EXHIBIT 10.26
EMPLOYMENT AGREEMENT
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AGREEMENT by and between Interplay Productions, Inc., a California
corporation (the "Company"), and Xxxxx Xxxxx (the "Executive"), dated as of the
28th day of March, 1994.
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WHEREAS, the Company and the Executive have entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with MCA INC., a Delaware corporation
("MCA"), pursuant to which MCA will purchase shares of stock of the Company from
the Company and from the Executive (the "Stock Purchase"); and
WHEREAS, the Company and the Executive desire to set forth in a written
agreement the terms and conditions under which the Executive will continue to be
employed by the Company after the Stock Purchase and the Executive has agreed in
the Stock Purchase Agreement to enter into this Agreement; and
WHEREAS, it is a condition to the obligation of MCA to consummate the Stock
Purchase that the Executive and the Company enter into this Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and the
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Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period commencing on the date of consummation of the Stock
Purchase and ending on the fifth anniversary of such date (the "Employment
Period").
2. Position and Duties. (a) During the Employment Period, the Executive
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shall be employed by the Company as President and Chief Executive Officer and
shall serve as Chairman of the Board of Directors of the Company, in each case,
with duties and responsibilities substantially similar to those previously
assigned to the Executive.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote full business attention and time to the business and affairs of the
Company, using the Executive's reasonable best efforts to carry out faithfully
and efficiently the responsibilities assigned to the Executive under this
Agreement. It shall not be considered a violation of the foregoing for the
Executive to (i) serve on corporate boards with the approval of the Company,
(ii) serve on civic or charitable boards or committees, (iii) deliver lectures
or fulfill speaking engagements and (iv) manage personal investments, so long as
such activities do not interfere with the performance of the Executive's
responsibilities under this Agreement or otherwise violate the terms of this
Agreement.
(c) The Executive's services shall be performed primarily at the
location specified on Schedule A. Travel in connection with the business of the
Company may be reasonably requested from time to time by the Board of Directors
of the Company (the "Board").
3. Compensation. (a) Base Salary. During the Employment Period, the
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Executive shall receive an annual base salary (the "Annual Base Salary") in an
amount not less than $500,000, payable in accordance with the Company's payroll
practices for executives, as in effect from time to time. During the Employment
Period, the Annual Base Salary shall be reviewed for possible increase at least
annually. Any increase in the Annual Base Salary shall not limit or reduce any
other obligation of the Company under this Agreement. The Annual Base Salary
shall not be reduced after any such increase,
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unless the annual base salaries of all executives of the Company are
proportionately reduced, and in any event shall not be reduced below $500,000.
After any such increase (or decrease), the term "Annual Base Salary" shall refer
to the Annual Base Salary as so increased (or decreased).
(b) Annual Bonus. In addition to the Annual Base Salary, the Executive
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shall be eligible to receive annual bonuses (each, an "Annual Bonus") at the
discretion of the Board of Directors of the Company.
(c) Other Benefits. The Executive shall be entitled to participate in
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any of the Company's medical, dental or other benefit plans approved by the
Company's Board of Directors.
(d) Expenses. During the Employment Period, the Executive shall be
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entitled to receive prompt reimbursement for all normal and customary expenses
incurred by the Executive in carrying out the Executive's duties under this
Agreement, provided that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts, or
similar documentation of such expenses.
(e) Fringe Benefits. During the Employment Period, the Executive shall
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be entitled to the fringe benefits set forth on Schedule A to this Agreement.
(f) Vacation. (i) During the Employment Period, the Executive shall be
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entitled to vacations in accordance with Company policies then in effect and, in
no event, shall such vacation time be less than four (4) weeks per calendar
year.
4. Termination of Employment. (a) Death or Disability. The Executive's
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employment shall terminate automatically upon the Executive's death during the
Employment Period. The Company shall be entitled to terminate the Executive's
employment because of the Executive's
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Disability during the Employment Period. "Disability" means that (i) the
Executive has failed, over a period of 180 consecutive days, to perform the
Executive's duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its insurers,
and reasonably acceptable to the Executive or the Executive's legal
representative, has determined that the Executive's incapacity constitutes a
disability for purposes of the Company's long-term disability insurance
coverage. A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and shall
be effective upon receipt of such notice by the Executive (the "Disability
Effective Date").
