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                              EMPLOYMENT AGREEMENT
                              --------------------

         This Employment Agreement ("Agreement") is entered into as of December
28, 2001 by and between ACCLAIM ENTERTAINMENT, INC. a Delaware corporation
("Company") and EDMOND P. SANCTIS ("Executive").

         1. DEFINITIONS: The following terms shall, where the context allows,
have the following meanings whether such terms shall appear in lower case or
with the first letter of each word capitalized (the foregoing shall apply to all
other defined terms used herein):

                  (a) "Company Client" means any person, business or entity
(collectively "Person") to or through whom any Company Product or Service is
sold or brought to market prior to or during Executive's employment under this
Agreement.

                  (b) "Company Product or Service" means any product or service
developed and/or sold or otherwise provided by Company during or prior to
Executive's employment under this Agreement, and all other products and/or
services which are similar to such products or services, including, without
limitation, computer game software of all kinds.

                  (c) "Competitor" means any Person who is engaged in the
development or sale of products or services like or similar to any Company
Product or Service including, without limitation, the development or sale of
computer game software.

                  (d) "Accelerated Options" shall be determined by multiplying
the number of options previously granted to Executive by a fraction the
denominator of which is thirty six (36) and the numerator of which is the number
of full calendar months that have elapsed from January 1, 2002 to the end of the
last full month preceding such termination then deduct from such result the
number of options that have vested prior to such termination. For example if the
Agreement is terminated on July 1, 2003 and the number of options previously
granted to Executive is 600,000, then the number of Accelerated Options shall
equal 100,000 (300,000 minus 200,000 vested options equals 100,000).

         2.       EMPLOYMENT:

                  (a) Acceptance of Employment by Company: Company hereby
engages Executive and Executive hereby agrees to provide to Company his
full-time services as President and Chief Operating Officer ("COO") of Company's
United States division, in accordance with the terms and conditions of this
Agreement and will faithfully carry out the duties associated with the President
and COO of an operating division. Executive will report to, and serve under the
direction of the Co-Chairman/Chief Executive Officer and the Co-Chairman/Senior
Executive Vice President or such other person(s) as may be designated by
Company. Executive shall devote his full working time and attention during
normal business hours to performing his services and duties hereunder to the
best of his ability and utilizing all of his skills, experience and knowledge to
advance the business and interests of the Company in a manner consistent with
the professional duties and responsibilities of his position. Executive shall
not, directly or indirectly, engage in or participate in the operation or
management of, or render any services to, any other Person. Notwithstanding the
foregoing to the contrary, Executive shall not be prevented from investing and
managing his assets in such form or manner as will not unreasonably interfere
with the services to be rendered by Executive hereunder, or from acting as a
director, trustee, officer of, or on a committee of, or a consultant to, any
other firm, trust or corporation or deliver lectures, fulfill speaking
engagements where such positions do not unreasonably interfere with the services
to be rendered by Executive hereunder and where the business of such firm, trust
or

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corporation is not in competition with Company's (or any of Company's
affiliates) business.

                  (b) Location of Employment: Executive shall render his
services at Company's offices presently located in Glen Cove, New York;
provided, however, that Executive shall render his services at such other
locations from time-to-time as the proper performance of Executive's duties may
reasonably require.

         3. TERM: Executive's employment hereunder shall commence on December
28, 2001 and expire on December 31, 2003 (the "Term") unless sooner terminated
as provided for herein. Both parties shall meet at least ninety (90) days prior
to the expiration of the Term to discuss a renewal of the Term. Executive agrees
that the covenants set forth in Paragraph 6 (hereinafter "Restrictive
Covenants"), and all other provisions of this Agreement related to the
enforcement thereof, shall continue throughout the full Term of this Agreement,
surviving any termination of Executive's employment hereunder for any reason,
but not longer than twelve (12) months following such termination of Executive's
employment.

         4.       COMPENSATION, BENEFITS:

                  (a) Salary: Company shall pay to Executive during the Term, an
annual base salary (the "Salary") of Five Hundred Thousand Dollars ($500,000)
per annum. The Salary shall be reviewed by the Company annually and may be
increased if the Company, in its sole and absolute discretion, determines that
such an increase is advisable based on such factors as the Company shall
consider appropriate from time to time (it is understood that no such review
shall cause a decrease in Executive's Salary). Executive's Salary shall be
payable in accordance with the Company's customary Executive payroll policy as
in effect from time to time. Such Salary, together with any other compensation
which may be payable to Executive hereunder shall be less such deductions as
shall be required to be withheld by applicable law and regulations and shall be
pro-rated for any period that does not constitute a full twelve (12) month
period.

                  (b) Benefits: In addition to the payments required by
Paragraph 4(a) to be paid to the Executive during the Term and to any benefits
payable hereunder, the Executive shall:

                      (i) be eligible to participate in all employee fringe
benefits and any pension, profit sharing and 401(k) plan that may be provided by
the Company for its key executive employees in accordance with the provisions of
any such plans;

                      (ii) participate on the commencement of the Term of this
Agreement at the Company's sole expense in medical, dental, disability, life and
accidental death and dismemberment insurance plans that may be provided by the
Company for its key executive employees in accordance with the provisions of any
such plans;

                      (iii) be entitled to sick leave and sick pay in accordance
with any Company policy and practice that may be applicable to key executive
employees; and

                      (iv) be eligible for participation in the Company's
Employee Stock Purchase Plan, effective with the next available enrollment
period following commencement of this Agreement.

