; software programs and information systems; and other
information relating to the development, marketing, and provision of the
Company's products, services, and systems (i.e.,
EXECUTIVE EMPLOYMENT AGREEMENT - Page 5
"Confidential Information"). Executive acknowledges that this Confidential
Information constitutes valuable, special and unique property of the Company.
b. Executive agrees that, except as may be necessary in the ordinary course
of performing his duties under this Agreement, Executive shall not, without
prior express written consent of the Company (i) use such Confidential
Information for Executive's own benefit or for the benefit of another; or (ii)
disclose, directly or indirectly, such Confidential Information to any person,
firm, corporation, partnership, association, or other entity (except for
authorized personnel of the Company) at any time prior or subsequent to the
termination or expiration of this Agreement.
c. By this Agreement, the Company is providing Executive with rights that
Executive did not previously have. In exchange for the foregoing and the
additional terms agreed to in this Agreement, Executive agrees that all Company
Proprietary and Confidential Information learned or developed by Executive
during past employment with the Company and all goodwill developed with the
Company's clients, customers and other business contacts by Executive during
past employment with the Company is now the exclusive property of the Company,
and will be used only for the benefit of the Company, whether previously so
agreed or not. Executive expressly waives and releases any claim or allegation
that he should be able to use client and customer goodwill, specialized Company
training, or Confidential Information, that was previously received or developed
by Executive while working for the Company for the benefit of any competing
person or entity.
8. Return of Company Property. Executive acknowledges that all memoranda, notes,
correspondence, databases, discs, records, reports, manuals, books, papers,
letters, CD Roms, keys, passwords and access codes,
client/customer/vendor/supplier profile data, contracts, orders, and lists,
software programs, information and records, and other documentation (whether in
draft or final form) relating to the Company's business, and any and all other
documents containing Confidential Information furnished to Executive by any
representative of the Company or otherwise acquired or developed by him in
connection with his association with the Company (collectively, "Recipient
Materials") shall at all times be the property of the Company. Within
twenty-four (24) hours of the termination of his relationship with the Company,
Executive promises to return to the Company any Recipient Materials that are in
his possession, custody or control, regardless of whether such Materials are
located in Executive's office, automobile, or home or on Executive's business or
personal computers. Executive also shall authorize and permit the Company to
inspect all computer drives used or maintained by Executive during his
employment or consulting at the Company and, if necessary, to permit the Company
to delete any Recipient Materials or Proprietary Information contained on such
drives.
9. Protective Covenants. Executive agrees that the following covenants are
reasonable and necessary agreements for the protection of the business interests
covered in the fully enforceable, ancillary agreements set forth in this
Agreement:
a. Definitions. "Competing Business" means any person or entity that
provides services or products that would compete with or displace any services
or products sold or being developed for sale by the Company during the term of
this Agreement, or engages in any other
EXECUTIVE EMPLOYMENT AGREEMENT - Page 6
activities so similar in nature or purpose to those of the Company that they
would displace business opportunities or customers of the Company.
b. Recordkeeping and Handling of Covered Items. Executive agrees to keep
and maintain current written records of all customer contacts, inventions,
enhancement, and plans he develops regarding matters that are within the scope
of the Company's business operations or that relate to research and development
on behalf of the Company, and agrees to maintain any records necessary to inform
the Company of such business opportunities. All Company Information and other
Company documents and materials maintained or entrusted to Executive shall
remain the exclusive property of the Company at all times; such materials shall,
together with all copies thereof, be returned and delivered to the Company by
Executive immediately without demand, upon termination of Executive's
relationship with the Company, and shall be returned at a prior time if the
Company so demands.
c. No Interference with Employee/Independent Contractor Relationships.
