Employment Agreement - Take-Two Interactive Software Inc. and Kelley Galvin Sumner
EMPLOYMENT AGREEMENT
AGREEMENT dated as of February 15, 2001 between Take-Two
Interactive Software, Inc., a Delaware corporation (the "Employer" or the
"Company"), and Kelly Galvin Sumner (the "Employee").
W I T N E S S E T H :
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WHEREAS, the Employer desires to employ the Employee as its
Chief Executive Officer and to be assured of his services as such on the terms
and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on
such terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer for a three-year period commencing
effective as of the date first written above (the "Effective Date") (such period
being herein referred to as the "Initial Term," and any year commencing on the
Effective Date or any anniversary of the Effective Date being hereinafter
referred to as an "Employment Year"). After the Initial Term, this Agreement
shall be renewable automatically for successive one year periods (each such
period being referred to as a "Renewal Term"), unless, more than ninety days
prior to the expiration of the Initial Term or any Renewal Term, either the
Employee or the Company give written notice that employment will not be renewed.
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall
have the duties and responsibilities of Chief Executive Officer of the Employer,
reporting directly to the Chairman of Employer and the Board of Directors of the
Employer (the "Board"). It is understood that such duties and responsibilities
shall be reasonably related to the Employee's position.
(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
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with the business of the Company.
3. Compensation.
(a) During the term of this Agreement, the Employer shall
pay the Employee a salary (the "Salary") at a rate of $425,000 per annum in
respect of each Employment Year, payable in equal installments bi-weekly, or at
such other times as may mutually be agreed upon between the Employer and the
Employee. The Salary shall be increased by at least 7.5% of each Employment
Year, provided that the Company's net income per share for the one-year period
then ended exceeds both first call estimates and the Company's net income per
share for the prior one-year period.
(b) The Employee shall be entitled to reimbursement of
reasonable expenses incurred in connection with relocating to the United States.
The Employee shall also be entitled to a reasonable housing allowance (i.e.,
rent) during the Initial Term and any Renewal Term while the Employee is
employed by the Company and resides in the United States.
(c) The Employee shall be paid a bonus equal to $25,000
in respect of each fiscal quarter, commencing with the quarter ending January
31, 2001; provided that net income per share in any such quarter exceeds both
first call estimates and the Company's net income per share in the comparable
quarter for the prior year.
(d) The Employee shall be entitled to incentive options
previously granted on December 20, 2000 to purchase 250,000 shares of Common
Stock, at an exercise price equal to $9.1562 per share, representing the fair
market value of the Common Stock on the date of grant (vesting as to one-half of
the shares covered thereby nine months from the date of grant and one-half of
the shares eighteen months from the date of grant).
(e) The Employee shall be entitled to receive an
automobile allowance of $1,500 per month.
(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 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
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obligation payable to the Employee pursuant to this Agreement.
(b) During the term of this Agreement, the Employee will
be entitled to the number of paid holidays, personal days off, vacation days and
sick leave days in each calendar year as are determined by the Company from time
to time (provided that in no event shall vacation time be fewer than four weeks
per 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. In addition, Employee and family shall be entitled to reasonable
round-trip airfare to visit the United Kingdom on two (2) separate occasions per
annum.
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), the Employer
shall have no further obligations or duties to the Employee.
(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 in the following sentence,
and Employee shall have no further obligations or duties to the Employer, except
as provided in Section 7. In the event of such termination, the Employer shall
continue to pay Salary to the Employee for a period of twelve (12) months from
the date of termination.
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(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. 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 clause (i) above.
(e) In the event that Employee's employment with the
Employer is terminated by Employer without cause 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
the Employee an amount equal to 1.5 times the total current Salary and cash
bonus. 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 granted to Employee prior to such date shall vest.
(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, which directors were not nominated by the
Board immediately in place prior to such change; (ii) upon the acquisition by
any person, entity or group of beneficial ownership of 50 percent 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; (iii)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 50
percent of the combined voting power of the voting securities of the Company or
the surviving entity after the merger; or (iv) upon the sale of all, or
substantially all, of the assets of the Company.