                  (c) Bonus: Executive shall during each fiscal year of Company
during which Executive is employed hereunder, be eligible to receive a bonus
(the "Bonus") of up to one hundred percent (100%) of Executive's salary. The
Bonus for each fiscal year shall be based on financial, strategic, tactical and
personal goals and objectives (collectively, the "Goals and Objectives") to be
mutually agreed by the Company and Executive as well as the ultimate performance
of the Company





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for such applicable fiscal year. If Executive and Company are unable to mutually
agree on the Goals and Objectives, then Company's decision as to the Goals and
Objectives shall be deemed final.

                  (d) Stock Options: Executive shall receive an option to
purchase Two Hundred Thousand (200,000) shares of the Company's common stock
(the "First Option"); provided, that the grant relating to One Hundred Thousand
(100,000) of such shares shall be subject to approval of (i) an amendment to the
Company's 1998 Stock Incentive Plan (the "Plan") increasing the number of shares
available for grant under the Plan, and (ii) an amendment to the Company's
certificate of incorporation increasing the number of shares authorized for
issuance (collectively, the "Amendments") by the Company's stockholders at the
Company's annual meeting on January 17, 2002 (the "Meeting"). Except as
otherwise provided herein, the First Option shall vest in equal annual
installments over a three-year period commencing on the one-year anniversary of
the date Executive commences employment. The option price per share for the
First Option will be the closing price of the Company's common stock on The
NASDAQ SmallCap market on the day Employee commences employment. In addition,
subject to approval of the Amendments by the Company's stockholders at the
Meeting, effective January 17, 2002 (the "Meeting Date"), Executive shall
receive an option to purchase Four Hundred Thousand (400,000) shares of the
Company's common stock (the "Second Option"). Except as otherwise provided
herein, the Second Option shall vest in equal annual installments on each of
December 28, 2002, December 28, 2003 and December 28, 2004. The option price per
share for the Second Option will be the closing price of the Company's stock on
The NASDAQ SmallCap market on the Meeting Date. Additional options on the
Company's common stock may be awarded to Executive at the discretion of the
Company and the Company's Compensation Committee. Except as provided herein, the
award of any options (including the options to be granted hereunder) and the
exercise of such options shall be subject to the terms placed on such options at
the time the Compensation Committee makes any such award and the provisions of
the Plan, as such Plan may be amended from time to time. Notwithstanding the
foregoing, if this Agreement is terminated by the Company without Cause,
Executive shall have the right to exercise certain of such options granted
hereunder as provided in and in accordance with Paragraph 8(c), below.

                  (e) Relocation Expenses: Company shall reimburse Employee for,
or pay, on Employee's behalf, all reasonable and necessary expenses incurred by
Employee in relocating himself and his family from Burlingame, California to
Glen Cove, New York, subject to, and in accordance with, Acclaim's Relocation
Procedure Executive Program ("Relocation Program"). Company will consider on a
case-by-case basis and reimburse reasonable expenses which may not be covered by
such Relocation Program, a copy of which has been previously furnished to
Employee.

                  (f) Loan for Purchase of Home: Company shall advance to
Executive (the "Housing Loan") up to the sum of sum of Three Hundred Thousand
Dollars ($300,000) for use by Executive solely in connection with the purchase
of a new principal residence in or around Glen Cove, New York (the "Residence").
Such Housing Loan shall be secured by a second trust deed on Executive's new
principal residence and a promissory note in the form attached hereto as Exhibit
A. Such Housing Loan will carry simple interest of six (6%) per annum and shall
be payable at the end of each calendar year. The Housing Loan will be fully
repaid to Company on the earlier of Executive's sale of the Residence or one
hundred eighty (180) days after the termination of this Agreement; provided if
this Agreement is terminated by Company without cause pursuant to Paragraph 8(c)
below, then, in such event, the Housing Loan shall be deemed forgiven by
Company. Company shall have the right to obtain life, health, accident,
disability or other insurance covering the repayment of the Housing Loan;
Executive shall have no right, title or interest in or to such insurance and
Executive will submit to usual and customary medical examination and supply
Company with any required medical information for such insurance and will sign
such applications or documents as may be reasonably required to obtain such
insurance. Executive acknowledges that the Housing Loan is being made to
Executive pursuant to ss.1.7872-5T of U.S. Treasury Regulations; in connection
therewith, Executive certifies that Executive



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reasonably expects to be entitled to and will itemize deductions on his income
tax returns for each year of the Term of this Agreement.

           (g) Vacation: The Executive shall be eligible for four (4) weeks of
vacation each year (20 days). The Executive may carry over as much as ten (10)
days into his vacation bank to a maximum of ten (10) carryover days at any given
time.

           (h) Expenses: Company will reimburse Executive for actual, ordinary
and necessary travel and accommodation costs, entertainment and other business
expenses incurred as a necessary part of discharging the Executive's duties
hereunder, subject to receipt of reasonable and appropriate documentation as
required from time-to-time by the Company.

