Employment Agreement - GT Interactive Software Corp. and Ronald Chaimowitz
EMPLOYMENT AGREEMENT
THIS AGREEMENT (together with all exhibits hereto, the "Agreement"),
made in New York, New York as of the 28th day of April, 1998, between GT
INTERACTIVE SOFTWARE CORP., a Delaware corporation having its executive offices
and principal place of business in New York, New York (the "Company"), and
RONALD CHAIMOWITZ, the undersigned individual ("Executive").
IN CONSIDERATION of the mutual covenants and agreements hereinafter set
forth, the Company and Executive agree as follows:
1. Agreement Term.
The term of this Agreement shall be the five-year period commencing
on April 28, 1998 and ending on April 27, 2003 (as extended from time to time
pursuant to Section 8(o) hereof, the "Agreement Term").
2. Employment.
(a) Employment by the Company. Executive agrees to be employed by
the Company for the Agreement Term upon the terms and subject to the conditions
set forth in this Agreement. Executive shall serve as the President - Chief
Executive Officer and/or Chairman of the Board of Directors ("Chairman of the
Board") of the Company, in each case as determined in the sole discretion of the
Board of Directors of the Company.
(b) Performance of Duties. Throughout the Agreement Term, Executive
shall faithfully and diligently perform Executive's duties in conformity with
the directions of the Board of Directors of the Company and serve the Company to
the best of Executive's ability. Executive shall devote Executive's entire
working time, attention and energies to the business and affairs of the Company,
subject to four weeks' vacation per year and sick leave in accordance with
Company policy. Executive shall have the title of President - Chief Executive
Officer and/or Chairman of the Board of the Company, in each case as determined
in the sole discretion of the Board of Directors, and shall report to the Board
of Directors of the Company, and at all times during the Agreement Term shall be
a director of the Company and its parent company, if any. Executive shall
perform the duties and shall have the responsibilities set forth on Exhibit A
hereto.
(c) Place of Performance. During the Agreement Term, Executive shall
be based at the Company's principal executive offices in New York City, New York
and, in this regard,
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Executive shall maintain Executive's personal residence in such city or such
other location within reasonable access to Executive's place of employment, but
shall in no event be required to maintain such residence in any location more
than 30 miles from the Company's executive offices in New York City at the date
hereof.
3. Compensation and Benefits.
(a) Base Salary. The Company agrees to pay to Executive for
employment hereunder a base salary ("Base Salary") at the annual rate of
$550,000 for the entire Agreement Term, payable in installments consistent with
the Company's payroll practices. Such Base Salary may be increased at the sole
discretion of the Board of Directors, provided, however, that from and after the
date that the net sales of the Company for any fiscal year ending during the
Agreement Term exceeds $one (1) billion, such Base Salary shall, as of the
beginning of the month following such fiscal year, be adjusted to the annual
rate of $600,000 for the balance of the Agreement Term.
(b) Benefits and Perquisites; Bonus; Automobile Allowance; Options.
(i) Executive shall be entitled to participate in, to the extent
Executive is otherwise eligible under the terms thereof, the benefit plans and
programs, and receive the benefits and perquisites, generally provided to senior
level executive officers of the Company. Except as otherwise provided in this
Agreement, Executive may receive bonuses and be entitled to receive stock
options at the sole discretion of the Board of Directors, provided that
Executive shall participate in the Company's senior executive bonus plan with a
target bonus of 60% of Base Salary. Nothing in this Agreement shall preclude the
Company from terminating or amending from time to time any employee benefit plan
or program.
(ii) The Company shall provide to Executive, or pay for the
costs of rental, insurance and maintenance and repairs of, an automobile for
Executive, as designated by Executive, provided that the costs to the Company
for such rental, insurance and maintenance and repairs shall not exceed $2,000
per month.
(iii) The Company shall pay or reimburse Executive for all
medical insurance payments which would otherwise be required to be paid by him
pursuant to the Company's medical insurance plans, as well as for all taxes
payable by him, if any, as a result of such reimbursement. Executive shall
provide documentation reasonably satisfactory to the Company to support such
reimbursement of taxes.
