Document:

exhibit10-1.htm

  

  

  

Exhibit 10.1

 

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into on June 8, 2010 (the “Execution Date”) and is effective as of June 16, 2010 (the “Effective Date”), by and between NovaDel Pharma, Inc. (the “Company”), and Craig Johnson (the “Executive”).  The Company and the Executive are hereinafter collectively referred to as the “Parties,” and individually referred to as a “Party”.

 

Recitals

 

A.           The Company desires to retain the Executive’s experience, skills, abilities, background and knowledge and is willing to engage the Executive as Senior Vice President, Chief Financial Officer and Secretary on the terms and conditions set forth in this Agreement.

 

B.           The Executive desires to be in the employ of the Company as Senior Vice President, Chief Financial Officer and Secretary and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

 

Agreement

 

In consideration of the foregoing Recitals and the mutual promises and covenants herein contained, and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows:

 

	
1.  

	
Employment.

 

1.1 Title.  The Executive shall serve as the Company’s Senior Vice President, Chief Financial Officer and Secretary and shall report solely and directly to the President and Chief Executive Officer.  The Executive shall be appointed by the Board of Directors of the Company and shall serve in such other capacities as the President and Chief Executive Officer may from time to time prescribe.

 

1.2 Duties. The Executive shall perform all services and actions necessary and/or advisable to conduct the business of the Company and which are normally associated with the position(s) the Executive holds in a corporation of the size and nature of the Company.  The Executive shall also perform such duties and assume such responsibilities as the President and Chief Executive Officer may assign from time to time.

 

1.3 Location. The Executive shall perform the services required pursuant to this Agreement by telecommuting from his residence in California and to travel temporarily to any other locations as is necessary to conduct the Company’s scheduled business, including attendance at all Board meetings.

 

  

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2.  

	
Loyal and Conscientious Performance.

 

2.1 Loyalty.  Except as otherwise specifically permitted by the Board or the President and Chief Executive Officer, during the Executive’s employment with the Company, the Executive shall devote the Executive’s full business energies, interest, abilities and productive time to the proper and efficient performance of the Executive’s duties under this Agreement.  The Executive may devote a reasonable amount of time and energies for duties as a member of other board’s of directors, as long as such functions will not in any manner conflict with nor diminish the Executive’s ability to perform the duties set forth in this Agreement and expected to be performed as the Company’s Senior Vice President, Chief Financial Officer and Secretary.  In the event that the Board or the President and Chief Executive Officer at any time identifies one or more activities which they believe are in potential conflict with his duties and responsibilities on behalf of the Company, the Executive shall immediately make orderly arrangements to stop, resign, and/or refrain from such activity(s); however, in no circumstance should such activity extend beyond thirty (30) days from the time that written notice was given to the Executive without the express approval of the Board or the President and Chief Executive Officer.

 

	
3.  

	
Compensation of the Executive.

 

3.1 Base Salary.  During the Term of this Agreement, the Company shall pay the Executive a base salary of One Hundred Fifty Thousand Dollars ($150,000) per year, payable in regular periodic payments in accordance with Company policy.  Such base salary shall be prorated for any partial year of employment on the basis of a 365-day fiscal year.

 

3.2 Annual Incentive Bonus.  In addition to the Executive’s base salary, the Executive will be eligible to participate in an annual performance incentive plan (“APIP”).  The APIP award that the Executive may earn shall consist of a target award equal to thirty percent (30%) of the Executive’s annual base salary, with a maximum equal to [one hundred fifty percent (150%)] of the target award.  The amount of the award will be based upon the Company’s performance achieved during the Company’s fiscal year, as measured against agreed-upon performance measures and targets established by the President and Chief Executive Officer, and approved by the Board; the level of achievement shall be determined by the President and Chief Executive Officer, and approved by the Board, in their sole and absolute discretion.

 

3.3 Changes to Compensation.  The Executive’s compensation shall be reviewed from time to time by the President and Chief Executive Officer, and approved by the Compensation Committee thereof as it deems appropriate and may be increased at any time by the President and Chief Executive Officer, and approved by the Compensation Committee thereof; however, the Executive’s base salary may be reduced and then only prospectively upon mutual written agreement between the Executive and the President and Chief Executive Officer, and approved by the Compensation Committee thereof.

 

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Employment Taxes.  All of the Executive’s compensation (in any form) shall be subject to all required withholding taxes, employment taxes and other deductions required by law.

 

3.4 Benefits.  The Executive shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible to participate in benefits under any benefit plan or arrangement which may be in effect from time to time and made available to the Company’s employees. In addition, the Executive shall be eligible for paid vacation and holidays in accordance with Company policy as in effect from time to time.

 

3.5 Equity Compensation.  The Executive is to be granted, on the Effective date of this agreement, an option to purchase 750,000 shares of common stock of the Company . The exercise price of the grant will be the closing price of the Company’s common stock on June 16, 2010. The grant is to have a 5 year life and vest ratably per month from the grant date to December 31, 2011, and the grant will be subject to the customary and standard terms contained in the Company’s stock plans and form of option agreement. The President and Chief Executive Officer will periodically evaluate the equity position of Executive and determine changes, if any, and to be approved by the Compensation Committee of the Board at its annual meeting addressing executive compensation in general.  The Executive shall be eligible to receive equity grants from time to time, in accordance with existing and any new equity plans that have been put forward and approved by a majority of shareholders.

 

	
4.  

	
Termination.

 

4.1 Termination by the Company.  The Executive’s employment with the Company may be terminated under the following conditions:

 

4.1.1 Termination for Death.  The Executive’s employment with the Company shall terminate effective upon the date of the Executive’s death.

 

4.1.2 Termination for Total Disability.  If, in the judgment of the Board, the Executive fails (with or without reasonable accommodation) to render the services contemplated under this Agreement because of illness or other incapacity for a period of six (6) consecutive months, or for shorter periods aggregating to nine (9) months or more in any consecutive twelve (12) month period, the Board may determine that the Executive is totally disabled and discharge the Executive.  The Board shall base its determination upon medical advice provided by a licensed physician acceptable to the Board.  Based upon such medical advice or opinion, the determination of the Board shall be final and binding and the date of such determination shall be the date of such Total Disability for purposes of this Agreement.

 

4.1.3 Termination For Cause.  The Board may terminate the Executive’s employment under this Agreement “For Cause” at any time after a reasonable and good-faith investigation by the Company.  A notice of termination given pursuant to this Section 4.1.3 shall effect termination on the date upon which the notice is given.  “For Cause” shall mean the occurrence of one or more of the following events:

 

 

  

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(i)           Any act or omission which the Company reasonably deems to constitute gross negligence or misconduct in a material way (whether financial or otherwise), unfavorable to the best interests of the Company in the performance of the Executive's obligations, duties and responsibilities hereunder;

 

(ii)           Executive’s conviction of, or plea of guilty or no contest to, any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof;

 

(iii)           Executive’s commission of (or attempted commission of), or participation in a fraud or act of dishonesty against the Company;

 

(iv)           Executive’s material violation of any statutory duty owed to the Company or material violation of any policy or rule of the Company, including, (a) the determination by the Company after a reasonable and good-faith investigation by the Company following a written allegation by another employee of the Company, that the Executive engaged in some form of harassment prohibited by law (including, without limitation, age, sex or race discrimination), or (b) any misappropriation or embezzlement of the property of the Company or its affiliates (whether or not a misdemeanor or felony);

 

(v)            Executive’s material violation of any federal or state statutory requirements, including but not limited to disclosures and filings for the Securities and Exchange Commission (SEC), Sarbanes-Oxley Act, and similar or successor regulatory requirements.