         5. OWNERSHIP OF RESULTS AND PROCEEDS OF EMPLOYMENT: All results and
proceeds of Executive's employment ("Work Product") hereunder shall be
considered "work made for hire" and shall be owned exclusively throughout the
world by the Company (including all copyrights and patents therein and thereto,
and all renewals and extensions thereof) in perpetuity (except with respect to
patents or copyrights which shall be owned exclusively by Company for the
duration of any applicable patent or copyright), free of any claims whatsoever
by Executive or any other Person. Company shall have the sole and exclusive
right to copyright or patent the Work Product and documentation thereto, or
other reproductions embodying the Work Product thereof, and any other material
capable of copyright and/or patent protection created in connection with the
Work Product in Company's name, as the owner and author thereof, and to secure
any and all registrations, renewals and extensions of such copyrights and
patents in Company's name or Executive's name as permitted pursuant to
applicable statute. If Company shall be deemed not to be the owner or author of
any of the aforementioned materials, this Agreement shall constitute an
irrevocable transfer to Company of ownership of copyright and/or patent therein
(and all renewals and extensions). Executive shall, upon Company's request,
execute and deliver to Company transfers of ownership of copyright (and all
renewals and extensions) or patent, as the case may be, in such materials and
any other documents as Company may deem necessary or appropriate to vest in
Company the rights granted to Company in this Agreement, and if Executive does
not execute any such above described transfers as required hereunder then
Executive hereby irrevocably appoints Company his attorney-in-fact for the
purpose of executing those transfers of ownership and other documents in his
name.

         6. CERTAIN COVENANTS OF EXECUTIVE: Without in any way limiting or
waiving any right or remedy accorded to Company or any limitation placed upon
Executive by law, Executive agrees as follows:

           (a) Acknowledgment: Executive understands and agrees that Company is
engaged in the highly competitive business of computer software development;
that Company's success is highly dependent upon the protection of Company's
trade secrets and confidential information; that Company has invested
considerable resources of its time and money in developing its products,
services, staff, goodwill, procedures, clients, techniques, special training,
client lists, manuals, records, documents, and other trade secrets and
confidential information; and that upon and during employment under this
Agreement Company has provided and will provide Executive access to and valuable
knowledge regarding Company's trade secrets and confidential information,
creating a relationship of confidence and trust between Company and Executive.
Executive acknowledges and agrees that the use of such trade secrets or
confidential information, or of Executive's expertise or leadership, for the
benefit of Company's Competitors would be greatly harmful to Company, and that
Company's willingness to enter into business with Executive and to provide
Executive access to its trade secrets and confidential information is
conditioned upon (i) the protection of Company's trade secrets and confidential
information for Company's sole and exclusive








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<PAGE>


benefit, (ii) the retention of Executive's expertise and leadership during the
Term of this Agreement for the sole and exclusive benefit of Company, and not
for any Competitor, and (iii) the protection of Company against Executive's use
for the benefit of any Competitor of the valuable skills Executive will acquire,
develop and/or refine by virtue of employment with Company under this Agreement.
Executive therefore agrees that the covenants and confidentiality provisions set
forth in this Agreement are reasonable in scope, time, territory and type of
activity and necessary for the protection of Company's legitimate interests, and
further agrees that the knowledge of Company's confidential information and
trade secrets to which he will gain access by virtue of employment under this
Agreement, constitute good, sufficient and adequate consideration for the
covenants and confidentiality provisions set forth in this Agreement.

        (b) Limited Non-Competition. Executive expressly covenants and agrees
that during the Term of this Agreement and for a period of one (1) year
following the termination of his employment with Company, for any reason, with
or without cause, Executive shall not, directly or indirectly, alone or in
concert with others, compete with Company in any manner or form, including but
not limited to serving in the capacity of employee, agent, consultant, owner,
investor, stockholder, partner, and/or independent contractor for any
Competitor, nor will Executive, except for or on behalf of Company, solicit or
attempt to solicit clients, business or patronage for the development or sale of
any product or service of Company. Executive acknowledges and agrees that the
computer software development industry in which Company is engaged is not
confined to any particular geographic market, but rather is global in geographic
scope, and that the absence of a restricted geographic scope to the limited
covenant of non-competition set forth herein is therefore reasonable and
necessary for the protection of Company's assets, trade secrets, confidential
information, goodwill and other legitimate business interests. Further, the
absence of a restricted geographic scope for the limited covenant of
non-competition set forth herein shall not be invoked as or provide a defense to
the enforceability of this Agreement or any provision hereof. Notwithstanding
the foregoing to the contrary, Executive shall have the right to own as a
passive investment up to one percent (1%) of any Competitor, provided such
Competitor is a public company. Further notwithstanding the foregoing to the
contrary, if this Agreement is terminated pursuant to Paragraph 8 (c), then the
first sentence of this Paragraph 6(b) shall not apply to such termination.

        (c) Limited Non-Solicitation of Company Clients. Executive expressly
covenants and agrees that for the one (1) year period following the termination
of his employment with Company, for any reason, with or without cause, Executive
shall not, directly or indirectly alone or in concert with others, solicit or
induce, or attempt to solicit or induce any Company Client, or any former
Company Client who, in the twelve (12) month period prior to the effective date
of such termination was an Company Client, to obtain or secure computer software
or its development from or through a Competitor. Further notwithstanding the
foregoing to the contrary, if this Agreement is terminated pursuant to Paragraph
8 (c), then the first sentence of this Paragraph 6(c) shall not apply to such
termination.

