CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated July 31, 1997, by and between Inventory
Management Systems, Inc., a Delaware corporation ("Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("Consultant"). In consideration of the mutual covenants and promises herein
contained, the parties hereto agree as follows:
1. Engagement. The Company agrees to engage Consultant as a consultant, and
Consultant accepts such engagement, under and subject to the terms and
conditions hereinafter set forth.
2. Term. Subject to earlier termination as hereafter provided, this
Agreement shall have an original term of three years commencing on the date
hereof (the "Effective Date") and shall be automatically extended thereafter for
successive terms of one year, unless either party provides notice more than
thirty days prior to the expiration of the original or any extension term that
the Agreement is not to be extended.
3. Duties. During the term of this Agreement, Consultant shall perform such
duties as are assigned to him from time to time by the Board of Directors (the
"Board") and/or the President of the Company commensurate with his experience
and reputation. In performing his duties hereunder, Consultant shall devote such
time as the Company and Consultant mutually agree to be necessary to perform his
duties.
4. Compensation. During the term of this Agreement, Consultant shall be
paid an amount of incentive compensation based on Net Income (as hereinafter
defined) in respect of each year during the term of this Agreement (pro rated
for any partial year during the term of this Agreement) of (i) 6% of Net Income
up to $500,000 and (ii) 9% of Net Income in excess of $500,000. The term "Net
Income" means, for any applicable fiscal year, the earnings of the Company
before interest and taxes ("EBIT"), as calculated in accordance with generally
accepted accounting principles applied on a basis consistent with those utilized
in the preparation of the Company's financial statements for such year,
excluding the effect of Parent (as hereinafter defined) company charges. The
amount of Net Income for each year shall be determined no later than 90 days
following the end of such year. Such incentive compensation shall be paid in
cash to Consultant within five business days following the date of such
determination, and shall be accompanied by a copy of the determination of such
amount, certified by the Chief Financial Officer or Controller of Take-Two
Interactive Software, Inc. (the "Parent") as having been determined in
accordance with the provisions of this Section 3(b).
5. Expenses. All travel and other expenses incident to the rendering of
services reasonably incurred on behalf of the Company by the Consultant during
the term of this Agreement shall be paid by the Company. If any such expenses
are paid in the first instance by the Consultant, the Company shall reimburse
him
therefor on presentation of appropriate receipts for any such expenses.
6. Termination. Notwithstanding the provisions of Section 1 hereof, the
Consultant's engagement with the Company may be earlier terminated as follows:
(a) By action taken by the Board, the Consultant may be discharged for
cause (as hereinafter defined), effective as of such time as the Board
shall determine. Upon discharge of the Consultant pursuant to this Section
6(a), the Company shall have no further obligation or duties to the
Consultant, except for payment of Salary through the effective date of
termination, and as provided in Sections 4 and 8, and the Consultant shall
have no further obligations or duties to the Company, except as provided in
Section 7.
(b) In the event of (i) the death of the Consultant or (ii) by action
of the Board and the inability of the Consultant, 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
incentive compensation hereunder shall not be suspended or diminished. Upon
any termination of the Consultant's engagement under this Section 6(b), the
Company shall have no further obligations or duties to the Consultant,
except as provided in Sections 4 and 8.
(c) In the event that Consultant's engagement with the Company is
terminated by action taken by the Board without cause, including
termination upon a Change in Control (as hereinafter defined), then the
Company shall have no further obligation or duties to Consultant, except
for payment of the incentive compensation through the effective date of
termination and as provided in Sections 4 and 8, and Consultant shall have
no further obligations or duties to the Company, except as provided in
Section 7.