 

(vi)           Executive’s unauthorized use or disclosure of the Company’s confidential information or trade secrets, or any other violation of Section 5 of this Agreement;

 

(vii)           Executive’s gross misconduct; or conduct that constitutes willful failure, disregard or refusal, or habitual neglect, of duties that is not cured within thirty (30) days following receipt by the Executive of written notification by the Board or a committee designated by the Board of such conduct.

 

The determination that a termination is For Cause shall be made by the Board in good faith.  Any determination that the Executive’s employment was terminated by reason of dismissal without Cause for the purposes of this Agreement shall have no effect upon any determination of the rights or obligations of the Company or the Executive for any other purpose.

 

4.1.4 Termination by the Company for Any Reason Other Than For Cause.  The Executive’s employment by the Company shall be “at will.”  The Board may terminate the Executive’s employment under this Agreement at any time, for any or no reason and with or without cause or advance notice.  This is the full and complete agreement between the

 

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Executive and the Company on this term.  Although the Executive’s duties, title, compensation and benefits may change, the “at will” nature of the Executive’s employment relationship with the Company may only be modified in an express written agreement signed by the Executive and the Board.

 

4.2 Termination by Mutual Agreement of the Parties.  The Executive’s employment pursuant to this Agreement may be terminated at any time upon the mutual written agreement of the Parties.

 

4.3 Termination by the Executive.  The Executive’s employment by the Company shall be “at will.”  The Executive shall have the right to resign or terminate his employment at any time, with or without cause, notice or Good Reason; however, the Executive is obligated to provide the Company at least ninety (90) days of notice in writing.  The President and Chief Executive Office, subject to approval by the Board, at its sole discretion, may terminate the Executive at any time prior to the identified date of termination, and compensate the Executive for any portion of the remaining ninety (90) days.

 

4.4 Termination by the Company in the Event of Bankruptcy.  In the event of the Company's bankruptcy, including filing for protection under federal bankruptcy regulations, the Company may terminate this Agreement at any time upon 30 days' written notice to the Executive, or immediately following a ruling to that effect by the bankruptcy court.  The Executive will continue to perform his duties and may be paid his regular base salary up to the date of termination but shall not be eligible to receive severance or other payments, other than those contractually required, such as earned base salary and earned but unused and unpaid vacation.  The Company, nor its shareholders, shall be liable for any compensation or severance subsequent to the date of termination.

 

4.5 Compensation upon Termination.

 

4.5.1 Termination by the Company.  The Executive’s employment with the Company may be terminated for the reasons indicated in Section 4.1.  For the purposes of clarity, the payments to which the Executive would be entitled to receive at termination are summarized in Exhibit C to this Agreement.

 

4.5.2 Termination for Death or Total Disability.  .Upon the Executive’s termination due to Death or Total Disability, the Executive’s base salary shall be paid up to the date of termination.  Any payments that the Executive would be entitled to receive under the APIP would be paid on a prorated basis up until the date of termination; such payment will be made to the Executive or his estate (in the event of his death) at the conclusion of the Plan Year for which payments have been earned, and the award shall be prorated for the performance period up until the date of termination; the calculation and timing of such APIP payment shall be consistent with the process for other APIP participants.  Any previously awarded and unvested equity grants shall immediately vest upon the date of termination, and the Executive (or his estate in the event of his death), shall have twelve (12) months following the date of termination in which to exercise any unexercised stock options, so long as the period in

 

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which to exercise the options is not in conflict with the normal expiration dates of such options, in which case the period in which to exercise the options will expire on that date.  In addition, the Executive and his covered beneficiaries as of the date of termination shall continue to be covered by the Company’s health benefits for twelve (12) months following the date of termination.  If the Company is unable to provide such coverage based on restrictions in its health insurance policy, the Company shall pay the COBRA premiums for the period of severance for a period not to exceed twelve (12) months.  The Executive shall also be entitled to receive any accrued and unused vacation benefits earned through the date of termination at the Executive’s base salary rate in effect at the time of termination.  All payments shall be made less standard deductions and withholdings.

 

4.5.3 Termination For Cause.  Not withstanding any conflicting federal, California or New Jersey labor laws to the contrary, upon termination For Cause, the Executive shall be paid his prorated base salary up to the date of termination.  The Executive shall not be entitled to receive any APIP payments, even if the performance measures were met and he would otherwise have been entitled to such award.  The Executive will be required to forfeit all unvested and vested but unexercised options as of the date of termination, and his right to exercise any unexercised options shall cease as of the date of termination.  All benefits that the Executive had participated in would terminate as of the date of termination.  The Executive shall be entitled to receive any accrued and unused vacation benefits earned through the date of termination at his base salary rate in effect at the time of termination.  All payments shall be made less standard deductions and withholdings. 

 

4.5.4 Termination by the Company for Any Reason Other Than For Cause.  In the event the Executive is terminated by the Company for any reason other than For Cause, the Executive shall be paid six (6) months base salary at the time of the date of termination.  The Executive shall be entitled to receive any APIP payments to which he would have been entitled if the performance measures were met; however, such payment will not be made until the end of the full performance period, and the award shall be prorated for the performance period up until the date of termination.  In addition, the Executive and his covered beneficiaries as of the date of termination shall continue to be covered by the Company’s health benefits for twelve (12) months following the date of termination.  If the Company is unable to provide such coverage based on restrictions inherent in its health insurance policy, the Company shall pay the COBRA premiums for the period of severance for a period not to exceed twelve (12) months.  The Executive shall also be entitled to receive any accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination.  All payments shall be made less standard deductions and withholdings.

 

4.5.5 Termination by Mutual Agreement of the Parties.  Upon termination by Mutual Agreement, the same compensation shall be paid as in 4.5.2.

 

4.5.6 Termination by the Executive.  In the event that the termination of employment is voluntary by the Executive, the base salary shall be paid though the date of termination and any unpaid APIP payments will be forfeited upon the date of termination.  The Executive shall be required to forfeit all unvested and vested but unexercised options as of the

 

 

  

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date of termination.  The Executive will no longer be eligible to participate in Company-sponsored benefits, other than his ability to apply for and participate in health benefits provided through COBRA.  The Executive shall also be entitled to receive any accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination.  All payments shall be made less standard deductions and withholdings. 

 

4.5.7 Termination by the Executive for Change in Control.  Upon termination due to a Change in Control, the same compensation shall be paid as in 4.5.2.