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(c) Travel and Business Expenses. Upon submission of itemized
expense statements in the manner specified by the Company, Executive shall be
entitled to reimbursement for reasonable travel and other reasonable business
expenses duly incurred by Executive in the performance of Executive's duties
under this Agreement in accordance with the policies and procedures established
by the Company from time to time for executives of the same level and
responsibility as Executive.
(d) Life Insurance. The Company shall pay for and maintain a term
life insurance policy on Executive's life, payable to his estate or other
beneficiary directed by Executive, in the face amount of $2,000,000, and shall
reimburse Executive for all taxes payable by him, if any, as a result of such
premium payment, net of any taxes payable by him as a result of such
reimbursement.
(e) No Other Compensation or Benefits; Payment. The compensation and
benefits specified in Sections 3 and 5 of this Agreement shall be in lieu of any
and all other compensation and benefits. Payment of all compensation and
benefits to Executive hereunder shall be made in accordance with the relevant
Company policies in effect from time to time, including normal payroll
practices, and shall be subject to all applicable employment and withholding
taxes.
(f) Cessation of Employment. In the event Executive shall cease to
be employed by the Company for any reason, then Executive's compensation and
benefits shall cease on the date of such event, except as otherwise provided
herein or in any applicable employee benefit plan or program.
4. Exclusive Employment; Noncompetition.
(a) No Conflict; No Other Employment. During the period of
Executive's employment with the Company, Executive shall not: (i) engage in any
activity which conflicts or interferes with or derogates from the performance of
Executive's duties hereunder nor shall Executive engage in any other business
activity, whether or not such business activity is pursued for gain or profit,
except as approved in advance in writing by the Board of Directors of the
Company; provided, that Executive shall be entitled to manage his personal
investments and otherwise attend to personal affairs, including charitable
activities, in a manner that does not unreasonably interfere with his
responsibilities hereunder, or (ii) accept any other full-time or substantially
full-time employment, whether as an executive or consultant or in any other
capacity, and whether or not compensated therefor. Among other things, Executive
may serve on the Board of Directors of any company which is not a Competing
Business (as defined in Section 5 hereof), so long as service on such Board or
Boards does not unreasonably interfere with fulfillment of his obligations
hereunder, and so long as he
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provides advance notice to the Board of Directors of his intention to so serve.
(b) No Competition. Without limiting the generality of the
provisions of Sections 2(b) or 4(a), during a period ending on the later of (i)
the end of the Agreement Term, (ii) the end of the Severance Period described in
Section 5(d)(i) hereof, if severance payments are required to be made to the
Executive under any provision of Section 5(d), and (iii) the end of any period
during which payments are made to the Executive under Section 5(c) hereof;
Executive shall not, directly or indirectly, own, manage, operate, join,
control, participate in, invest in or otherwise be connected or associated with,
in any manner, including as an officer, director, employee, partner, consultant,
advisor, agent, proprietor, trustee or investor, any Competing Business;
provided, however, that if Executive's employment hereunder is terminated by the
Company under Section 5(d) or Executive voluntarily resigns for Good Reason as
provided in Section 5(d), then the provisions of this Section 4(b) shall remain
in effect only so long as the Company continues to pay to Executive amounts as
severance pursuant to Section 5(d). For purposes of this Section 4(b), the term
"Competing Business" shall mean any business or venture which develops,
manufactures, publishes, licenses, sells, distributes or supplies entertainment,
educational or "edutainment" computer software or video games for commercial
use, whether for retail distribution, by direct marketing, electronically, by
license to others or otherwise; or any other business which is substantially
similar to the whole or any significant part of the business conducted by the
Company; provided that ownership of 2% or less of the stock or other securities
of a corporation, the stock of which is listed on a national securities exchange
or is quoted on The NASDAQ Stock Market, shall not constitute a breach of this
Section 4, so long as Executive does not in fact have the power to control, or
direct the management of, or is not otherwise associated with, such corporation.
Notwithstanding anything in this Agreement to the contrary, if the Executive's
employment with the Company shall not have terminated prior to the happening of
a Change of Control (as defined in Section 5(d)(iii) hereof), then the
Executive's obligation pursuant to this Section 4(b) shall be limited to a
period equal to the greater of (A) one year from the date of the happening of
such Change of Control, and (B) the period during which Executive remains in the
employ of the Company or its successor and parent company, if any.
(c) No Solicitation of Employment. During the Agreement Term and for
a period of two years thereafter, Executive shall not solicit or encourage any
other employee to leave the Company for any reason.