(b) By the Company. (i) The Company may terminate the Executive's
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employment during the Employment Period for Cause or without Cause. "Cause"
shall mean (A) fraud, embezzlement or willful misconduct materially injurious to
the Company on the part of the Executive, (B) the Executive's (x) persistent and
continued failure to substantially perform his material duties (which duties
shall be reasonably consistent with those previously assigned to the Executive)
for the Company when and to the extent reasonably requested by the Board to do
so and (y) failure to correct same within thirty (30) days after notice from the
Board requesting the Executive to do so (it being understood that this standard
is intended to assure the Company of the reasonable attendance, efforts and good
faith business attention of the Executive to his duties on behalf of the
Company, but may not be relied upon by the Company to terminate the Executive
based upon the operating performance of the Company), or (C) the Executive's
breach of any material provision of this Agreement, which breach has not been
cured in all material respects within thirty (30) days after notice of such
breach is given to the Executive by the Company. No act or failure to act on the
part of the Executive shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
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Company. Any act or failure to act that is based upon authority given pursuant
to a resolution duly adopted by the Board or the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The Executive
shall not be deemed to have been terminated for Cause unless such notice is
accompanied by a copy of a resolution duly adopted by the Board to such effect.
(ii) A termination of the Executive's employment by the Company
without Cause shall be effected by giving the Executive written notice of the
termination.
(c) Good Reason. (i) The Executive may terminate employment for Good
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Reason.
"Good Reason" means:
(A) the assignment to the Executive of duties inconsistent in
any material respect with paragraph (a) of Section 2 of this Agreement,
other than actions that are not taken in bad faith and are remedied by the
Company within five (5) business days after receipt of notice thereof from
the Executive;
(B) any failure by the Company to comply with any provision
of Section 3 of this Agreement other than failures that are not taken in
bad faith and are remedied by the Company within five (5) business days
after receipt of notice thereof from the Executive;
(C) any requirement by the Company that the Executive's
services be rendered primarily at a location or locations not complying
with the provisions of paragraph (c) of Section 2 of this Agreement; or
(D) any failure by the Company to require any successor
(whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would have been required to
perform if no such succession had taken place.
(ii) A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
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termination of employment by the Executive for Good Reason shall be effective on
the tenth business day following the date when the Notice of Termination for
Good Reason is given, unless the notice sets forth a later date (which date
shall in no event be later than 30 days after the notice is given); provided,
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that such atermination of employment shall not become effective if the Company
shall have previously corrected to the reasonable satisfaction of the Executive
the circumstance giving rise to the Notice of Termination.
(d) Date of Termination. The "Date of Termination" means the date
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of the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or by the
Executive for Good Reason is effective, or the date on which the Company gives
the Executive notice of a termination of employment without Cause, as the case
may be.
5. Obligations of the Company Upon Termination.
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(a) Death, Disability, Cause. If, during the Employment Period, the
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Executive's employment is terminated because of death, Disability, or for Cause,
then except as provided in Section 8, the Executive shall not be entitled to any
compensation provided for under this Agreement, other than Annual Base Salary
through the effective date of any such termination or resignation, benefits
under the long-term disability insurance coverage in the case of termination
because of Disability, and (without limiting the provisions of Section 6 hereof)
vested benefits, if any, required to be paid or provided by law.