 

“Change in Control” shall mean a transaction (excluding in each case transactions in which securities are purchased from the Company for the principal purpose of raising capital for the Company) in which one of the following occurs:

 

(i) any person or related group of persons (other than the Parent or an affiliate of the Parent) directly acquires beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities;

 

(ii) the composition of the Board changes over a period of twenty-four (24) consecutive months or less in a way that results in a majority of the Board (rounded up to the next whole number) ceasing, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (A) have been Board members continuously since the beginning of the period or (B) have been elected or nominated for election as Board members during the period by at least two-thirds of the Board members described in clause (A) who were still in office at the time the election or nomination was approved by the Board;

 

(iii) (a) a merger or consolidation occurs in which the Parent is not the surviving entity, or (b) any reverse merger occurs in which the Parent is the surviving entity, or (c) any merger involving a subsidiary of the Parent occurs in which the Parent is a surviving entity, but in each case in which holders of the Parent’s outstanding voting securities immediately prior to such transaction, as such, do not hold, immediately following such transaction, securities possessing fifty percent (50%) or more of the total combined voting power of the surviving entity’s outstanding securities (in the case of clause (a)) or the Parent’s outstanding voting securities (in the case of clauses (b) and (c)); or

 

(iv) all or substantially all of the Parent’s assets are sold of transferred other than in connection with an internal reorganization of the Parent or the Parent’s complete liquidation (other than a liquidation of the Parent into a wholly-owned subsidiary).

 

4.5.8 Release.  Notwithstanding the foregoing, the Executive shall not receive any of the severance payments or benefits set forth under Section 4.5.7, except as required by law, unless within the time period set forth therein, but in no event later than (i) if a Change in Control shall have occurred prior to such Covered Termination, twenty-five (25) days following termination of employment, or (ii) if a Change in Control shall not have occurred prior

 

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to such Covered Termination, the later of (a) twenty-five (25) days following termination of employment or (b) twenty-five (25) days following the effective date of such Change in Control, the Executive furnishes  the Company with a waiver and release of claims in a form acceptable to the Parties and substantially as attached hereto as Exhibit A, including such changes as may be made by the Company as necessary to comply with applicable laws (the "Release"), and permits such release to become effectivew in accordance with its terms. If the Executive has breached any provision of this Agreement or the Release, the Company shall be excused from the obligation to provide any severance payment under Section 4.5.7; provided, however, that the Company shall not be entitled to recovery of any severance payment already provided to the Executive under Section 4.5.7.

 

4.5.9 No Mitigation.   Amounts payable to the Executive under Section 4.5.7 shall not be reduced by any amount of the Executive's earnings from other employment during the Compensation Severance Period, if applicable, and, during the Compensation Severance Period, the Executive shall not have an affirmative duty to seek other employment or otherwise mitigate the amount of any payment contemplated by this Agreement.

 

4.6 Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

 

4.6.1 Covered Termination.  “Covered Termination” means the Executive’s employment is terminated by the Company without Cause, or the Executive resigns for Good Reason within the period commencing three (3) months before and ending twelve (12) months following a Change in Control (as defined above).

 

4.6.2 “Payment Commencement Date” means:

 

(i)           with respect to a Covered Termination resulting from the Executive resigning for Good Reason within twelve (12) months following a Change in Control, (a) if such Covered Termination occurs prior to the effective date of the applicable Change in Control, the later of (1) the effective date of such Change in Control or (2) the effective date of the Release required by Section 4.5.8 or (b) if such Covered Termination occurs on or after the effective date of the applicable Change in Control, the later of (1) the date of such Covered Termination or (2) the effective date of the Release required by Section 4.5.8.

 

(ii)           with respect to a Covered Termination resulting from the Company terminating Executive without Cause, the later of (1) the date of such Covered Termination or (2) the effective date of the Release required by Section 4.5.8.

 

4.7 Parachute Payments.  Anything in this Agreement to the contrary notwithstanding, if any payment or benefit the Executive would receive from the Company pursuant to this Agreement or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced

 

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Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion of the Payment, up to and including the total Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order:  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Executive’s stock awards.

 

The Company shall appoint a nationally recognized independent accounting firm to make the determinations required hereunder, which accounting firm shall not then be serving as accountant or auditor for the individual, entity or group that effected the Change in Control.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.

 

The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Executive within fifteen (15) calendar days after the date on which the Executive’s right to a Payment is triggered (if requested at that time by the Company or the Executive) or such other time as requested by the Company or the Executive.  If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to such Payment.  The Company shall be entitled to rely upon the accounting firm’s determinations, which shall be final and binding on all persons.

 

4.8 Exclusive Remedy. In the event Executive executes the Release, the rights, remedies and payments set forth in this Section 4 shall be the exclusive rights, remedies and payments available to the Executive upon termination of this Agreement and the Executive’s employment hereunder.  Such rights remedies and payments shall supersede and replace any and all rights and remedies under state or federal law.  To the extent permitted by applicable laws, the Company may deduct any amounts the Executive owes the Company at the time of the Executive’s termination of employment from any severance payments.

 

4.9 Application of Section 409A.  Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement (the “Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Executive’s termination of employment unless and until Executive has also

 

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incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”).

 

It is intended that each installment of the Severance Benefits payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits, or a portion thereof, constitute “deferred compensation” under Section 409A and Executive is, on the termination of Executive’s service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, to the extent necessary to avoid the imposition of any additional tax or income recognition under Section 409A prior to actual payment to the Executive, the timing of the Severance Benefit payments that constitute “deferred compensation” under Section 409A shall be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s Separation From Service or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”).  On the Specified Employee Initial Payment Date, the Company (or the successor entity thereto, as applicable) shall (A) pay to Executive a lump sum amount equal to the sum of the Severance Benefit payments that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Severance Benefits in accordance with the applicable payment schedules set forth in this Agreement.

 

Except to the extent that payments are delayed until the Specified Employee Initial Payment Date pursuant to the preceding paragraph, on the first regular payroll pay day following the Payment Commencement Date, the Company will pay Executive the Severance Benefits Executive would otherwise have received under the Agreement on or prior to such date but for the delay in payment related to the effectiveness of the Release or the occurrence of the Change of Control, as applicable, with the balance of the Severance Benefits being paid as originally scheduled.  All amounts payable under the Agreement will be subject to standard payroll taxes and deductions.

 

It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the Severance Benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.  The Company and the Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to the Executive (provided that no such amendment shall materially reduce the benefits provided hereunder).

 

 

  

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4.10 Survival of Certain Sections. Sections 3.4, 4.5 through 4.9 and 5 through 16 of this Agreement shall survive the termination of this Agreement.

 

	
5.  

	
Confidential And Proprietary Information; 

 

5.1 Proprietary Information and Inventions Agreement.  As a condition of employment, the Executive agrees to execute and abide by the Proprietary Information and Inventions Agreement attached hereto as Exhibit B.  As noted in the Proprietary Information and Inventions Agreement, the Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after Employee’s employment with the Company, except with the prior written consent of the Company or as may be required by law or the legal process.

 

5.2 Non-Solicitation.  During the Executive’s employment with the Company and for two (2) years after termination, the Executive agrees that he shall not, either directly or through others, solicit or attempt to solicit any employee, consultant or independent contractor of the Company or its subsidiaries to terminate his or her relationship with the Company (or the applicable subsidiary) in order to become an employee, consultant or independent contractor to or for any other person or business entity. The Executive shall refrain either directly or indirectly from approaching or attempting to solicit any business of the Company.