(d) Company Customers. Executive shall not, during the period which
is coincident with the Executive's obligation not to compete under Section 4(b)
hereof, directly or indirectly, contact, solicit or do business with (i)
Wal-mart
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Corporation, Target Stores, Caldor, Phar-mor, Comp U.S.A., Best Buy, Office
Depot, Kmart or any of their respective affiliated operations, for the purpose
of selling entertainment, educational or "edutainment" computer software, video
games or any other product (which is an integral product in a material product
line of the Company) then sold by the Company to such customers at the time of
termination of Executive's employment hereunder; (ii) any "customers" (as
defined below) of the Company for the purpose of selling computer software,
video games or any other product then sold by the Company to such customers at
the time of termination of Executive's employment hereunder; or (iii) any
supplier, licensor or licensee of the Company with respect to licensing computer
software, video games or other intellectual property (which is related to
computer software, video games or any other material product line of the
Company), from such person.
For the purposes of the provisions of this Section 4(d), "customer" shall
include any entity that purchased computer software, video games or any other
product from the Company within eight months of the termination of Executive's
employment hereunder, without regard to the reason for such termination. The
term "customer" also includes any former customer or potential customer of the
Company which the Company has solicited within eight months of such termination,
for the purpose of selling computer software or any other product then sold by
the Company.
5. Termination of Employment.
(a) Termination. The Company may terminate Executive's employment
for Cause (as defined below), in which case the provisions of Section 5(b) shall
apply. The Company may also terminate Executive's employment in the event of
Executive's Disability (as defined below), in which case the provisions of
Section 5(c) shall apply. The Company may also terminate the Executive's
employment for any other reason by written notice to Executive, in which case
the provisions of Section 5(d) shall apply. If Executive's employment is
terminated by reason of Executive's death, retirement or voluntary resignation,
the provisions of Section 5(b) shall apply.
(b) Termination for Cause; Termination by Reason of Death or
Retirement or Voluntary Resignation. In the event that Executive's employment
hereunder is terminated during the Agreement Term (x) by the Company for Cause
(as defined below), (y) by reason of Executive's death or retirement or (z) by
reason of Executive's voluntary resignation (other than voluntary resignation
with Good Reason (as hereinafter defined) or following a Change of Control as
permitted by Section 5(d)(iii)), then the Company shall pay to Executive, within
thirty (30) days of the date of such termination, only the Base Salary,
automobile allowance and any bonus previously approved by the Board of Directors
through such date of termination. For purposes of this
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Agreement, "Cause" shall mean (i) conviction of any crime (whether or not
involving the Company) constituting a felony in the jurisdiction involved; (ii)
engaging in any substantiated act involving moral turpitude affecting the
Company's business; (iii) willful and continued gross neglect or willful
misconduct in the performance of Executive's material duties hereunder; and (iv)
willful and repeated failure or refusal to perform such duties as may be
delegated to Executive by the Board of Directors in writing commensurate with
Executive's position as President Chief Executive Officer and/or Chairman of the
Board of the Company and consistent with his responsibilities set forth on
Exhibit A; provided, however, that (a) with respect to clauses (iii) and (iv),
Executive shall have received written notice from the Company setting forth the
alleged act or failure to act constituting "Cause" hereunder, and Executive
shall not have cured such act or refusal to act (other than fraud or
embezzlement, which may not be cured) within 15 business days of his actual
receipt of such notice; and (b) for purposes of this Section 5(b), no act or
failure to act by Executive shall be considered "willful" unless done, or
omitted to be done, by Executive in bad faith and without a reasonable belief
that his actions or omission was in the best interest of the Company. For
purposes hereof, the term "Good Reason" shall mean (i) the modification of the
duties and responsibilities, or the assignment or delegation to Executive of
duties or responsibilities inconsistent with those, set forth on Exhibit A with
respect to the Company or its successor and parent company, if any, or the
assignment to Executive of a position or title other than, Chief Executive
Officer and/or Chairman of the Board of, the Company or its successor and parent
company, if any, or (ii) any requirement that the Executive report to any person
other than the Board of Directors of the Company or its successor and parent
company, if any, or (iii) any requirement that Executive perform services in an
office of the Company or any successor or parent company located more than 30
miles from the Company's executive offices in New York City at the date hereof
or, (iv) the failure by the Company, or its successor or parent company, if any,
to pay compensation or provide benefits or perquisites to Executive as and when
required by the terms of this Agreement, or the failure of Executive to be
elected and remain a director of the Company or its successor and parent
company, if any.