        (d) Limited Non-Solicitation of Company Employees. Executive expressly
covenants and agrees that for the one (1) year period following the termination
of his employment with Company, for any reason, with or without cause, Executive
shall not, directly or indirectly, alone or in concert with others, recruit,
solicit or induce, or attempt to recruit, solicit or induce any employee,
officer, consultant, representative, independent contractor or advisor of
Company to terminate, alter, or modify their employment or relationship with
Company.

        (e) Proprietary Information:

            (i) Executive further acknowledges and agrees that the success of
the Company depends, among other things, upon maintaining strict secrecy with
respect to its trade secrets and confidential information relating to the
design, development and marketing of its products




                                       5



<PAGE>



and services, including without limitation "know-how" trade secrets, details of
supplier's, manufacturer's, employee's or distributor's contracts, pricing
policies, financial data, operational methods, marketing and sales information
or strategies, product development techniques or plans, or any strategies
relating thereto, technical processes, designs and design projects, and other
proprietary information of the Company or any parent, subsidiary or affiliate of
Company (hereinafter individually referred to as a "Protected Company") and to
which trade secrets and confidential information Executive may acquire knowledge
of or have access to during the course of his employment by the Company. Such
trade secrets and confidential information as described above are hereinafter
referred to as "Proprietary Information". For the purpose of this Agreement,
Proprietary Information also includes, without limitation, any and all
information not lawfully and generally available to the public concerning the
Company, and any Protected Company or any of its respective products, services,
clients, affairs, personnel or suppliers. In addition, in the course of its
business, the Company may receive confidential disclosures of the trade secrets
and confidential information of other persons and entities. In such event, when
instructed by the Company, Executive shall receive and treat the trade secrets
and confidential information of such other persons and entities with the same
obligation and degree of care as Executive treats the Proprietary Information of
the Company.

            (ii) Executive shall use his best efforts to exercise utmost
diligence, as an individual as well as part of a working group, to protect and
guard the Proprietary Information of the Company and any Protected Company.
Executive agrees not to disclose to any Person not employed by the Company or
not engaged to render services to a Protected Company either during or after his
employment, nor to use, for himself or another, during or after his employment,
without the Company's written consent, any Proprietary Information obtained by
him during his employment, whether developed by him or not, and Executive agrees
to hold all Proprietary Information in strict confidence; provided, however,
that this provision shall not preclude the Executive from making, upon advice of
counsel, any disclosure required by any applicable law or using or disclosing
information known generally to the public (other than information known
generally to the public as a result of any violation of this Paragraph 6(e) by
or on behalf of the Executive).

            (iii) Proprietary Information shall at all times, both during the
Term of this Agreement and at all times thereafter, be and remain the property
of Company for its sole and exclusive use and benefit, and Executive shall
deliver all documents containing or reflecting such information to Company at
any time upon request of Company, and in any event shall deliver all such
documents to Company upon the termination of his employment regardless of
whether or not expressly requested to do so at the time employment pursuant to
this Agreement ceases. Upon leaving the employment of the Company, Executive
shall not take with him any of the Company's Proprietary Information.

        (f) Breach of Covenants. Executive acknowledges and agrees that the
services to be rendered by him hereunder are of a special, unique, extraordinary
and intellectual character which gives them peculiar value. In the event of any
breach of any covenant or promise set forth herein, Executive agrees that
Company shall be entitled to seek judicial remedies in any appropriate court for
the redress of such breach, including, without limitation, the right to seek
injunctive relief. Executive further acknowledges that it will be difficult, if
not impossible, to measure in money the damage that will be suffered by the
Company in the event that Executive fails to comply with the covenants and
restrictions set forth in this Paragraph 6 and that in such event the Company
will not have an adequate remedy at law. Therefore, Executive agrees that the
Company in such event shall be entitled to injunctive relief, both temporary and
permanent, to enforce such covenants or restrictions, or any of them, in any
court having jurisdiction thereof, in addition to such other equitable and legal
remedies which may be available to it, and in the event that any action or
actions should be instituted in equity to enforce any restriction or covenant
hereunder, no party will raise the defense that there in an adequate remedy at
law.

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<PAGE>

        7. RIGHTS AND REMEDIES UPON BREACH: If Executive breaches any of the
provisions of the Restrictive Covenants, Company shall have the following rights
and remedies, each of which rights and remedies shall be independent of the
other and severally enforceable:

            (a) Specific Performance: The right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.

            (b) Severability of Covenants: If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.

            (c) Blue-Pencilling: If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographical scope of such provision, such court shall have the power to reduce
the duration or scope of such provision and, in its reduced form, such provision
shall then be enforceable.

            (d) No Waiver, Cumulative Remedies: The failure of any party to this
Agreement to seek redress for a violation of or to insist upon the strict
performance of any covenant or condition of this Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from having
the effect of an original violation. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights or remedies the
parties may have by law, statute, ordinance or otherwise.

