EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is hereby entered into by and between Interplay
Entertainment Corp., a Delaware corporation (the "Company"), and Brian Fargo
(the "Executive"), as of the 2nd day of November, 1999.
WHEREAS, the Company and the Executive propose to into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with Titus Interactive SA, a French
corporation ("Titus"), pursuant to which Titus will purchase 6,250,000 shares of
Common Stock of the Company from the Company ("the Stock Purchase");
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
WHEREAS, it is a condition to the obligation of Titus 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
-----------------
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 third anniversary of such date (the "Employment
Period").
2. Position and Duties.
-------------------
(a) Executive shall be employed by the Company as Chief Executive
Officer and shall serve as Chairperson of the Board of Directors of the Company,
(i) in the case of Executive's position as Chief Executive Officer, with the
duties and responsibilities set forth on Exhibit A attached hereto and made a
---------
part hereof, and (ii) in the case of Executive's position as Chairperson of the
Board, with duties and responsibilities substantially similar to those assigned
to the Executive prior to the Stock Purchase.
(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 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
Company's corporate headquarters, located at 16815 Von Karman Ave., Irvine,
California 92606. 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 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).
(b) Annual Bonus. In addition to the Annual Base Salary, the
------------
Executive shall be eligible to receive annual bonuses (each, an "Annual Bonus")
at the discretion of the Board of Directors of the Company.
(c) Stock Options. Concurrently with the entering into of this
-------------
Agreement by the Company and the Executive, the Executive shall be granted
options to purchase 500,000 shares of the Common Stock of the Company pursuant
to the Company's Amended and Restated 1997 Stock Option Plan at an exercise
price equal to the closing price per share of the Company's Common Stock on the
date hereof as reported by Nasdaq (the "Options"). The Options shall vest over a
four-year period commencing with the date of grant of such options, with 25% of
the aggregate number of such options vesting each year during such four year
period. Such options shall immediately vest in full in the event that (i) a
Change in Control (as defined in that certain Stockholder Agreement of even date
herewith among the Company, the Executive and Titus Interactive SA) occurs, or
(ii) Executive is terminated without Cause (as such term is defined in Section
4.b.(i) below) or terminates his employment with Good Reason (as such term is
defined in Section 4.c.(i) below).
(d) Other Benefits. The Executive shall be entitled to participate in
--------------
any of the Company's medical, dental or other benefit plans approved by the
Company's Board of Directors.
(e) Expenses. During the Employment Period, the Executive shall be
--------
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.
(f) Fringe Benefits. During the Employment Period, the Executive
---------------
shall be entitled to the fringe benefits provided by the Company from time to
time to its other executive officers.
(g) Vacation. During the Employment Period, the Executive shall be
--------
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.
-------------------------
2
(a) Death or Disability. The Executive's 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 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 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 (as set forth on Exhibit A hereto)
---------
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
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 Reason. "Good
Reason" means:
(A) removal of duties set forth on Exhibit A hereto from the
---------
the Executive, or the assignment to the Executive of duties inconsistent in any
material respect with the duties set forth on Exhibit A hereto, 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;
3
(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
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,
that such termination 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 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.
-------------------------------------------
(a) Death, Disability, Cause. If, during the Employment Period, the
------------------------
Executive's employment is terminated by the Company because of death,
Disability, or for Cause or by the Executive other than for Good Reason, 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.
(b) Without Cause; Good Reason. If, during the Employment Period, 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 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
4
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 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
-------------------------
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 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
--------------------------
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 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 in the interactive
software business, anywhere in the world, that is directly competitive with the
business in which the Company is engaged at the date hereof, or at any time
during the Employment Period; and (ii) except as provided on Exhibit B attached
---------
hereto and made a part hereof, 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
5
percent (5%) of the equity of any entity engaged in a Prohibited Activity,
provided that the Executive does not engage in any of the other activities
listed in the preceding sentence with respect to such entity; 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 which he
is an employee of the Company and for a period of two (2) years thereafter,
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 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. The foregoing shall
not be deemed to restrict the Executive's ability to hire any such person if
such person responds to a general solicitation of employment or otherwise seeks
on his own initiative employment by the Executive or any of his 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
provision 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, 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) The validity of this Agreement, the construction of its terms and
the determination of the rights and duties of the parties hereto shall all be
governed by the laws of the State of California, without reference to principles
of conflicts of laws. The parties hereby consent and agree that the United
States District Court for the Central District of California, or the Superior
Court of California for the County of Orange will have exclusive jurisdiction
over any legal action or proceeding arising out of or relating to this
Agreement, and each party consents to the in personam jurisdiction of such
courts for the purpose of any such action or proceeding and agrees that venue is
proper in such courts. 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
(i) the parties hereto and (ii) so long as no Change in Control has occurred,
Titus, or (in either such case) their respective successors and legal
representatives.
6
Titus and its successors and assigns are intended to be and shall be intended
third-party beneficiaries of the preceding sentence.
(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:
Brian Fargo
Interplay Productions, Inc.
16815 Von Karman Avenue
Irvine, CA 92606
If to the Company:
Interplay Productions, Inc.
16815 Von Karman Avenue
Irvine, CA 92606
Attention: President
with a copy to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attention: K.C. Schaaf, Esq.
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.
(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, including, without limitation, that
certain Employment Agreement dated March 28, 1994, as amended by amendments
dated March 2, 1998 and March 18, 1999, concerning the subject matter hereof.
7
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.
INTERPLAY ENTERTAINMENT CORP.
By: /s/ MANUEL MARRERO
---------------------------------------
Manuel Marrero, Chief Financial Officer
/s/ BRIAN FARGO
---------------------------------------
Brian Fargo
8
EXHIBIT A
Duties of Executive
-------------------
Executive shall have primary responsibility and authority in the Company
with respect to the following management functions:
1. Product Development. Supervision of all internal and external product
-------------------
development activities of the Company, including, without limitation, setting
product development strategy and management of developer relationships. The
Company's Vice President of Development will report to Executive.
2. Marketing. Supervision of all the Company's marketing functions. The
---------
Company's Vice President of Marketing will report to Executive.
3. Business Development/Corporate Strategy. Setting of global corporate
---------------------------------------
strategy for the Company and development of corporate relationships. The
Company's Vice President of Strategic Development and Vice President of Business
Development will report to the Executive.
4. Legal. Supervision of the Company's legal and contractual affairs.
-----
The Company's Vice President of Legal and Business Affairs will report to the
Executive.
5. Consultation With President. The Executive shall consult with the
---------------------------
President of the Company in the development of all operating plans for the
Company, and shall not take any action which constitutes a material deviation
from any operating plan without the concurrence of the President. The Executive
shall also consult with the President of the Company with respect to all
material decisions relating to Interplay Films.
EXHIBIT B
Exceptions to Prohibited Activities
-----------------------------------
Fargo may serve as a consultant to Games On-Line, Inc. in the area of
online gaming, so long as Fargo's obligations under such consulting arrangement
do not exceed, on average, twenty (20) hours per month.