(c) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from Executive's
duties hereunder on a full time basis for either (i) one hundred twenty (120)
days within any three hundred sixty-five (365) day period, or (ii) ninety (90)
consecutive days, and within thirty (30) days after written notice of
termination is given shall not have returned to the performance of Executive's
duties hereunder on a full time basis, the Company may terminate Executive's
employment hereunder for "Disability". In that event, the Company shall pay to
Executive,
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within thirty (30) days, of the date of such termination, only the Base Salary,
automobile allowance and any bonus approved by the Board of Directors through
such date of termination. During any period that Executive fails to perform
Executive's duties hereunder as a result of incapacity due to physical or mental
illness (a "Disability Period"), Executive shall continue to receive the
compensation and benefits provided by Section 3 hereof until Executive's
employment hereunder is terminated; provided, however, that the amount of
compensation and benefits received by Executive during the Disability Period
shall be reduced by the aggregate amounts, if any, payable to Executive under
disability benefit plans and programs of the Company or under the Social
Security disability insurance program covering the same period of time.
In addition, in the event that the Company shall terminate this
Agreement pursuant to this Section 5(c), the Company shall thereafter pay to
Executive or his estate, severance pay equal to the Base Salary that Executive
would have otherwise received if the terms of this Agreement were in effect
during a period of two years following the date of such termination, commencing
with the date of such termination and payable at the times and in the amounts
such Base Salary would have been so paid, reduced by the aggregate amounts, if
any, payable to Executive under disability benefit plans and programs of the
Company or under the Social Security disability insurance program covering the
same period of time.
(d) Termination By Company For Any Other Reason; Voluntary
Resignation for Good Reason; Change of Control.
(i) In the event that (A) Executive's employment hereunder is
terminated by the Company during the Agreement Term for any reason other than as
provided in Sections 5(b) or 5(c) hereof, or (B) the Executive voluntarily
resigns for Good Reason, as defined in Section 5(b), then the Company shall pay
to Executive, within thirty (30) days of the date of such termination, the Base
Salary, automobile allowance and any bonus approved by the Board of Directors
through such date of termination or resignation and, in lieu of any further
compensation and benefits for the balance of the Agreement Term, severance pay
equal to the Base Salary that Executive would have otherwise received if the
terms of this Agreement were in effect during a period equal to the greater of
(A) the remainder of the Agreement Term, and (B) two-years from the date of such
termination or resignation (the "Severance Period"), plus an amount per annum
for the remainder of the Severance Period (pro rated where appropriate for part
of a year, if any) equal to 60% of such Base Salary in lieu of bonus, in each
case from the effective date of such termination or resignation, commencing with
such date of termination or resignation and payable at the times and in the
amounts such Base Salary would have been so paid and, in the case of such amount
in lieu of bonus, one half thereof on each July 1 and January 1 following the
date of such
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termination or resignation. Under such circumstances, except as set forth below,
for the balance of the Severance Period, Executive shall also continue to
participate in and receive the benefits and perquisites provided for in Sections
3(b) and 3(c) hereof (excluding any bonus (other than the amount in lieu of
bonus provided for in this Section 5(d)) and stock options) to the same extent
as if Executive's employment hereunder had not been terminated or he had not
resigned; provided, however, that in the event that Executive shall breach
Sections 4 or 6 hereof, in addition to any other remedies the Company may have
in the event Executive breaches this Agreement, the Company's obligation
pursuant to this Section 5(d) to continue such salary, amount in lieu of bonus,
benefits and perquisites shall cease and Executive's rights thereto shall
terminate and shall be forfeited.