 

5.3 Non-Competition.  The Executive understands and recognizes that his services to the Company are special and unique and that in the course of performing such services the Executive will have access to and knowledge of Confidential and Proprietary Information (as defined in Exhibit B) and the Executive agrees that, during the Term and for a period of two (2) years thereafter, he shall not in any manner, directly or indirectly, on behalf of himself or any person, firm, partnership, joint venture, corporation or other business entity (“Person”), enter into or engage in any business which is engaged in any business competitive with the business of the Company, either as an individual for his own account, or as a partner, joint venturer, owner, executive, employee, independent contractor, principal, agent, consultant, salesperson, officer, director or shareholder of a Person in a business competitive with the Company within the geographic area of the Company’s business, which is deemed by the parties hereto to be worldwide. The Executive acknowledges that, due to the unique nature of the Company’s business, the loss of any of its clients or business flow or the improper use of its Confidential and Proprietary Information could create significant instability and cause substantial damage to the Company and its affiliates and therefore the Company has a strong legitimate business interest in protecting the continuity of its business interests and the restriction herein agreed to by the Executive narrowly and fairly serves such an important and critical business interest of the Company. For purposes of this Agreement, the Company shall be deemed to be actively engaged on the date hereof in the development of novel application drug delivery systems for presently marketed prescription and over-the-counter drugs and providing consulting services in connection therewith, and in the future in any other business in which it actually devotes substantive resources to study, develop or pursue. Notwithstanding the foregoing, nothing contained in this Section 5.3 shall be deemed to prohibit the Executive from (i) acquiring

 

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or holding, solely for investment, publicly traded securities of any corporation, some or all of the activities of which are competitive with the business of the Company so long as such securities do not, in the aggregate, constitute more than 4.9% of any class or series of outstanding securities of such corporation.

 

	
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Assignment and Binding Effect.

 

This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s heirs, executors, personal representatives, assigns, administrators and legal representatives.  Because of the unique and personal nature of the Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by the Executive.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.

 

	
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Choice of Law.

 

This Agreement shall be construed and interpreted in accordance with the internal laws of the state of New Jersey (without giving effect to principles of conflicts of law).

 

	
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Integration.

 

Except as may otherwise be provided herein, this Agreement, including Exhibit A and Exhibit B, contains the complete, final and exclusive agreement of the Parties relating to the terms and conditions of the Executive’s employment and the termination of Executive’s employment, and supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Parties, including but not limited to the Prior Agreement. To the extent this Agreement conflicts with the Proprietary Information and Inventions Agreement attached as Exhibit B, the Proprietary Information and Inventions Agreement controls.

 

	
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Amendment.

 

This Agreement cannot be amended or modified except by a written agreement signed by the Executive and the President and Chief Executive Officer and approved by the Board.

 

	
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Waiver.

 

No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived, except with the written consent of the Party against whom the waiver is claimed, and any waiver or any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach.

 

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Severability.

 

The finding by a court of competent jurisdiction or other authorized body of the unenforceability, invalidity or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable, invalid or illegal.  The invalid or unenforceable term or provision shall be modified or replaced with a valid and enforceable term or provision which most accurately represents the Parties’ intention with respect to the invalid or unenforceable term or provision.

 

	
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Interpretation; Construction.

 

The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement.  The Executive has been encouraged to consult with, and has consulted with, Executive’s own independent counsel and tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

	
13.  

	
Representations and Warranties.

 

The Executive represents and warrants that the Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that the Executive’s execution and performance of this Agreement shall not violate or breach any other agreements between the Executive and any other person or entity.

 

	
14.  

	
Counterparts.

 

This Agreement may be executed in two counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument.

 

	
15.  

	
Arbitration.

 

To ensure the rapid and economical resolution of disputes that may arise in connection with the Executive’s employment with the Company, the Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to Executive’s employment, or the termination of that employment, will be resolved, to the fullest extent permitted by law, by final binding arbitration. Both the Executive and the Company shall be entitled to all rights and remedies that either the Executive or the Company would be entitled to pursue in a court of law. The Company shall pay all administrative fees associated with the arbitration and the fees of the arbitrator.  Nothing in this Agreement is intended to prevent either the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Notwithstanding the foregoing, the Executive and the Company each have the right to resolve

 

.

 

  

13.

  

 

 

 any and all issues or disputes involving confidential information, proprietary information, trade secrets or related information or intellectual property rights by court action instead of arbitration.

 

	
16.  

	
Trade Secrets Of Others.

 

It is the understanding of both the Company and the Executive that the Executive shall not divulge to the Company and/or its subsidiaries any confidential information or trade secrets belonging to others, including the Executive’s former employers, nor shall the Company and/or its subsidiaries seek to elicit from the Executive any such information.  Consistent with the foregoing, the Executive shall not provide to the Company and/or its subsidiaries, and the Company and/or its subsidiaries shall not request, any documents or copies of documents containing such information.

 

 

.

 

  

14.

  

 

In Witness Whereof, the Parties have executed this Agreement as of the date first shown above.

 

	
NovaDel Pharma Inc.

	
/s/ Steven B. Ratoff

	
STEVEN B. RATOFF

	
PRESIDENT AND CHIEF EXECUTIVE OFFICER

	  
	
EXECUTIVE

	
/s/ Craig Johnson

	
CRAIG JOHNSON

	
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY

 

 

.

 

  

15.

  

 

 

EXHIBIT A

 

RELEASE AND WAIVER OF CLAIMS

 

In consideration of the payments and other benefits set forth in Section 4.5 of the  Employment Agreement dated June 8, 2010 (the “Employment Agreement”), to which this form is attached, I, Craig Johnson, hereby furnish Novadel Pharma, Inc. (the “Company”), with the following release and waiver (“Release and Waiver”):

 

In exchange for the consideration provided to me by the Employment Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release and Waiver.  This general release includes, but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all claims related to my compensation or benefits from the Company, including, but not limited to, salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company, except to the extent that such claims cannot be released pursuant to the New Jersey Labor Code; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including, but not limited to, claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including, but not limited to, claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 and the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”).

 

I acknowledge that, among other rights, I am waiving and releasing any rights I may have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for this Release and Waiver is in addition to anything of value to which I was already entitled as an executive of the Company.  I further acknowledge that I have been advised, as required by the Older Workers Benefit Protection Act, that:  (a) the release and waiver granted herein does not relate to claims under the ADEA which may arise after this Release and Waiver is executed; (b) I should consult with an attorney prior to executing this Release and Waiver; (c) I have twenty-one (21) days in which to consider this Release and Waiver (although I may choose voluntarily to execute this Release and Waiver earlier); (d) I have seven (7) days following the execution of this Release and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waiver shall not be effective until the eighth day after I execute this Release and Waiver and the revocation period has expired unexercised (the “Effective Date”).

 

 

  

  

  

 

I acknowledge and agree to my continuing obligations under my Proprietary Information and Inventions Agreement, a copy of which is attached to the Employment Agreement.  I understand and agree that my right to the severance pay I am receiving in exchange for my agreement to the terms of this Release and Waiver is contingent upon my continued compliance with my Proprietary Information and Inventions Agreement.