8.           TERMINATION/SUSPENSION/CHANGE OF CONTROL:

             (a)  Termination Upon Death or Disability:

                  (i) If during the Term of this Agreement Executive should die,
then this Agreement shall be deemed to have automatically terminated as of the
date of Executive's death. Executive's estate shall be entitled to any unpaid
Salary which has accrued prior to the date of such death as well as unpaid
expenses which have been approved, and benefits provided for under this
Agreement which have accrued prior to the date of such death and to which
Executive is otherwise legally entitled

                  (ii) If during the Term of this Agreement Executive becomes
Disabled (as such term is defined below) and such disability has lasted for a
period of one hundred eighty (180) days in any consecutive twelve (12) month
period and no reasonable accommodation (as such term is defined in the Americans
With Disabilities Act) is available or can be furnished, then following such
period Company shall have the right to terminate this Agreement or suspend the
Term at Company's election. In the event Company elects to suspend the Term
hereof and Company's obligations hereunder, then such suspension shall be for
the duration of such disability and the Term shall be automatically extended by
a number of days equal to the total number of days of the suspension, or such
fewer number of days of which Company may advise Executive in writing. Executive
may only return to work following such disability upon submission to Company of
a certificate from the physician selected by the Company as aforesaid certifying
that Executive is able to return to work. No suspension shall in any manner
suspend or otherwise impair Company's rights under this Agreement. During the
period that Executive is Disabled and prior to any termination or suspension by
Company, Executive shall retain his status and continue to receive his full
compensation (Salary but no Bonus). As used in this Agreement, the term
"Disabled" shall mean Executive's inability to substantially perform his duties
and





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responsibilities under this Agreement by reason of a non-intentionally
self-inflicted medical disability, including mental or physical illness, as
certified by a physician appointed by the Company. If Company elects to
terminate this Agreement as provided in this Paragraph 8(a)(ii), then Executive
shall be entitled to any unpaid Salary and unpaid vacation which have accrued
prior to the date of such termination as well as unpaid expenses which have been
approved, and benefits provided for under this Agreement which have accrued
prior to the date of such termination and to which Executive is otherwise
legally entitled.

         (b) Termination for Cause: Company shall have the right to terminate
Executive's employment pursuant to this Agreement for Cause. "Cause" for
termination means (i) any act of fraud, embezzlement, or other misappropriation
or any other act or omission by Executive that amounts to a willful breach of
Executive's fiduciary duty to Company or its direct or indirect clients, (ii)
Executive's conviction of a felony or any crime involving moral turpitude under
state or federal law, or the equivalent under foreign law, (iii) Executive's
material breach of any rules or regulations of employment, or any policies
related thereto, which may be adopted or amended from time to time by Company of
which Executive has been given written notice and which are consistent with this
Agreement, (iv) Executive's refusal to perform satisfactorily Executive's duties
and obligations under this Agreement, (v) any other acts or omissions by
Executive constituting neglect or dereliction of Executive's duties hereunder,
(vi) Executive's willful refusal to carry out the reasonable instructions of the
Board, either of the Co-Chairmen of Company or such other person as either of
the Co-Chairmen have determined, (vii) the happening of any event which, under
the provisions of any federal, state or foreign laws applicable to Company or
its activities, disqualifies Executive from acting in any capacity provided for
herein, including, without limitation, any event which disqualifies Executive
under the Securities Act of 1933 or the Securities Exchange Act of 1934, or
(viii) Executive's default of any material obligations under this Agreement;
provided however, that the Company shall have given Executive written notice
specifying any event or breach specified in clauses (iii) through (vi) and
(viii) above and permitted Executive to cure any such breach within the period
of twenty (20) days after receipt of such notice and Executive has failed to
cure such breach within such twenty (20) days; provided, further, however that
the Company shall not be obligated to provide Executive with notice and
opportunity to cure more than one event or breach under each of clauses (iii)
through (vi) and (viii) above. If Executive's employment is terminated by
Company for Cause, Company's obligations to Executive shall terminate
immediately; provided that Company shall pay to Executive any unpaid salary and
unpaid vacation which have accrued prior to such termination as well as unpaid
expenses which have been approved, and benefits provided for under this
Agreement which have accrued prior to the date of such termination and to which
Executive is otherwise legally entitled.

         (c) Termination Without Cause by Company or for Cause by Executive: If
the Company terminates this Agreement without cause by written notice to the
Executive, or if Executive's employment hereunder is terminated by Executive
pursuant to Paragraph 8(e) hereunder, the Executive shall be entitled to receive
from the Company, (i) any unpaid Salary, unpaid vacation pay, unreimbursed
business expenses and any other monies payable to the Executive under any
Executive benefit plan, in each case earned through the date of the Executive's
termination; (ii) from and after the effective date specified in the Company's
notice of termination and for a period of twelve (12) months thereafter (the
"Severance Period"), the Salary (it being understood, for the avoidance of
doubt, that Executive shall not be entitled to receive any bonuses of any type
during the Severance Period); (iii) continued coverage under Company's then
available medical, dental, life and disability benefits for the 12-month period
commencing with Executive's termination of employment; (iv) Executive shall be
entitled to a prorated Bonus (prorated based on the number of months expired
from the commencement of the Fiscal Year in which Executive is terminated until
the date of such termination), if any, based on the Goals and Objectives fixed
by the parties at the commencement of such applicable fiscal year (such amount,
if any, shall be payable to Executive when no later than 120 days following the
expiration of the Fiscal Year in which Executive is terminated, and (v)
notwithstanding