(ii) In addition to any severance amounts payable hereunder, in
the event (A) the Executive's employment is terminated by the Company or its
successor or parent company, if any, for any reason other than properly for
Cause as provided in Section 5(b) hereof, or (B) the Executive dies or (C) the
Executive voluntarily resigns for Good Reason, as defined in Section 5(b), then
all options previously granted to Executive pursuant to the Company's 1995 Stock
Incentive Plan, 1997 Stock Incentive Plan or otherwise shall immediately vest
and be exercisable by Executive in full, and Executive (or his estate in the
event of death) shall thereafter be entitled to exercise such options for the
balance of their respective terms. This Section (d)(ii) and Section (d)(iii) are
intended to be amendments to any stock option agreement between the Company and
the Executive to the extent required to effectuate the provisions hereof and
thereof, and have been approved as such amendments by the Board of Directors of
the Company and the appropriate committee thereof.
(iii) Upon the happening of a Change of Control, as hereinafter
defined, then all options previously granted to Executive pursuant to the
Company's 1995 Stock Incentive Plan, 1997 Stock Incentive Plan or otherwise
shall immediately vest and be exercisable by Executive in full, and Executive
shall thereafter be entitled to exercise such options for the balance of their
respective terms. In addition, if, following a Change of Control, (1) there
occurs Good Reason, as defined in Section 5(b), or (2) Executive is not the
President Chief Executive Officer and/or Chairman of the Board of the Company or
its successor and parent company, if any, or (3) Executive's employment is
terminated by the Company or its successor or parent company, if any, for any
reason other than as provided in Sections 5(b) or (c), then in any such case, at
any time within ninety (90) days of any event specified in clauses (1) or (2),
Executive may voluntarily resign from employment with the Company or its
successor and parent company, and thereupon (and following the happening of the
event specified in clause (3)), the Company and its successor and parent company
shall be
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obligated to make severance payments and provide benefits and perquisites as
provided in Section 5(d)(i) hereof with the same effect as if the Company
terminated the employment of Executive as contemplated by the provisions of
Section 5(d)(i) or the Executive voluntarily resigned for Good Reason; provided,
that following such voluntarily resignation (or termination of Executive's
employment as specified in clause (3)) and during the applicable Severance
Period described in Section 5(d)(i) hereof (but subject to the limitations
contained in the last sentence of Section 4(b)), Executive shall be bound by the
provisions of Section 4(b) hereof so long as the Company, or its successor and
parent company, if any, continue to make the severance payments required by this
Section 5(d).
For purposes hereof, Change of Control shall mean any of the following
occurrences:
(1) any "person" as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934 ("Exchange Act") (other than (A) the
Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, (B) Joseph Cayre, Stanley Cayre,
Kenneth Cayre and their respective spouses or children or trusts for
such children, (C) General Atlantic Partners or any entity managed or
controlled by General Atlantic Partners ((A), (B) and (C) together or
individually, a "Current Owner"), or (D) any entity more than 50% of
whose voting and equity interests are owned beneficially by a Current
Owner), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities (other than as a result of a
merger or consolidation covered by clause (3)(i) below in connection
with a merger involving the Company which would result in voting
securities of the Company outstanding immediately prior thereto
continuing to represent more than 50% of the combined voting power of
the voting securities of the Company or the surviving entity (or its
parent) outstanding immediately after such merger or consolidation);
(2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a
transaction described in clause (1), (3) or (4) of this definition)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination
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for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(3) the stockholders of the Company approve a merger or consolidation of
the Company with any other entity, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving
entity (or its parent) outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Company's then outstanding securities; or
(4) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(e) No Further Liability; Release. Payment made and performance by
the Company in accordance with this Section 5 shall operate to fully discharge
and release the Company and its directors, officers, employees, subsidiaries,
affiliates, stockholders, successors, assigns, agents and representatives from
any further obligation or liability with respect to Executive's employment and
termination of employment. Other than paying Executive's Base Salary through the
date of termination of Executive's employment and making any severance payment
and continuing benefits and perquisites pursuant to and in accordance with this
Section 5 (as applicable), the Company and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives shall have no further obligation or liability to Executive or
any other person under this Agreement. The Company shall have the right to
condition the payment of any severance or other amounts pursuant to Sections
5(c) or 5(d) hereof upon the delivery by Executive to the Company of a release
in form and substance satisfactory to the Company of any and all claims
Executive may have against the Company and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives arising out of or related to Executive's employment by the
Company and termination of such employment.
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6. Confidential Information.
(a) Existence of Confidential Information. The Company owns and has
developed and compiled, and will develop and compile, certain proprietary
techniques and confidential information which have great value to its business
(referred to in this Agreement, collectively, as "Confidential Information").