 

I represent that I have not filed any claims against the Company, and agree that, except as such waiver may be prohibited by statute, I will not file any claim against the Company or seek any compensation for any claim other than the payments and benefits referenced herein.  I agree to indemnify and hold the Company harmless from and against any and all loss, cost, and expense, including, but not limited to court costs and attorney’s fees, arising from or in connection with any action which may be commenced, prosecuted, or threatened by me or for my benefit, upon my initiative, or with my aid or approval, contrary to the provisions of this Release and Waiver.

 

This Release and Waiver, including any referenced documents, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated herein.  This Release and Waiver may only be modified by a writing signed by both me and a member of the Board of Directors of the Company.

 

                                                             

	 	 	 
	 	 	 	 
	
Date:  

	
By: 

	 	 
	 	 	Craig Johnson	 
	 	 	 	 
	 	 	 	 

 

 

  

  2.

  

EXHIBIT B

 

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

  

  

  

 

EXHIBIT C

 

The following table provides a summary of the applicable severance and payments that would be provided to the Executive and/or his estate under different termination scenarios:

 

	
Reason For Termination

	
Base Salary

	
APIP

	
Equity Plans

	
Healthcare Benefits/Vacation

	
Death

	
Date of Termination

	
Date of Termination

	
Immediate vesting & 12 months to exercise

	
Continue up to 12 months or COBRA; accrued and unused vacation days through date of termination are paid.

	
Total Disability

	
Date of Termination

	
Date of Termination

	
Immediate vesting & 12 months to exercise

	
Continue up to 12 months or COBRA; accrued and unused vacation days through date of termination are paid.

	
For Cause

	
Date of Termination

	
None

	
Forfeit all unvested and vested unexercised

	
Date of termination or COBRA; accrued and unused vacation days through date of termination are paid.

	
Without Cause

	
6 months

	
Date of Termination

	
If Salary received, then forfeit all unvested and vested unexercised

	
Continue up to 12 months or COBRA; accrued and unused vacation days through date of termination are paid.

	
Mutual

Agreement

	
Date of Termination

	
Date of Termination

	
Immediate vesting & 12 months to exercise

	
Continue up to 12 months or COBRA; accrued and unused vacation days through date of termination are paid.

	
Voluntary by Executive

	
Date of Termination

	
Forfeit Any Unpaid

	
Forfeit all unvested and vested unexercised

	
Date of termination or COBRA; accrued and unused vacation days through date of termination are paid.

	
Change in Control

	
Date of Termination

	
Date of Termination

	
Immediate vesting & 12 months to exercise

	
Continue up to 12 months or COBRA; accrued and unused vacation days through date of termination are paid.QuickLinks
 -- Click here to rapidly navigate through this document
 

 
 

  Exhibit 10.2    
    

 
    EMPLOYMENT AGREEMENT    
    

AGREEMENT entered into on June 4, 2010 between Take-Two Interactive Software, Inc., a Delaware corporation (the "Employer"
or the "Company"), and Seth Krauss (the "Employee"). 

W
I T N E S S E T H : 

WHEREAS,
the Employer and the Employee entered into an Employment Agreement dated February 28, 2007 (the "Initial Agreement") and an amendment to the Initial Agreement dated March 25,
2008 (the "Amendment"); and 

WHEREAS,
the Employer and the Employee desire to further revise, restate, replace and supersede the Initial Agreement and the Amendment in accordance with the terms and conditions hereinafter set
forth; 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and intending to be legally bound hereby, the Employer and the Employee agree as follows: 

1.    Term.    The Employer hereby agrees to employ the Employee, and the Employee hereby agrees to
serve the Employer for a period commencing on June 4, 2010 (the "Effective Date") and continuing until June 30, 2013 (such period being herein referred to as the "Initial Term"). After
the Initial Term, this Agreement shall be renewable automatically for successive one-year periods (each such period being referred to as a "Renewal Term" and together with the Initial Term
referred to as the "Term"), unless, at least ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, either the Employee or the Employer gives written notice that
employment will not be renewed (as the case may be, a "Notice of Non-Renewal"). 

2.    Employee Duties.    

(a)   During
the Term, the Employee shall serve as Executive Vice President and General Counsel and have the duties and responsibilities customarily associated with such position in a
company the size and nature of the Company and as periodically assigned to the Employee. Employee shall report directly to the Chief Executive Officer of Employer and the Board of Directors of the
Employer (the "Board"). 

(b)   The
Employee shall devote substantially all of his business time, attention, knowledge and skills faithfully, diligently and to the best of his ability, in furtherance of the business
and activities of the Company. The principal place of performance by the Employee of his duties hereunder shall be the Company's principal executive offices in New York, although the Employee may be
required to travel outside of the area where the Company's principal executive offices are located in connection with the business of the Company. 

3.    Compensation.    

(a)   During
the Term, the Employer shall pay the Employee a salary (the "Salary") at a rate of $525,000 per annum. The Salary shall be payable in equal installments
semi-monthly in accordance with the Company's normal payroll practices and procedures in effect from time to time for the payment of salaries to executive officers. For so long as the Term
is in effect, such Salary shall be subject to annual review by the Compensation Committee of the Board in consultation with the Chief Executive Officer of the Company. 

(b)   The
Employee shall be eligible to receive an annual bonus ("Bonus") with respect to each fiscal year of the Company ("Fiscal Year") during the Term based upon reasonable and
appropriate quantitative and qualitative performance targets as determinate by the Compensation 

1

 

Committee
of the Board in consultation with the Chief Executive Officer of the Company, with a target range of 18.5% to 100% of Salary and a mid-point target payment of 75% of Salary. 

(c)   The
Bonus, if earned, for any Fiscal Year during the Term shall be paid within 90 days following the end of such Fiscal Year; provided that the Employee is employed by the
Company on such date (subject to the provisions of Section 6(c) hereof). 

(d)   The
Employee shall receive a one-time grant of shares of the Company's restricted common stock having a value equal to $750,000 (such number of shares to be calculated as
of the Grant Date (as defined below) in accordance with the Company's equity granting practices (the "Sign-on Grant"). The Sign-on Grant will be subject to the terms and
conditions of the Take-Two's Incentive Stock Plan ("Stock Plan") and the applicable grant letter. The Sign-on Grant shall be made on the fifth trading day following the filing
by the Company of its quarterly report on form 10-Q for the quarter ended April 30, 2010 (the "Grant Date"). The Sign-on Grant will vest solely on a
time-based schedule, with one-third of those shares vesting on each of the first, second, and third anniversaries of the Grant Date. Additionally, the Employee shall be
eligible to participate in the Company's annual Long Term Incentive Compensation Program at a level commensurate with the Company's other senior executives. 

(e)   Notwithstanding
anything in this Agreement to the contrary, in the event that any severance payment to the Employee would be subject to the excise tax imposed by Section 4999
of the United States Internal Revenue Code (the "Excise Tax"), then the amounts of the severance payments payable (each a "Payment") shall be
automatically reduced to an amount one dollar less than an amount that would subject the Employee to the Excise Tax; provided, however, that the foregoing reduction shall be made only if and to the
extent that such reduction would result in an increase in the aggregate Payment to be provided, determined on a net after-tax basis (taking into account the Excise Tax imposed, any tax
imposed by any comparable provision of state law, and any applicable federal, state and local income taxes). 