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anything to the contrary contained in the Stock Option Plan (as defined in
Paragraph 4(d) hereinabove), Executive's right to such options previously
granted to Executive shall vest and be exerciseable as follows: (1) if Executive
terminates this Agreement or is terminated by Company pursuant to this paragraph
8(c) prior to July 1, 2002, then Executive shall not be entitled to any options;
(2), if this Agreement is terminated prior to July 1, 2002, solely because of a
Change in Control pursuant to Paragraph 8(e), below, then Executive shall be
entitled to one-half of that portion of the First Option shares which would
otherwise have become vested on the one-year anniversary of the date Executive
commences employment; (3) If Executive terminates this Agreement or is
terminated by Company pursuant to this paragraph 8(c) after June 30, 2002, then
the Accelerated Options (as such term is defined in Paragraph 1(d), above) shall
become immediately vested and Executive shall have ninety (90) days from the
date of Termination to exercise such Accelerated Options as well ninety (90)
days to exercise any options which have vested prior to such termination. If the
Executive should die at any time after the termination of this Agreement
pursuant to this Paragraph 8(c), the amounts or benefits payable or provided to
the Executive under subclauses (ii) and (iii), above, of this Paragraph 8(c)
shall cease and the provisions of Paragraph 8(a) shall apply; provided, further,
that the Executive shall not be entitled to receive any bonuses of any type,
other than as provided in subclause (iv), above of this Paragraph 8(c) and
provided, further that any payments made to the Executive pursuant to subclause
(ii) of this Paragraph 8(c) shall be offset by any compensation that the
Executive may receive from employment that the Executive may obtain during the
remaining Term of this Agreement following such termination and, in connection
therewith, the Executive shall be required to refund to the Company any amounts
which shall constitute an overpayment made by the Company to the Executive under
subclause (ii) of this Paragraph 8(c) as a result of any compensation that the
Executive may obtain during the remaining Term of this Agreement from such
employment following the termination of this Agreement pursuant to this
Paragraph 8(c). Fiscal Year as used in this Agreement means the fiscal year of
Company.

        (d) Designation of Beneficiary: The parties hereto agree that the
Executive shall designate, by written notice to the Company, a beneficiary to
receive the payments described in Paragraph 4 in the event of his death. The
designation of any such beneficiary may be changed by the Executive from time to
time by written notice to the Company. In the event the Executive fails to
designate a beneficiary as herein provided, any payments which are otherwise to
be made to a designated beneficiary under Paragraph 4 shall be made to the
Executive's estate.

        (e) Termination by Executive for Cause/Change in Control: If, during
Executive's employment, (i) Company shall breach a material term of this
Agreement or (ii) there shall occur a "Change in Control" (as defined below) of
Company and, within one year thereafter, there shall occur a change in
Executive's "Circumstances of Employment" (as defined below), then Executive may
terminate his employment pursuant to this Agreement by written notice to Company
and Executive shall be entitled to receive the benefits provided in Paragraph
8(c)(i) through (v) above; provided, however, that Executive shall first have
given Company written notice specifying the specific nature of such breach or
such change in Executive's Circumstances of Employment as case may be, and
Company has not cured any such breach or Change in Circumstances within the
period of 20 days after receipt of notice of such aforementioned notice.

            (i) A "Change in Control" shall be deemed to occur upon (a) the sale
by Company of all or substantially all of its assets to any person (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), the
consolidation of Company with any person, or the merger of Company with any
person as a result of which merger Company is not the surviving entity as a
publicly held corporation, or (b) the sale or transfer or issuance of shares of
Common Stock by Company and/or any one or more of its stockholders (other than
Gregory E. Fischbach or James R. Scoroposki), as the case may be, in one or more
transactions, related or unrelated, to one or more persons as a result of which
any person and its "affiliates" (as hereinafter defined), other than Gregory



                                       9




<PAGE>



E. Fischbach or James R. Scoroposki, shall own more than thirty five percent
(35%) of the outstanding Common Stock, unless such sale or transfer has been
approved in advance by the Board. An "affiliate" shall mean any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, any other person.

            (ii) Executive's "Circumstances of Employment" shall be deemed to
have changed if there shall have occurred any of the following events: (A) a
material reduction or change in Executive's duties or reporting
responsibilities; (B) a material breach by Company of any provision of this
Agreement; (C) a material reduction in the fringe benefits made available by
Company to Executive, unless such reduction is also applicable to all senior
executive officers of Company generally; (D) a material diminution in
Executive's status, working conditions or economic benefits; or (E) a reduction
in Executive's Salary.

   9.   EXECUTIVE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES:

        (a) Right to Enter Into Agreement: Executive has the right and is free
to execute this Agreement, to grant the rights granted by him to the Company
hereunder, and to perform each and every term and provision hereof.

        (b) Breach Under Other Agreement or Arrangement: Neither the execution
and delivery of this Agreement nor the performance by Executive of any of his
obligations hereunder will constitute a violation, breach, or default under, any
agreement, arrangement or understanding, or any other restriction of any kind,
to which Executive is a party or by which Executive is bound.

        (c) Services Rendered Deemed Special, Etc.: Executive acknowledges and
agrees that the services to be rendered by him hereunder are of a special,
unique, extraordinary and intellectual character which gives them peculiar
value, the loss of which cannot be adequately compensated for in an action at
law and that a breach of any term, condition or covenant hereof will cause
irreparable harm and injury to Company and in addition to any other available
remedy Company will be entitled to seek injunctive relief.