Confidential Information includes not only information disclosed by the Company
to Executive, but also information developed or learned by Executive during the
course or as a result of employment with the Company, which information shall be
the property of the Company. Confidential Information includes all information
that has or could have commercial value or other utility in the business in
which the Company is engaged or contemplates engaging, and all information of
which the unauthorized disclosure could be detrimental to the interests of the
Company, whether or not such information is specifically labelled as
Confidential Information by the Company. By way of example and without
limitation, Confidential Information includes any and all information developed,
obtained, licensed by or to or owned by the Company concerning trade secrets,
techniques, know-how (including designs, plans, procedures, merchandising,
marketing, distribution and warehousing know-how, processes, and research
records), software, computer programs, and any other intellectual property
created, used or sold (through a license or otherwise) by the Company,
Electronic Data Information know-how and processes, innovations, discoveries,
improvements, research, development, test results, reports, specifications,
data, formats, marketing data and plans, business plans, strategies, forecasts,
unpublished financial information, orders, agreements and other forms of
documents, price and cost information, merchandising opportunities, expansion
plans, store plans, budgets, projections, customer, supplier, licensee, licensor
and subcontractor identities, characteristics, agreements and operating
procedures, and salary, staffing and employment information.
(b) Protection of Confidential Information. Executive acknowledges
and agrees that in the performance of duties hereunder the Company discloses to
and entrusts Executive with Confidential Information which is the exclusive
property of the Company and which Executive may possess or use only in the
performance of duties for the Company. Executive also acknowledges that
Executive is aware that the unauthorized disclosure of Confidential Information,
among other things, may be prejudicial to the Company's interests, an invasion
of privacy and an improper disclosure of trade secrets. Executive shall not,
directly of indirectly, use, make available, sell, disclose or otherwise
communicate to any corporation, partnership, individual or other third party,
other than in the course of Executive's assigned duties and for the benefit of
the Company, any Confidential Information, either during the Agreement Term or
thereafter. In the event Executive desires to publish the results of Executive's
work for or experiences with the Company
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through literature, interviews or speeches, Executive will submit requests for
such interviews or such literature or speeches to the Chief Executive Officer of
the Company at least fourteen (14) days before any anticipated dissemination of
such information for a determination of whether such disclosure is in the best
interests of the Company, including whether such disclosure may impair trade
secret status or constitute an invasion of privacy. Executive agrees not to
publish, disclose or otherwise disseminate such information without the prior
written approval of the Chief Executive Officer of the Company.
(c) Delivery of Records, Etc. In the event Executive's employment
with the Company ceases for any reason, Executive will not remove from the
Company's premises without its prior written consent any records, files,
drawings, documents, equipment, materials and writings received from, created
for or belonging to the Company, including those which relate to or contain
Confidential Information, or any copies thereof. Upon request or when employment
with the Company terminates, Executive will immediately deliver the same to the
Company.
7. Assignment and Transfer.
(a) Company. This Agreement shall inure to the benefit of and be
enforceable by, and may be assigned by the Company to, any purchaser of all or
substantially all of the Company's business or assets, any successor to the
Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise). The Company will require any such
purchaser, successor or assignee to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase, succession or assignment had taken
place. For purposes of this Agreement, the term Company shall include any
successor to the Company, and any parent company of such successor (or of the
Company), pursuant to or resulting from a merger or consolidation involving the
Company which does not constitute a "Change of Control" pursuant to Section 5(d)
of this Agreement.
(b) Executive. Executive's rights and obligations under this
Agreement shall not be transferable by Executive by assignment or otherwise, and
any purported assignment, transfer or delegation thereof shall be void;
provided, however, that if Executive shall die, all amounts then payable to
Executive hereunder shall be paid in accordance with the terms of this Agreement
to Executive's devisee, legatee or other designee or, if there be no such
designee, to Executive's estate.
8. Miscellaneous.
(a) Other Obligations. Executive represents and warrants that
neither Executive's employment with the Company nor
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Executive's performance of Executive's obligations hereunder will conflict with
or violate or otherwise are inconsistent with any other obligations, legal or
otherwise, which Executive may have.