(a) Without Cause; Good Reason. If, during the Employment Period,
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the Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall not be entitled to any
compensation provided for under this Agreement
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except as set forth in the following sentence. For the remainder of the
Employment Period, the Executive shall continue to be considered an employee of
the Company, and the Company (i) shall continue to pay the Executive for and
with respect to the unexpired portion of the Employment Period (in the same
manner as specified herein) (A) an amount equal to one hundred and fifty percent
(150%) of his Annual Base Salary and (B) an amount equal to seventy-five percent
(75%) of the Executive's Imputed Annual Bonuses and (ii) shall continue during
the unexpired portion of the Employment Period the welfare benefits set forth in
Section 3 (in the same manner as specified herein); provided that (x) if any
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such benefits cannot be provided under the terms of the applicable plans or
applicable law, the Company shall provide the Executive with substitute benefits
that are comparable and equal in value to such benefits, and (y) during any
period when the Executive is eligible to receive any such benefits under another
employer-provided plan, the benefits provided by the Company under this
paragraph may be made secondary to those provided under such other plan. As
used herein, "Imputed Annual Bonuses" shall mean the "target" bonuses or similar
amounts under any Company bonus plan then in effect approved by the Board that
the Executive would have received had he not been terminated.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
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limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company for which the Executive may qualify,
nor, subject to paragraph (f) of Section 10, shall anything in this Agreement
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company. Vested benefits and other amounts that
the Executive is otherwise entitled to receive under any plan, policy, practice
or program of, or any contract or agreement with, the Company on or after the
Date of Termination shall be payable in accordance with
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such plan, policy, practice, program, contract or agreement, as the case may be,
except as explicitly modified by this Agreement.
7. No Mitigation or Reduction. In no event shall the Executive be
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obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced, regardless of whether the
Executive obtains other employment.
8. Confidential Information; Other Covenants. (a) The Executive shall
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hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company and its
business that the Executive has obtained during the Executive's employment by
the Company and that is not public knowledge (other than as a result of the
Executive's violation of this paragraph (a) of Section 8) ("Confidential
Information"), unless disclosure of such information is required by court order.
The Executive shall not communicate, divulge or disseminate Confidential
Information at any time during or after the Executive's employment with the
Company, except with the prior written consent of the Company or as otherwise
required by law or legal process.
(b) During the full original term of the Employment Period, except as
otherwise provided in paragraph (d) of this Section 8, the Executive shall not,
without the prior written consent of the Board, engage in or become associated
with a Prohibited Activity. For purposes of this paragraph (b) of Section 8: (i)
a "Prohibited Activity" means any business or other endeavor that engages in the
interactive software business in which the Company is at the date hereof, or at
any time during the Employment Period, engaged in the United States (including
Puerto Rico); and (ii) except as provided on Schedule A, the Executive shall be
considered to have become "associated with a Prohibited Activity" if he becomes
directly or indirectly involved as an owner, employee, officer, director,
independent contractor, agent, partner, advisor, lender, or in any other
capacity with any individual, partnership, corporation or other organization
that is engaged in a Prohibited Activity. Notwithstanding the foregoing: (i) the
Executive may make and retain investments during the Employment Period in not
more than five percent (5%) of the equity of any entity engaged in a Prohibited
Activity, if such equity is listed on a national securities exchange or
regularly traded in an over-the-counter market; and (ii) if the Executive's
employment is terminated because of Disability, the provisions of this paragraph
(b) of Section 8 shall only apply if, following notice from the Executive that
his disability has ended and that he intends to seek employment in a Prohibited
Activity, the Company commences payment and continues to pay from the date of
such notice throughout the remainder of the Employment Period the compensation
and benefits provided for hereunder in respect of such remaining term.
(c) The Executive agrees that he will not, at any time during the full
original term of the Employment Period, without the prior written consent of the
Company, whether directly or indirectly, solicit the employment of, whether as
an employee, officer, director, agent, consultant or
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independent contractor, any person who was or is at any time during the previous
twelve (12) months an employee, representative, officer or director of the
Company or any of its affiliates.
(d) The Executive acknowledges and agrees that the Company's remedy at
law for any breach of the Executive's obligations under this Section 8 would be
inadequate and agrees and consents that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to enforce any
provision of such Section without the necessity of proof of actual damage. With
respect to any provision of this Section 8 finally determined by a court of
competent jurisdiction to be unenforceable, the Executive and the Company hereby
agree that such court shall have jurisdiction to reform this Agreement or any
provison hereof so that it is enforceable to the maximum extent permitted by
law, and the parties agree to abide by such court's determination.
9. Successors. (a) This Agreement is personal to the Executive and,
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without the prior written consent of the Company, shall not be assignable by the
Executive. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors.