(f)    In
addition to the foregoing, the Employee shall be entitled to such other cash bonuses and such other compensation in the form of stock, stock options or other property or rights as
may from time to time be awarded to him by the Compensation Committee of the Board during or in respect of his employment hereunder. 

4.    Benefits.    

(a)   During
the Term, the Employee shall have the right to receive or participate in all benefits and plans which the Company may from time to time institute during such period for its
executive officers and for its employees in general and for which the Employee is eligible (including the Company's MERP Plan). Nothing paid to the Employee under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in lieu of the salary or any other obligation payable to the Employee pursuant to this Agreement. 

(b)   During
the Term, the Employee shall accrue paid time off ("PTO") days on an annual basis in accordance with the Employer's policy for other senior executives. Currently, the Employee
is eligible for twenty-five PTO days per calendar year. PTO days may be taken in the Employee's discretion with, when possible, the prior approval of the Company, and at such times as are
not inconsistent with the reasonable business needs of the Company. 

5.    Travel Expenses.    All travel and other expenses incident to the rendering of services
reasonably incurred on behalf of the Employer by the Employee during the Term shall be paid by the Employer in a manner consistent with the Employer's Travel and Entertainment Policy. If any such
expenses are paid in the first instance by the Employee, the Employer shall reimburse him therefor on presentation of appropriate receipts for any such expenses. All travel and lodging arrangements
shall be made in accordance with the Employer's regular policies. 

2

 

6.    Termination.    Notwithstanding the provisions of Section 1 hereof, the Employee's
employment with the Employer may be earlier terminated as follows: 

(a)   By
action taken by the Board, the Employee may be discharged for Cause (as hereinafter defined), effective as of such time as the Board shall determine. Upon discharge of the Employee
pursuant to this Section 6(a), the Employer shall have no further obligation or duties hereunder to the Employee, except for payment of Salary through the effective date of termination and as
provided in Section 8(g), and the Employee shall have no further obligations or duties hereunder to the Employer, except as provided in Section 7. 

(b)   In
the event of (i) the death of the Employee or (ii) by action of the Board and the inability of the Employee, by reason of physical or mental disability, to continue
substantially to perform his duties hereunder for a period of 180 consecutive days, during which 180-day period Salary and
any other benefits hereunder shall not be suspended or diminished. Upon any termination of the Employee's employment under this Section 6(b), the Company shall pay to the Employee a
pro-rata portion of the Employee's mid-point target Bonus for the fiscal year in which such termination occurs based on the number of days worked by the Employee in the
Company's fiscal year in which his employment was so terminated, and all outstanding options to purchase common stock and any shares of stock granted to the Employee by the Company but not yet vested
shall immediately vest, and the Company shall have no further obligations or duties hereunder to the Employee, except as provided in Section 8(g) of this Agreement. 

(c)   In
the event that the Employee's employment with the Employer is terminated by action taken by the Company without Cause (other than in accordance with Section 6(b) above) or
by a Notice of Non-Renewal from the Company, then the Employer shall have no further obligation or duties hereunder to the Employee, except for payment of the amounts described in this
Section 6(c) and as provided in Section 8(g), and Employee shall have no further obligations or duties hereunder to the Employer, except as provided in Section 7. In the event of
such termination, the Employee shall be entitled to a lump sum payment within 30 days following such termination equal to the sum of: (i) an amount equal to
one-and-one-half times the Employee's annual Salary at the rate then in effect; (ii) an amount equal to one-and-one-half
times the Employee's mid-point target bonus as set out above in Section 3(b); (iii) an amount equal to the "Accrued Bonus" (as hereinafter defined); plus (iv) all
unpaid bonuses with respect to the last full fiscal year of the Employee's employment with the Company, if any, that would have been paid but for such termination without Cause. Additionally, for a
period of eighteen (18) months from the date of termination, subject to Employee's timely election of continuation coverage under the Consolidated Budget Omnibus Reconciliation Act of 1985, as
amended ("COBRA"), the Employer will pay Employee's COBRA medical insurance premium, provided that Employee is eligible and remains eligible for COBRA coverage and provided further that if Employee
obtains other employment that offers substantially similar or improved group health benefits, for which the Employee is eligible, the Employer's obligation under this sentence shall immediately cease.
In the event of such termination without Cause or upon expiration of the Term as a result of the delivery by the Company to the Employee of a Notice of Non-Renewal, all outstanding options
and shares of restricted stock granted to the Employee which have not vested as of the date of such termination shall immediately vest and, as applicable, become immediately exercisable. For purposes
of this Section 6(c), the "Accrued Bonus" shall be an amount equal to (x) if such termination occurs on or prior to the last day of the second fiscal quarter of a Fiscal Year, a
pro-rata portion of the Employee's mid-point target bonus as set out above in Section 3(b) for the Fiscal Year in which termination occurs based upon the number of days
worked by the Employee during such Fiscal Year or (y) if such termination occurs on or after the first day of the third fiscal quarter of a Fiscal Year, 100% of the Employee's
mid-point target bonus for such Fiscal Year as set out above in Section 3(b). 

3

 

(d)   For
purposes of this Agreement, the Employee shall be deemed to have been terminated by the Company without Cause if (i) the Company terminates his employment for any reason
other than in
accordance with Sections 6(a) or 6(b) above or (ii) the Employee resigns after the occurrence of any of the following events without the Employee's consent: (A) a material breach
of this Agreement by the Company; (B) a material diminution in the Employee's title, status, position or responsibilities; (C) a failure by the Company to timely pay any compensation due
to the Employee hereunder; (D) a material reduction by the Company in the Salary or any reduction in the target percentage of Salary payable as a Bonus as set forth in Section 3(b)
hereof; (E) the assignment to the Employee of duties which are materially inconsistent with the duties set forth in Section 2 hereof; (F) any relocation of Employee's principal
place of employment beyond 10 miles from its then current location; (G) the failure of any successor to the Company to assume the obligations of the Company under this Agreement either in
writing or by operation of law; provided, however, that, any such resignation by the Employee will not
be deemed to have been a termination by the Employer without Cause unless within ninety (90) days of any such event having occurred, the Employee shall have provided the Company with written
notice that such event has occurred, afforded the Company thirty (30) days to cure same, and the Company has failed to cure such event within such thirty (30) day period. For the
avoidance of doubt, a diminution of the Employee's duties shall be deemed to have occurred, without limitation, if a transaction results in a change in the nature or scope of the Company's business or
status that causes a diminution of duties. 

(e)   For
purposes of this Agreement, the Company shall have "Cause" to terminate the Employee's employment under this Agreement upon (i) the continued failure by the Employee to
substantially perform his duties under this Agreement after receipt of notice from the Company requesting such performance, (ii) the criminal conviction of Employee by plea or after trial of
having engaged in criminal misconduct (including embezzlement and fraud) which is demonstrably injurious to the Company, monetarily or otherwise, (iii) the conviction of the Employee of a
felony; (iv) gross negligence on the part of the Employee which significantly affects the Company; or (v) a material failure of the Employee to adhere to the Company's material written
policies or to cooperate in any investigation or inquiry involving the Company. The Company shall give written notice to the Employee of any proposed termination for Cause, which notice shall specify
the grounds for the proposed termination, and the Employee shall be given thirty (30) days to cure if the grounds arise under clauses (i) or (v) above (in the event employee cures
the event giving rise to Cause set forth in such written notice within said 30 day period, Cause for termination shall not exist). 