(b) Nondisclosure; Other Employers. Executive will not disclose to
the Company, or use, or induce the Company to use, any proprietary information,
trade secrets or confidential business information of others. Executive
represents and warrants that Executive has returned all property, proprietary
information, trade secrets and confidential business information belonging to
all prior employers.
(c) Cooperation. Following termination of employment with the
Company, Executive shall cooperate with the Company, as requested by the
Company, to affect a transition of Executive's responsibilities and to ensure
that the Company is aware of all matters being handled by Executive.
(d) No Duty to Mitigate. Executive shall be under no duty to
mitigate with respect to any severance or other amounts payable pursuant to
Sections 5(c) or 5(d) hereof.
(e) Protection of Reputation. During the Agreement Term and
thereafter, Executive agrees that he will take no action which is intended, or
would reasonably be expected, to harm the Company or its reputation or which
would reasonably be expected to lead to unwanted or unfavorable publicity to the
Company.
(f) Governing Law. This Agreement, including the validity,
interpretation, construction and performance of this Agreement, shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in such state without regard
to such state's conflicts of law principles. All actions and proceedings
relating directly or indirectly to this Agreement shall be litigated in any
state court or federal court located in New York, New York. The parties hereto
expressly consent to the jurisdiction of any such court and to venue therein and
consent to the service of process in any such action or proceeding by certified
or registered mailing of the summons and complaint therein directed to Executive
at the address as provided in Section 8(m) hereof and to the Company's
designated agent for service of process (which initially shall be GT Interactive
Software Corp., 417 Fifth Avenue, New York, New York 10016, Attention:
Secretary, which agent may be changed by the Company upon thirty (30) days'
prior written notice to Executive).
(g) Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties hereto in respect of the subject matter
hereof and supersedes, cancels and annuls any prior or contemporaneous written
or oral agreements, understandings, commitments and practices between them
respecting the subject matter hereof, including all prior
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<PAGE> 14
employment agreements, if any, and any amendments or supplements thereto between
the Company and Executive, which agreement(s) hereby are terminated and shall be
of no further force or effect.
(h) Amendment. This Agreement may be amended only by a writing which
makes express reference to this Agreement as the subject of such amendment and
which is signed by Executive and, on behalf of the Company, by its duly
authorized officer.
(i) Severability. If any term, provision, covenant or condition of
this Agreement or part thereof, or the application thereof to any person, place
or circumstance, shall be held to be invalid, unenforceable or void, the
remainder of this Agreement and such term, provision, covenant or condition
shall remain in full force and effect, and any such invalid, unenforceable or
void term, provision, covenant or condition shall be deemed, without further
action on the part of the parties hereto, modified, amended and limited to the
extent necessary to render the same and the remainder of this Agreement valid,
enforceable and lawful. In this regard, Executive acknowledges that the
provisions of Sections 4 and 6 are reasonable and necessary for the protection
of the Company.
(j) Construction. The headings and captions of this Agreement are
provided for convenience only and are intended to have no effect in construing
or interpreting this Agreement. The language in all parts of this Agreement
shall be in all cases construed according to its fair meaning and not strictly
for or against the Company or Executive. The use herein of the word "including,"
when following any general provision, sentence, clause, statement, term or
matter, shall be deemed to mean "including, without limitation". As used herein,
"Company" shall mean the Company and its subsidiaries and any purchaser of,
successor to or assignee (whether direct or indirect, by purchase, merger,
consolidation or otherwise) of all or substantially all of the Company's
business or assets which is obligated to perform this Agreement by operation of
law, agreement pursuant to Section 7 hereof or otherwise. As used herein, the
words "day" or "days" shall mean a calendar day or days.
(k) Nonwaiver. Neither any course of dealing nor any failure or
neglect of either party hereto in any instance to exercise any right, power or
privilege hereunder or under law shall constitute a waiver of any other right,
power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company, by
its duly authorized officer.