(d) For purposes of this Agreement, the Company shall have "cause" to
terminate the Consultant's employment under this Agreement upon (i) the
failure by the Consultant to substantially perform his duties under this
Agreement, (ii) the engaging by the Consultant in criminal misconduct
(including embezzlement and criminal fraud) which is materially injurious
to the Company, monetarily or otherwise, (iii) the conviction of the
Consultant of a felony, (iv) gross negligence on the part of the Consultant
or (v) other misconduct of the Consultant in the performance of his duties
hereunder. The Company shall give written notice to the Consultant, which
notice shall specify the grounds for the proposed termination and the
Consultant shall be given thirty (30) days to cure if the grounds arise
under clauses (i) or (v) above.
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(e) For purposes of this Agreement, a "Change in Control" shall be
deemed to occur, unless previously consented to in writing by the
Consultant, upon the Parent owning less than a majority of the issued and
outstanding capital stock of the Company.
7. Confidentiality; Noncompetition. In addition to and supplementing the
covenants contained in Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 of the Agreement
and Plan of Merger (the "Merger Agreement"), dated ___________, 1997, among the
Parent, Take-Two Acquisition Corp., Inventory Management Systems, Inc. and
Consultant, the Company and Consultant agree as follows:
(a) The Company and the Consultant acknowledge that the services to be
performed by the Consultant under this Agreement are unique and
extraordinary and, as a result, the Consultant will be in possession of
confidential information relating to the business practices of the Company
and the Parent. The term "confidential information" shall mean any and all
information (verbal and written) relating to the Company, the Parent or any
of their respective affiliates, or any of their respective activities,
other than such information which can be shown by the Consultant 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: existing and proposed projects, source codes, object codes, forecasts,
assumptions, trade secrets, personnel lists, financial information,
research projects, services, pricing, customers, customer lists and
prospects, product sourcing, marketing and selling and servicing. The
Consultant agrees that he will not, at any time during or after the
termination of his 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 or Parent and that Consultant agrees that all confidential
information shall be the sole property of the Company.
(b) Except for the Consultant's ownership of ▇▇▇▇▇▇▇▇ Sales, Inc., the
Consultant hereby agrees that he shall not, during the period of his
engagement and for a period of one (1) year following such engagement,
directly or indirectly, within any county (or adjacent county) in the
Commonwealth of Virginia or 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 Consultant's engagement or on the date of
termination of the Consultant's engagement, 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 notwithstanding anything to the
contrary
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contained herein, the Consultant shall not be subject to the one (1) year
prohibition set forth above in the event that he is terminated by the
Company without cause.
(c) Except for the Consultant's ownership of ▇▇▇▇▇▇▇▇ Sales, Inc., the
Consultant hereby agrees that he shall not, during the period of his
engagement and for a period of one (1) year following such engagement,
directly or indirectly, take any action which constitutes an interference
with or a disruption of any of the Parent's or Company's business
activities including, without limitation, the solicitations of the Parent's
or Company's customers, or persons listed on the personnel lists of the
Parent or Company. At no time during the term of this Agreement, or
thereafter shall the Consultant directly or indirectly, disparage the
commercial, business or financial reputation of the Parent or Company;
provided, however, that notwithstanding anything to the contrary contained
herein, the Consultant shall not be subject to the one (1) year prohibition
set forth above in the event that he is terminated by the Company without
cause.
(d) For purposes of clarification, but not of limitation, the
Consultant hereby acknowledges and agrees that the provisions of
subparagraphs 7(b) and (c) above shall serve as a prohibition against him,
during the period referred to therein, directly or indirectly, hiring,
offering to hire, enticing, soliciting or in any other manner persuading or
attempting to persuade any officer, employee, agent, lessor, lessee,
licensor, licensee or customer who has been previously contacted by either
a representative of the Parent or Company, including the Consultant, to
discontinue or alter his or its relationship with the Parent or Company.
(e) Upon the termination of the Consultant's engagement 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 or Parent which are in the possession of the Consultant including
all copies thereof, shall be promptly returned to the Company.