(f)    Notwithstanding
anything herein to the contrary, upon any termination of the Employee's employment, the Employee shall receive from the Company: (i) any earned but unpaid
Salary through the date of termination, paid in accordance with Section 3(a) of this Agreement; (ii) reimbursement for any unreimbursed expenses properly incurred through the date of
termination under, and paid in accordance with, Section 5 of this Agreement and applicable policies of the Company; (iii) payment for any accrued but unused PTO in accordance with the
Company's PTO policy; and (iv) such vested accrued benefits, and other payments, if any, as to which the Employee may be entitled under, and in accordance with the terms and conditions of, the
employee benefit arrangements, plans and programs of the Company as of the date of termination ("Accrued Amounts"). 

(g)   The
Employee may terminate his employment with the Company at any time, for no reason. Upon such termination of employment under this Section 6(g), the Company shall have no
further obligations or duties to the Employee hereunder, except for providing the Employee with the Accrued Amounts, and the Employee shall have no further obligations or duties to the Company, except
as provided in Section 7. 

4

 

7.    Confidentiality; Noncompetition.    

(a)   The
Employer and the Employee acknowledge that the services to be performed by the Employee under this Agreement are unique and extraordinary and, as a result of such employment, the
Employee will be in possession of confidential information relating to the business practices of the Company. The term "confidential information" shall mean any and all information (oral and written)
relating to the Company or any of its affiliates, or any of their respective activities which the Employee came into possession of in the course of his employment with the Company, other than such
information which can be shown by the Employee to be in the public domain (such information not being deemed to be in the public domain merely because it is embraced by more general information which
is in the public domain) other than as the result of breach of the provisions of this Section 7(a), including, but not limited to, information relating to: trade secrets, personnel lists,
compensation of employees, financial information, research projects, services used, pricing, customers, customer lists and prospects, product sourcing, marketing and selling and servicing.
Notwithstanding the foregoing "confidential information" shall not include information relating to the general methodology and mechanics employed by Employee in the performance of his duties with the
Company or that Employee can demonstrate was known to him prior to his employment with the Company. The Employee agrees that he will not, during or after his termination or expiration of employment
hereunder, directly or indirectly, use, communicate, disclose or disseminate to any person, firm or corporation any confidential information regarding the clients, customers or business practices of
the Company acquired by the Employee during his employment by Employer, without the prior written consent of Employer. Anything herein to the contrary notwithstanding, the provisions of this
Section 7(a) shall not apply (i) when disclosure is required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with
actual or apparent jurisdiction to order the Employee to disclose or make accessible any information, (ii) with respect to any other litigation, arbitration or mediation involving this
Agreement, including, but not limited to, the enforcement of this Agreement, (iii) as to information that becomes generally known to the public or within the relevant trade or industry other
than due to the Employee's violation of this Section or (iv) as to information that is or becomes available to the Employee on a non-confidential basis from a source which is
entitled to disclose it to the Employee. 

(b)   If
permitted by the New York Canon of Ethics, the Employee hereby agrees that he shall not, during the period of his employment and for a period of one (1) year following the
termination of such employment, directly or indirectly, within any county (or adjacent county) in any State within the United States or territory outside the United States in which the Company is
engaged in business during the period of the Employee's employment or on the date of termination of the Employee's employment, engage, have an interest in or render any services to any business
(whether as owner, manager, operator, licensor, licensee, lender, partner, stockholder, joint venturer, employee, consultant or otherwise) competitive with the Company's business activities. 

(c)   The
Employee hereby agrees that he shall not, during the period of his employment and for a period of one (1) year following such employment, directly or indirectly solicit any
of the Company's customers, or persons listed on the personnel lists of the Company, to discontinue or alter his, her or its relationship with the Company. Except as required by law or legal process,
at no time during the Term, or thereafter shall the Employee, directly or indirectly, disparage the commercial, business or financial reputation of the Company. Except as required by law or legal
process, at no time during the Term, or thereafter shall the Employer or any executive officer of the Company, directly or indirectly, disparage the professional, business, financial or personal
reputation of the Employee. 

5

 

 

(d)   For
purposes of clarification, but not of limitation, the Employee 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 Company, including the Employee, (but only those persons or
entities that had a business or employment relationship with the Company during the time of the Employee's employment by the Company, or at the termination of his employment), to discontinue or alter
his, her or its relationship with the Company. 

(e)   Upon
the termination of the Employee's employment for any reason whatsoever, all documents, records, notebooks, equipment, employee lists, price lists, specifications, programs,
customer and prospective customer lists and other materials which refer or relate to any aspect of the business of the Company which the Employee acquired in the course of his employment with the
Company and are in the possession of the Employee, including all copies thereof, shall be promptly returned to the Company. Anything to the contrary notwithstanding, nothing in this
Section 7(e) shall prevent the Employee from retaining a home computer and security system, papers and other materials of a personal nature, including personal diaries, calendars and Rolodexes,
information relating to the Employee's compensation or relating to reimbursement of expenses, information that the Employee reasonably believe may be needed for tax purposes, and copies of plans,
programs and agreements relating to the Employee's employment. 

(f)    The
products and proceeds of Employee's services hereunder that Employee may acquire, obtain, develop or create during the Term that relate to the Company's business, or that are
otherwise made at the direction of the Company or with the use of the Company's or its affiliates' facilities or materials, including, but not limited to, all materials, ideas, concepts, formats,
suggestions, developments, packages, programs and other intellectual properties (collectively, "Works"), shall be considered a "work made for hire," as
that term is defined under the United States Copyright Act, and Employee shall be considered an employee for hire of the Company, and all rights in and to the Works, including the copyright thereto,
shall be the sole and exclusive property of the Company, as the sole author and owner thereof, and the copyright thereto may be registered by the Company in its own name. In the event that any part of
the Works shall be determined not to be a work made for hire or shall be
determined not to be owned by the Company, Employee hereby irrevocably assigns and transfers to the Company, its successors and assigns, the following: (a) the entire right, title and interest
in and to the copyrights, trademarks and other rights in any such Work and any rights in and to any works based upon, derived from, or incorporating any such Work ("Derivative Work"); (b) the
exclusive right to obtain, register and renew the copyrights or copyright protection in any such Work or Derivative Work; (c) all income, royalties, damages, claims and payments now or
hereafter due or payable with respect to any such Work and Derivative Work; and (d) all causes of action in law or equity, past and future, for infringements or violation of any of the rights
in any such Work or Derivative Work, and any recoveries resulting therefrom. Employee also hereby waives in writing any moral or other rights that he has under state or federal laws, or under the laws
of any foreign jurisdiction, which would give him any rights to constrain or prevent the use of any Work or Derivative Work, or which would entitle him to receive additional compensation from the
Company. Employee shall execute all documents, including without limitation copyright assignments and applications and waivers of moral rights, and perform all acts that the Company may request, in
order to assist the Company in perfecting its rights in and to any Work and Derivative Work anywhere in the world. Employee hereby appoints the officers of the Company as Employee's
attorney-in-fact to execute documents on behalf of Employee for this limited purpose 

6

 

(g)   The
parties hereto hereby acknowledge and agree that (i) the Company may be irreparably injured in the event of a breach by the Employee of any of his obligations under this
Section 7, (ii) monetary damages may not be an adequate remedy for any such breach, and (iii) the Company shall be entitled to seek injunctive relief, in addition to any other
remedy which it may have, in the event of any such breach. 