        (d) Indemnity: Executive agrees and does hereby indemnify save and hold
Company harmless from and against any and all damages, liabilities, costs,
losses and expenses (including legal costs and reasonable attorney's fees)
arising out of or in connection with any claim, demand or action by a third
party which is inconsistent with any of the warranties, representations or
agreements made by Executive in this Agreement Executive agrees to reimburse
Company, on demand, for any payment made by Company at any time with respect to
any such demand, liability, costs, loss or expense to which the foregoing
indemnity applies; provided, such payment arises from a final judgment or
arbitration or a settlement made with Executive's prior consent, which consent
Executive shall not unreasonably withhold. Company shall notify Executive in
writing of any such claim, demand or action promptly after Company has been
formally advised thereof and Executive shall have the right, at his expense to
participate in the defense thereof with counsel of his choice. Notwithstanding
the foregoing to the contrary, Executive shall not be liable to indemnify
Company as provided above to the extent that any above referenced claim is
covered by any insurance policies Company may elect to maintain generally for
the benefit of officers or in connection with any proceeding to which Executive
(or Executive's legal representatives or other successors) may be made a party
by reason of Executive's being or having been an officer or Executive of Company
and its subsidiaries and affiliates including, without limitation, any joint
venture or partnership in which Company or any of its subsidiaries has an
interest as long such actions were within the scope of Executives duties
hereunder.

    10. NOTICES: Any notice, consent or other communication under this
Agreement







                                       10




<PAGE>


(hereinafter "Notice") shall be in writing and shall be delivered personally,
sent by facsimile transmission (and confirmed in writing) or overnight courier
(regularly providing proof of delivery) or sent by registered, certified, or
express mail and shall be deemed given when so delivered personally, sent by
facsimile transmission and confirmed in any other manner permitted in this
Paragraph 10 or overnight courier, or if mailed two (2) days after the date of
deposit in the United States mail as provided herein. Notices shall be addressed
to Executive at 1308 Sanchez Avenue, Burlingame, California 94010 and to Loeb &
Loeb LLP, 10100 Santa Monica Boulevard, Suite 2200, Los Angeles, CA 90067,
Attention: Kenneth Benbassat, Esq.. Notices shall be addressed to Company at One
Acclaim Plaza, Glen Cove, New York 11542, Attention: Chief Executive Officer,
and to Fischbach, Perlstein & Lieberman, LLP, 1875 Century Park East, Suite 850,
Los Angeles, CA 90067, Attention: Bernard J. Fischbach, Esq. Either party may
change its address for Notices hereunder by notice to the other party in
accordance with this Paragraph 10.

    11. ASSIGNMENT: Subject to Paragraph 8(e), Company shall have the right, at
its election, to assign any of its rights or obligations hereunder, in whole or
in part to any parent, subsidiary, affiliated, or related company, or to any
person, firm, or corporation owning or acquiring a substantial portion of
Company's or Company's stock or assets, and, to the extent of such assignment,
Company and/or Company shall thereafter be relieved of their obligations
hereunder. Executive shall not have the right to assign any of his rights or
obligations hereunder, except for family gifts or transfers of compensation
payable under Paragraph 4 to heirs, beneficiaries, or otherwise by operation of
law, in accordance with Company's policies, practices and procedures.

    12. FURTHER INSTRUMENTS: Executive shall furnish Company with any further
instruments, in such form and substance as shall be approved or designated by
Company, which Company may reasonably require or deem necessary, from time to
time, in its discretion, to evidence, establish, protect, enforce, defend or
secure to Company any or all of its rights, titles, properties or interests or
more fully to effectuate or carry out the purposes, provisions or intent of this
Agreement. In this connection, Executive hereby irrevocably constitutes and
appoints Company as its lawful attorney-in-fact to execute, acknowledge and
deliver all such further instruments and to do all acts and things contemplated
by this paragraph.

    13. COMPLETE AGREEMENT; MODIFICATION AND HEADINGS: This Agreement contains
the entire agreement between the parties with respect to Executive's employment
by Company, superseding all existing agreements between them concerning
Executive's employment. This Agreement may not be amended, modified, superseded,
canceled, or waived except by a written instrument signed by the party to be
charged. The headings in this Agreement are solely for the convenience of
reference and shall not affect its interpretation.

    14. COMPANY INDEMNITY: Company shall indemnify Executive (and Executive's
legal representatives or other successors) to the fullest extent permitted by
the laws of the State of Delaware and its existing certificate of incorporation
and by-laws, and Executive shall be entitled to the protection of any insurance
policies Company may elect to maintain generally for the benefit of officers,
against all costs, charges and expenses whatsoever incurred or sustained by
Executive (or Executive's legal representatives or other successors) in
connection with any action, suit or proceeding to which Executive (or
Executive's legal representatives or other successors) may be made a party by
reason of Executive's being or having been an employee, officer or executive of
Company and its subsidiaries and affiliates including, without limitation, any
joint venture or partnership in which Company or any of its subsidiaries has an
interest.

    15. GOVERNING LAW: This Agreement shall interpreted with, and governed by,
the laws of the State of New York, without regard to conflicts of law doctrines.
Any claim, dispute or disagreement in respect of this Agreement may be brought
only in the courts of the State of New York,





                                       11




<PAGE>




in Nassau County or the federal courts within the State of New York and in
Nassau County, which courts shall have exclusive jurisdiction thereof. Any
process in any action or proceeding commenced in such courts may, among other
methods, be served upon the parties hereto, as applicable, by delivering or
mailing the same, via registered or certified mail, return receipt requested,
addressed to Company or Executive, as applicable, at the addresses set forth or
designated pursuant to Paragraph 10, above. Any such service by delivery or mail
shall be deemed to have the same force and effect as personal service within the
State of New York.