10. Miscellaneous. (a) This Agreement shall be governed by, and construed
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in accordance with, the laws of the State of California, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended, modified, terminated or waived except with the prior written consent
of MCA, and then only by a written agreement executed by the parties hereto or
their respective successors and legal representatives. MCA is intended to be and
shall be a third-party beneficiary of the preceding sentence.
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(b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
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Xxxxx Xxxxx
Interplay Productions, Inc.
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
If to the Company:
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Interplay Productions, Inc.
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Camps
With a copy to:
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MCA INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 10. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
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(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of Section 4 of this
Agreement) shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement except to the extent any
other party hereto is materially prejudiced by such failure.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ XXXXX XXXXX
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Xxxxx Xxxxx
INTERPLAY PRODUCTIONS, INC.
By: /s/ XXXXX XXXXX
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EXHIBIT A
TO
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX XXXXX AND INTERPLAY PRODUCTIONS
The Executive's services shall be performed at 00000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000.
A-1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement ("First Amendment") dated as
of the 2nd day of March, 1998, is made and entered into by INTERPLAY
PRODUCTIONS, a California corporation (the "Company"), XXXXX XXXXX (the
"Executive"), and UNIVERSAL STUDIOS, INC., a Delaware corporation formerly known
as MCA, INC. ("Universal").
WHEREAS, Executive is presently employed by the Company pursuant to a
written Employment Agreement ("Employment Agreement") dated as of March 28,
1994; and
WHEREAS, the parties desire to amend the Employment Agreement to reflect
certain new terms for Executive's continued employment, while leaving all
remaining terms of the Employment Agreement in effect;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Section 2(a) of the Employment Agreement concerning Executive's
Position and Duties is hereby amended to read as follows:
2. Position and Duties. (a) During the Employment Period, the
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Executive shall be employed by the Company as Chief Executive Officer and
shall serve as Chairperson of the Board of Directors of the Company, in
each case with duties and responsibilities substantially similar to those
previously assigned to the Executive.
2. Section 3(a) of the Employment Agreement concerning Executive's Base
Salary is hereby amended to read as follows:
3. Compensation. (a) Base Salary. Effective March 1, 1998,
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and continuing during the Employment Period, the Executive shall receive an
annual salary (the "Annual Base Salary") in an amount not less than Two
Hundred Fifty Thousand Dollars ($250,000), payable in accordance with the
Company's payroll for executives, as in effect from time to time. During
the Employment Period, the Annual Base Salary shall be reviewed for
possible increase at least annually. Any increase in the Annual Base Salary
shall not limit or reduce any other obligation of the Company under this
Agreement. The Annual Base Salary shall not be reduced after any such
increase, unless the annual base salaries of all executives of the Company
are proportionately reduced, and in any event shall not be reduced below
Two Hundred Fifty Thousand Dollars ($250,000). After any such increase (or
decrease), the term "Annual Base Salary" shall refer to the Annual Base
Salary as so increased (or decreased).
3. In consideration for this Amendment and other valuable consideration,
Executive hereby waives and releases any claims he may have against the Company
or Universal or their predecessors, successors, and assigns for (i) any Base
Salary, and (ii) any bonus or other compensation (other than the $1 million
dollar bonus reflected in the draft Registration Statement as of the date hereof
and such Annual Bonus, if any, as may be awarded by the Board of Directors for
the fiscal year ending December 31, 1998), in each case for any period prior to
March 1, 1998, and whether arising under the Employment Agreement or otherwise.
4. In all other respects, the Employment Agreement shall remain in full
force and effect according to its terms, except as so amended.
IN WITNESS WHEREOF, the parties have caused this First Amended to be
executed on their behalf as of the date and year first written above.
/s/ Xxxxx Xxxxx
____________________________________________________
XXXXX XXXXX
/s/ Xxxxxxxxxxx X. Xxxxxxxxxx
____________________________________________________
INTERPLAY PRODUCTIONS
/s/ Xxxxx Xxxxxxxx
____________________________________________________
UNIVERSAL STUDIOS, INC., formerly known as MCA, INC.
2