(f) (i) The Consultant agrees that all processes, intellectual
property rights, technologies and inventions ("Inventions"), including new
contributions, improvements, ideas and discoveries, whether patentable or
not, relating to the business of the Parent or Company, or conceived,
developed, invented or made by him during his engagement by Company shall
belong to the Company. The Consultant shall further: (a) promptly disclose
such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent, copyright, trademark 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;
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(ii) If any Invention is described in a patent or copyright
application or is disclosed to third parties, directly or indirectly, by
the Consultant within two years after the termination of his engagement by
the Company, it is to be presumed that the Invention was conceived or made
during the period of the Consultant's engagement by the Company; and
(iii) The Consultant 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 Consultant's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Consultant may acquire, obtain, develop or create in connection with and
during the term of the Consultant's engagement hereunder, free and clear of
any claims by the Consultant (or anyone claiming under the Consultant) of
any kind or character whatsoever (other than the Consultant's right to
receive payments hereunder). The Consultant 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
Consultant 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(i) hereof, the Company
shall have the right and remedy to require the Consultant 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 Consultant as the result of any transactions constituting a breach
of any of the provisions of Section 7, and the Consultant hereby agrees to
account for any pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in Section 7(i) and
7(j) 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.
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(k) If any provision contained in this Section 7 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(l) If any provision contained in this Section 7 is found to be
unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope or other provision and in its reduced
form any such restriction shall thereafter be enforceable as contemplated
hereby.
(m) It is the intent of the parties hereto that the covenants
contained in this Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in
which enforcement is sought (the Consultant hereby acknowledging that said
restrictions are reasonably necessary for the protection of the Company).
Accordingly, it is hereby agreed that if any of the provisions of this
Section 7 shall be adjudicated to be invalid or unenforceable for any
reason whatsoever, said provision shall be (only with respect to the
operation thereof in the particular jurisdiction in which such adjudication
is made) construed by limiting and reducing it so as to be enforceable to
the extent permissible, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction.
8. Indemnification. The Company shall indemnify and hold harmless the
Consultant against any and all expenses reasonably incurred by him in connection
with or arising out of (a) the defense of any action, suit or proceeding in
which he is a party, or (b) any claim asserted or threatened against him, in
either case by reason of or relating to his being or having been a consultant to
the Company, whether or not he continues to be such a consultant at the time of
incurring such expenses, except insofar as such indemnification is prohibited by
law. Such expenses shall include, without limitation, the fees and disbursements
of attorneys, amounts of judgments and amounts of any settlements, provided that
such expenses are agreed to in advance by the Company. The foregoing
indemnification obligation is independent of any similar obligation provided in
the Company's Certificate of Incorporation or Bylaws.
9. 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
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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 Company:
Inventory Management Systems, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Chairman
Telecopier:
With copies to:
Take-Two Interactive Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Telecopier:
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: 212-885-5001
To the Consultant:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier:
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With a copy to:
▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier:
(b) Parties in Interest. Consultant 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 engagement of the Consultant by the Company and contains all
of the covenants and agreements between the parties with respect to such
engagement in any manner whatsoever; provided that the provisions of
Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 of the Merger Agreement shall also
apply to Consultant. 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. Consultant agrees to
and hereby does submit to jurisdiction before any state or federal court of
record in New York City, New York, or in the state and county in which such
violation may occur, at Company's election.
(e) Warranty. Consultant hereby warrants and represents as follows:
(i) That the execution of this Agreement and the discharge of
Consultant's obligations hereunder will not breach or conflict with
any other contract, agreement, or understanding between Consultant and
any other party or parties.
(ii) Consultant has ideas, information and know-how relating to
the type of business conducted by Company, and Consultant's disclosure
of such ideas, information and know-how to Company will not conflict
with or violate the rights of any third party or parties.
(f) Severability. In the event that any term or condition in this
Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or condition
of this Agreement, but this Agreement shall be construed as if such
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invalid or illegal or unenforceable term or condition had never been
contained herein.
(g) Execution in Counterparts. This Agreement may be executed by the
parties in one or more counterparts, each of which shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has
been signed by each of the parties hereto and delivered to each of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVENTORY MANAGEMENT SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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