(l) Remedies for Breach. The parties hereto agree that Executive is
obligated under this Agreement to render personal services during the Agreement
Term of a special, unique, unusual, extraordinary and intellectual character,
thereby giving
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<PAGE> 15
this Agreement peculiar value, and, in the event of a breach or threatened
breach of any covenant of Executive herein, the injury or imminent injury to the
value and the goodwill of the Company's business could not be reasonably or
adequately compensated in damages in an action at law. Accordingly, Executive
expressly acknowledges that the Company shall be entitled to specific
performance, injunctive relief or any other equitable remedy against Executive,
without the posting of a bond, in the event of any breach or threatened breach
of any provision of this Agreement by Executive (including Sections 4 and 6
hereof). Without limiting the generality of the foregoing, if Executive breaches
Sections 4 or 6 hereof, such breach will entitle the Company to enjoin Executive
from disclosing any Confidential Information to any Competing Business, to
enjoin such Competing Business from receiving Executive or using any such
Confidential Information and/or to enjoin Executive from rendering personal
services to or in connection with such Competing Business. The rights and
remedies of the parties hereto are cumulative and shall not be exclusive, and
each such party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other
under this Agreement, and the enforcement of one or more of such rights and
remedies by a party shall in no way preclude such party from pursuing, at the
same time or subsequently, any and all other rights and remedies available to
it.
(m) Notices. Any notice, request, consent or approval required or
permitted to be given under this Agreement or pursuant to law shall be
sufficient if in writing, and if and when sent by certified or registered mail,
return receipt requested, with postage prepaid, to Executive's residence (as
reflected in the Company's records or as otherwise designated by Executive on
thirty (30) days' prior written notice to the Company) or to the Company's
principal executive office, attention: President (with copies to the General
Counsel), as the case may be. All such notices, requests, consents and approvals
shall be effective upon being deposited in the United States mail. However, the
time period in which a response thereto must be given shall commence to run from
the date of receipt on the return receipt of the notice, request, consent or
approval by the addressee thereof. Rejection or other refusal to accept, or the
inability to deliver because of changed address of which no notice was given as
provided herein, shall be deemed to be receipt of the notice, request, consent
or approval sent.
(n) Assistance in Proceedings, Etc. Executive shall, without
additional compensation, during and after expiration of the Agreement Term, upon
reasonable notice, furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection with any legal or
quasi-legal proceeding, including any external or internal investigation,
involving the Company or any of its affiliates or in which any of them is, or
may become, a party.
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<PAGE> 16
(o) Automatic Extension of Agreement Term. This Agreement shall be
automatically extended for a period of one year at the end of the Agreement Term
(or any extension thereof) unless, not later than six months prior to the end of
the Agreement Term (or extension thereof) (the "Notice Date"), the Company or
the Executive shall have notified the other in writing of its or his intention
not to so renew this Agreement. Any such extension shall be effective and
binding as of the applicable Notice Date. (p) Insurance and Indemnification.
Executive shall be covered under any director and officer insurance policy
obtained by the Company, if any, and shall be entitled to benefit from any
officer or director indemnification arrangements adopted by the Company, if any,
to the same extent as other senior executive officers and directors of the
Company (including the right to such coverage or benefit following Executive's
employment to the extent such policy or benefit covers former employees);
provided, however that Executive acknowledges and agrees that the Company shall
not be obligated, in any way, to obtain such insurance coverage or to adopt any
such indemnification arrangements for such officers or directors.
(q) Survival. This Agreement and the respective obligations, rights
and benefits of the Company and the Executive as set forth herein shall survive
the cessation or termination of Executive's employment with the Company and the
termination of the Agreement Term in accordance with the terms set forth herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed on its behalf by an officer thereunto duly authorized and Executive has
duly executed this Agreement, all as of the date and year first written above.
GT Interactive Software Corp. EXECUTIVE:
By: /s/ Joseph Cayre /s/ Ronald Chaimowitz
------------------------- ------------------------
Name: Joseph Cayre Ronald Chaimowitz
Title:
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<PAGE> 17
EXHIBIT A
Chairman of the Board:
- Overall strategic direction (in conjunction with the Chief
Executive Officer).
- Plan, set agenda for and chair Board of Directors' Meetings.
- General responsibility for publishing and product development.
- If Chief Executive Officer is not the Executive, the Chief
Executive Officer will report to the Chairman of the Board of
Directors and all officers shall report to the Chief Executive
Officer.
Chief Executive Officer:
- Responsibility for developing and executing the Company's
strategic plan, and annual operating plans and budgets in
order to maximize long-term shareholder value.
- Responsibility for the recruitment and retention of the
management team; all executive officers will report to the
Chief Executive Officer.
- Responsibility for all corporate activities and initiatives
subject to direction of the Board of Directors.
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