Executive agrees that, except as otherwise provided herein, through the later of
(i) the expiration (but not earlier termination) of the three-year term (or any
one-year renewal term) of this Agreement or (ii) one year after Executive's
employment with the Company ceases, Executive will not, either directly or
indirectly, participate in recruiting or hiring away any employees or
independent contractors of the Company, or encourage or induce any employees,
agents, independent contractors or investors of the Company to terminate their
relationship with the Company, unless given the prior written consent of the
Board to do so.
d. No Interference with Client/Customer Relationships. Executive agrees
that, except as otherwise provided herein, through the later of (i) the
expiration (but not earlier termination) of the three-year term (or any one-year
renewal term) of this Agreement or (ii) one year after Executive's employment
with the Company ceases, Executive will not induce or attempt to induce any
client or customer of the Company to diminish, curtail, divert, or cancel its
business relationship with the Company. This paragraph is geographically limited
to the United States. Executive may not avoid the purpose and intent of this
paragraph by engaging in conduct within the geographically limited area from a
remote location through means such as telecommunications, written
correspondence, computer generated or assisted communications, or other similar
methods.
e. No Unfair Competition. Executive agrees that, except as otherwise
provided herein, through the later of (i) the expiration (but not earlier
termination) of the three-year term (or any one-year renewal term) of this
Agreement or (ii) one year after Executive's employment with the Company ceases,
Executive will not participate in, work for, or assist a Competing Business in
any capacity (as owner, employee, consultant, contractor, officer, director,
lender, investor, agent, or otherwise), unless given the prior written consent
of the Board to do so. This restriction is limited to the Untied States, which
the parties stipulate is a reasonable geographic area because of the scope of
the Company's operations and Executive's activities. This paragraph creates a
narrowly tailored advance approval requirement in order to avoid unfair
competition and irreparable harm to the Company and is not intended or to be
construed as a general restraint from engaging in a lawful profession or a
general covenant against competition, and is ancillary to the Company's
agreement contained herein to employ Executive for a definite
EXECUTIVE EMPLOYMENT AGREEMENT - Page 7
term. Nothing herein will prohibit ownership of less than 5% of the publicly
traded capital stock of a corporation so long as this is not a controlling
interest, or ownership of mutual fund investments. Executive may not avoid the
purpose and intent of this paragraph by engaging in conduct within the
geographically limited area from a remote location through means such as
telecommunications, written correspondence, computer generated or assisted
communications, or other similar methods.
f. Remedies. In the event of breach or threatened breach by Executive of
any provision of Section 9 hereof, the Company shall be entitled to (i)
injunctive relief by temporary restraining order, temporary injunction, and/or
permanent injunction; (ii) recovery of all attorneys' fees and costs incurred by
the Company in obtaining such relief; and (iii) any other legal and equitable
relief to which may be entitled, including, without limitation, any and all
monetary damages that the Company may incur as a result of said breach or
threatened breach, in each case without the necessity of posting any bond. The
Company may pursue any remedy available, including declaratory relief,
concurrently or consecutively in any order as to any breach, violation, or
threatened breach or violation, and the pursuit of one such remedy at any time
will not be deemed an election of remedies or waiver of the right to pursue any
other remedy.
h. Early Resolution Conference. This Agreement is understood to be clear
and enforceable as written and is executed by both parties on that basis.
However, should Executive later challenge any provision as unclear,
unenforceable or inapplicable to any competitive activity that Executive intends
to engage in, Executive will first notify the Company in writing and meet with a
Company representative and a neutral mediator (if the Company elects to retain
one at its expense) to discuss resolution of any disputes between the parties.
Executive will provide this notification at least fourteen (14) days before
Executive engages in any activity on behalf of a Competing Business or engages
in other activity that could foreseeably fall within a questioned restriction.
The failure to comply with this requirement shall waive Executive's right to
challenge the reasonable scope, clarity, applicability, or enforceability of the
Agreement and its restrictions at a later time. All rights of both parties will
be preserved if the Early Resolution Conference requirement is complied with
even if no agreement is reached in the conference.
10. Merger or Acquisition Disposition and Assignment. In the event the Company
should consolidate, or merge into another entity, or transfer all or
substantially all of its assets or operations to another Person, or divide its
assets or operations among a number of entities, this Agreement shall continue
in full force and effect with regard to the surviving entity and may be assigned
by the Company if necessary to achieve this purpose. Executive's obligations
under this Agreement are personal in nature and may not be assigned by Executive
to another Person.
11. Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered on
the date personally delivered or on the date deposited in a receptacle
maintained by the United States Postal Service for such purpose, postage
prepaid, by certified mail, return receipt requested, or by express mail or
overnight courier, addressed to the address indicated under the signature block
for that party provided below. Either party may designate a different address by
providing written notice of a new address to the other party.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 8
12. Severability. If any provision contained in this Agreement is determined to
be void, illegal or unenforceable by a court of competent jurisdiction, in whole
or in part, then the other provisions contained herein shall remain in full
force and effect as if the provision that was determined to be void, illegal, or
unenforceable had not been contained herein. In making any such determination,
the determining court shall deem any such provision to be modified so as to give
it the maximum effect permitted by applicable law.
13. Waiver, Construction and Modification. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party. This Agreement may not be
modified, altered or amended except by written agreement of all the parties
hereto.
14. Governing Law and Venue. It is the intention of the parties that the laws of
the State of Texas should govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the parties hereto without regard to any contrary conflicts of laws principles.
It is stipulated that Texas has a compelling state interest in the subject
matter of this Agreement, and that Executive has or will have regular contact
with Texas in the performance of this Agreement. The agreed upon venue and
personal jurisdiction for the parties on any claims or disputes under this
Agreement is Dallas County, Texas.
15. Representation of Executive. Executive hereby represents and warrants to the
Company that Executive has not previously assumed any obligations that would
prevent him from accepting, retaining and/or engaging in full employment with
the Company, or which Executive could violate in the ordinary course of his
duties for the Company. Further, Executive hereby represents and warrants to the
Company that Executive has not previously assumed any obligations that are
inconsistent with those contained in this Agreement, and that he will not use,
disclose, or otherwise rely upon any confidential information or trade secrets
derived from any previous employment, if Executive has any, in the performance
of his duties on behalf of the Company. Further, Executive acknowledges that he
has read and is fully familiar with the terms of this Agreement, has had a
reasonable opportunity to consider this Agreement and to seek legal counsel, and
after such review, Executive stipulates that the promises made by him in this
Agreement are not greater than necessary for the protection of the Company's
good will and other legitimate business interests and do not create undue
hardship for Executive or the public.
16. Complete Agreement. Except for the existing Stock Option Agreements between
the Company and Executive, which shall continue in full force and effect, this
Agreement contains the complete agreement and understanding concerning the
employment arrangement between the parties and will supersede all other
agreements, understandings or commitments between the parties as to such subject
matter. The parties agree that neither of them has made any representations
concerning the subject matter of this Agreement except such representations as
are specifically set forth herein. The parties agree that, except as
specifically contemplated by this Agreement, this Agreement supersedes any other
agreement, plan or arrangement that may now exist that may otherwise apply to or
include Executive regarding employment, compensation, bonus, severance or
retention benefits, that any such agreements, plans or arrangements are hereby
terminated with respect to Executive and that none of the Company nor
EXECUTIVE EMPLOYMENT AGREEMENT - Page 9
any affiliate of the Company will have any liability or obligation to Executive,
his heirs, successors or beneficiaries with respect to the existence or
termination of any such agreements, plans or arrangements, notwithstanding the
terms of any of them.
17. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and assigns,
and upon Executive, his heirs, executors, administrators, representatives and
assigns. It is specifically agreed that upon the occurrence of any of the events
specified in Section 10 above, the provisions of this Employment Agreement shall
be binding upon and inure to the benefit of and be assumed by any surviving or
resulting Person or any such Person to which such assets shall be transferred.
18. Captions. The Section and other headings used in this Agreement are for the
convenience of the parties only, are not substantive and shall not affect the
meaning or interpretation of any provision of this Agreement.
19. Counterparts. This Agreement may be signed in counterparts, which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties agree to each of the foregoing terms.
EXECUTIVE:
/s/ Xxxxxx X. XxXxxxxx
-------------------------------
Xxxxxx X. XxXxxxxx
Address: c/o GameStop Corp.
0000 Xxxxxxx X. Xxxx Xxx.
Xxxxxxxxx, XX 00000
THE COMPANY:
GAMESTOP CORP.
By: /s/ R. Xxxxxxx Xxxxxxxx
------------------------
Name: R. Xxxxxxx Xxxxxxxx
Title: Chairman and Chief
Executive Officer
Address: GameStop Corp.
0000 Xxxxxxx X. Xxxx Xxx.
Xxxxxxxxx, XX 00000
EXECUTIVE EMPLOYMENT AGREEMENT - Page 10