         WHEREFORE, the parties hereto have executed this Agreement as of the
day and year first above written.

ACCLAIM ENTERTAINMENT, INC.



By: /s/ Gregory Fischbach                         /s/ EDMOND P. SANCTIS
   -----------------------------------------     ------------------------------
Its: Co-chairman and Chief Executive Officer








                                       12

<PAGE>



                                   EXHIBIT "A"

                                 PROMISSORY NOTE

$300,000                                                    Glen Cove, New York

         FOR VALUE RECEIVED the undersigned, EDMOND P. SANCTIS ("Sanctis"),
promises to pay ACCLAIM ENTERTAINMENT, INC. ("Acclaim"), or its assignees on the
Due Date (as defined below), the principal amount of Three Hundred Thousand
Dollars ($300,000.00) ("the Sum").

         Sanctis also promises to pay interest on the unpaid principal amount
hereof from the date hereof through maturity (whether by acceleration or
otherwise) at a rate of six percent (6%) per annum. Interest shall be due and
payable on or before December 31st of each year this promissory note remains
outstanding.

         Any interest payments on this promissory note not paid when due,
whether at stated maturity, by notice of prepayment, or acceleration or
otherwise, shall be added to the unpaid principal balance and shall thereafter
bear interest payable upon demand at the highest rate permitted by law.

         Interest on this promissory note shall be computed on the basis of a
360-day year of twelve 30-day months.

         This promissory note is made pursuant to the Employment Agreement dated
as of December 28, 2001 herewith between the parties (the "Employment
Agreement") and the Sum is to used by Sanctis solely in connection with the
purchase of a new principal residence in or around Glen Cove, New York (the
"Residence").

         This promissory note shall be secured by a certain second deed of
trust, issued on a form satisfactory to Acclaim, of which Acclaim shall be the
Beneficiary, for the real property on which the Residence is situated.

         As used herein, the term "Due Date" means the date which is the earlier
of Executive's sale of the Residence or one hundred eighty (180) days after the
termination of the Employment Agreement; provided if the Employment Agreement is
terminated by Acclaim without cause pursuant to Paragraph 8(c) of the Employment
Agreement, then, in such event, this promissory note shall be deemed forgiven by
Acclaim.

         Principal and interest shall be payable in lawful money of the United
States of America to Acclaim at One Acclaim Plaza, Glen Cove, New York 11542,
Attention: Gregory Fischbach or to such other person or at such other place as
Acclaim may from time to time designate in writing.

         This promissory note may be prepaid in full or in part at any time
without penalty.

         With respect to the repayment of this promissory note, but subject to
the notice and cure provisions provided below, the undersigned hereby (1) waives
all rights and benefits conferred by any and all statutes of limitation in any
action on this promissory note to the extent permitted by the laws of the State
of New York; (2) waives presentment, protest, notice of presentment, notice of
dishonor, notice of non-payment and notice of any kind with respect to this
promissory note or the performance of the obligations under this promissory
note; (3) waives the right to require Acclaim or its successors or assigns to
proceed against him, and except as otherwise required by law, waives the right
to require Acclaim or its successors or assigns to proceed against any security
before proceeding against him; and (4) agrees that





                                       13



<PAGE>



no delay or omission on the part of Acclaim in exercising any right or power
under this promissory note shall affect its liability.

         Acclaim and all successors and assigns thereof, with respect to this
promissory note, shall have all of the rights of a holder in due course as
provided in the Uniform Commercial Code and other laws of the State of New York.

         In the event of a default by the undersigned of this promissory note,
the undersigned agrees to indemnify and hold harmless Acclaim, its successors
and assigns, from and against any and all costs and expenses (including
reasonable attorney's fees) incurred in connection with or arising out of the
collection, enforcement, sale, or suit on this promissory note or any part of
it, whether or not suit is filed.

         Time is of the essence of this promissory note.

         No delay or omission by Acclaim in exercising any right hereunder shall
operate as a waiver of such right or any other right of Acclaim. A waiver on one
occasion shall not be construed as a bar or a waiver of any right in the future.
None of the provisions hereof and none of the rights of Acclaim shall be deemed
to have been waived by acceptance of any past due amount or by way other
indulgence granted to the undersigned.

         If, for any reason, performance of any provision of this promissory
note, shall have the effect of requiring the payment of interest at a rate
exceeding the highest rate of interest allowed by law, the rate of interest
chargeable hereunder shall be reduced to the highest lawful rate. If, for any
reason, Acclaim shall receive as interest any amounts which exceed the highest
rate of interest allowed by law, such amounts as would otherwise be excessive
interest shall be immediately and automatically applied to the reduction of the
unpaid balance of the principal amount and not to payment of interest. The
provisions of this paragraph shall control every other provision of this
promissory note.

         This promissory note shall be construed and interpreted in accordance
with, and all disputes hereunder shall be governed by, the laws of the State of
New York.

         The undersigned hereby promises to make all payments in accordance with
the terms hereof.

Dated as of December    ,  2001
                     ---





                                                              EDMOND P. SANCTIS