(g) In the event that this Agreement is not renewed or
the Employee is terminated without cause, the Company may either waive the
provisions of Section 7(b) or pay the Salary to the Employee during the term of
the non-compete provision of Section 7(b).
7. Confidentiality; Noncompetition.
(a) The Employer and the Employee acknowledge that the
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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
(oral and written) relating to the Company or any of its affiliates, or any of
their respective activities, other than such information which can be shown by
the Employee to be in the public domain (such information not being deemed to be
in the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, personnel lists, financial information, research
projects, services used, pricing, customers, customer lists and prospects,
product sourcing, marketing and selling. 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.
(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; provided, however, that it is acknowledged that Employee is
a non-executive director of Runecraft.
(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 listed on the personnel lists of the Company. At no time during the term
of this Agreement, or thereafter shall the Employee directly or indirectly,
disparage the commercial, business or financial reputation of the Company.
(d) For purposes of clarification, but not of limitation,
the Employee hereby acknowledges and agrees that the
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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 either a
representative of the Company, including the Employee, (but only those suppliers
existing during the time of the Employee's employment by the Company, or at the
termination of his employment), to discontinue or alter his, her or its
relationship with the Company.
(e) Upon the termination of the Employee's employment for
any reason whatsoever, all documents, records, notebooks, equipment, price
lists, specifications, programs, customer and prospective customer lists and
other materials which refer or relate to any aspect of the business of the
Company which are in the possession of the Employee including all copies
thereof, shall be promptly returned to the Company.
(f) (i) The Employee agrees that all processes,
technologies and inventions ("Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during his employment by Employer shall
belong to the Company, provided that such Inventions grew out of the Employee's
work with the Company and 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 one year 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
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acquire, obtain, develop or create in connection with and during the term of the
Employee's employment hereunder, free and clear of any claims by the Employee
(or anyone claiming under the Employee) of any kind or character whatsoever
(other than the Employee's right to receive payments hereunder). The Employee
shall, at the request of the Company, execute such assignments, certificates or
other instruments as the Company may from time to time deem necessary or
desirable to evidence, establish, maintain, perfect, protect, enforce or defend
its right, or title and interest in or to any such properties.
(h) The parties hereto hereby acknowledge and agree that
(i) the Company would be irreparably injured in the event of a breach by the
Employee of any of his obligations under this Section 7, (ii) monetary damages
would not be an adequate remedy for any such breach, and (iii) the Company shall
be entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach.
(i) The parties hereto hereby acknowledge that, in
addition to any other remedies the Company may have under Section 7(h) hereof,
the Company shall have the right and remedy to require the Employee to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively, "Benefits") derived or received by
the Employee as the result of any transactions constituting a breach of any of
the provisions of Section 7, and the Employee hereby agrees to account for any
pay over such Benefits to the Company.
(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) 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
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so as to be enforceable to the extent permissible, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of said provision in any other jurisdiction.
8. General. This Agreement is further governed by the
following provisions:
(a) Notices. All notices relating to this Agreement shall
be in writing and shall be either personally delivered, sent by telecopy
(receipt confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other address or to
the attention of such other person as the recipient has specified by prior
written notice to the sending party. Notice shall be effective when so
personally delivered, one business day after being sent by telecopy or five days
after being mailed.
To the Employer:
Take Two Interactive Software, Inc.
575 Broadway
New York, New York 10012
Attention: Ryan A. Brant
To the Employee:
____________________
____________________
____________________
(b) Parties in Interest. Employee may not delegate his
duties or assign his rights hereunder. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(c) Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the parties hereto,
with respect to the employment of the Employee by the Employer (including the
Agreement dated July 29, 1997, as amended) and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever. Any modification or termination of this Agreement will be effective
only if it is in writing signed by the party to be charged.
(d) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. 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.
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(e) 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.
(f) 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.
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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/ Ryan A. Brant
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Name: Ryan A. Brant
Title: Chairman
/s/ Kelly Galvin Sumner
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Kelly Galvin Sumner