(h)   The
parties hereto hereby acknowledge that, in addition to any other remedies the Company may have under Section 7(g) hereof, the Company may have the right and remedy to seek
to require the Employee to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, "Benefits") derived or received by the
Employee as the result of any transactions constituting a breach of any of the provisions of Section 7, and the Employee hereby agrees to account for any pay over such Benefits to the Company
if so ordered by an appropriate court or arbitrator. 

(i)    Each
of the rights and remedies enumerated in Section 7(g) and 7(h) 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. 

(j)    It
is the intent of the parties hereto that the covenants contained in this Section 7 shall be enforced to the fullest extent permissible under the laws and public policies of
each jurisdiction in which enforcement is sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed that if any of the provisions of this Section 7 shall be adjudicated to be invalid or unenforceable for any reason
whatsoever, said provision shall be (only with respect to the operation thereof in the particular jurisdiction in which such adjudication is made) construed by limiting and reducing it so as to be
enforceable to the extent permissible, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of said provision in any other jurisdiction. 

8.    General.    This Agreement is further governed by the following provisions: 

(a)    Notices.    All notices relating to this Agreement shall be in writing and shall be either
personally delivered, sent by facsimile (receipt confirmed) or nationally recognized overnight carrier or mailed by certified mail, return receipt requested, to be delivered at such address as is
indicated below, or at such other address or to the attention of such other person as the recipient has specified by prior written notice to the sending party. Notice shall be effective when so
personally delivered, one business day after being sent by telecopy or five days after being mailed. 

If
to the Employer: 

Take-Two
Interactive Software, Inc.

622 Broadway

New York, New York 10012

Attention: Chief Executive Officer 

If
to the Employee: 

To
the Employee's address on the books and records of the Company. 

(b)    Parties in Interest.    Employee may not delegate his duties or assign his rights hereunder. The
Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company, provided that the Company shall require such successor to expressly assume
and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; otherwise, the Company may not
assign this Agreement at all. 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. 

7

 

(c)    Entire Agreement.    This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties hereto, with respect to the employment of the Employee by the Employer (including, without limitation, the Initial Agreement and the Amendment) and contains all of the
covenants and agreements between the parties with respect to such employment in any manner whatsoever. Any modification or termination of this Agreement will be effective only if it is in writing
signed by the party to be charged. 

(d)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. Employee agrees to and hereby does submit to jurisdiction before any state or federal court of record in New York County. 

(e)    Warranty.    Employee hereby warrants and represents as follows: 

  (i)  That
the execution of this Agreement and the discharge of Employee's obligations hereunder will not breach or conflict with any other contract, agreement, or
understanding between Employee and any other party or parties. 

 (ii)  Employee
has ideas, information and know-how relating to the type of business conducted by Employer, and Employee's disclosure of such ideas, information
and know-how to Employer will not conflict with or violate the rights of any third party or parties. 

(iii)  Employee
will not disclose any trade secrets relating to the business conducted by any previous employer and agrees to indemnify and hold Employer harmless for any liability arising
out of Employee's use of any such trade secrets. 

(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 invalid or illegal or unenforceable term or condition had never been contained herein. 

(g)    Indemnification.    The Employee shall be entitled to the benefits of all provisions of the
Certificate of Incorporation and Bylaws of the Company, each as amended, that provide for indemnification of officers and directors of the Company. In addition, without limiting the indemnification
provisions of the Certificate of Incorporation or Bylaws, to the fullest extent permitted by law, the Company shall indemnify and save and hold harmless the Employee from and against, and pay or
reimburse, any and all claims, demands, liabilities, costs and expenses, including judgments, fines or amounts paid on account thereof (whether in settlement or otherwise), and reasonable expenses,
including attorneys' fees actually and reasonably incurred including, but not limited to, investigating, preparing, pursuing or defending any action, suit, investigation, proceeding, claim or
liability if the Employee is made or threatened to be made a party to or witness in any action, suit, investigation or proceeding, or if a claim or liability is asserted or threatened to be asserted
against Employee (whether or not in the right of the Company), by reason of the fact that he was or is a director, officer or employee, or acted in such capacity on behalf of the Company, or the
rendering of services by the Employee pursuant to this Agreement or any of the Employee's prior employment agreements with the Company, whether or not the same shall proceed to judgment or be settled
or otherwise brought to a conclusion (except only if and to the extent that such amounts shall be finally adjudged to have been caused by Employee's willful misconduct or gross negligence). Upon the
Employee's request, the Company will advance any reasonable expenses or costs, subject to the Employee undertaking to repay any such advances in the event there is an unappealable final determination
that Employee is not entitled to indemnification for such expenses. Employee shall be entitled to indemnification under this Section regardless of any subsequent amendment of the Certificate of
Incorporation or of the Bylaws of the Company. Further, Employee shall be entitled to be covered by any directors' and 

8

 

officers'
liability insurance policies which the Company maintains for the benefit of its directors and officers, subject to the limitations of such policies. This provision shall survive the
expiration or termination of this Agreement. Any payments owed by the Company to the Employee pursuant to this Section shall be paid within ninety days of the Employee's notifying the Company of the
expense, which notice from the Employee shall be made within thirty days of the accrual of the expense. 

(h)    Legal Fees.    The Company shall promptly pay upon presentation of appropriate documentation the
reasonable legal fees incurred by the Employee in connection with the negotiation and documentation of this Agreement. In addition, in the event of a claim or other dispute under this Agreement, the
Company shall promptly pay or reimburse the Employee for all reasonable legal fees and expenses incurred by the Employee as incurred and submitted for payment or reimbursement provided that, if the
Employee is not the prevailing party with respect to the case which is or has become unappealable, then the Employee shall thereafter pay his own costs and expenses in respect thereof and promptly
(and in no event more than 14 days after demand therefor by the Company) return to the Company any amounts previously paid by the Company under this sentence with respect to such claim or other
dispute. Any payments owed by the Company to the Employee pursuant to this Section shall be paid within ninety days of the Employee's notifying the Company of the expense, which notice from the
Employee shall be made within thirty days of the accrual of the expense. 

(i)    Section 409A.    The intent of the parties is that payments and benefits under this
Agreement comply either with Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and guidance promulgated thereunder (collectively "Section 409A") or comply
with one or more exceptions
to Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted in such manner. In this regard: 

(A)  If
any payments hereunder are determined to be "nonqualified deferred compensation" under Section 409A, then such payments shall be made in compliance with the
6-month delay requirement of Section 409A, to the extent such requirement is applicable. 

(B)  Whether
the Employee shall have incurred a termination of employment shall be determined based on all relevant facts and circumstances. In situations in which the Employee continues
to be carried on the payroll of the Company but performs only nominal services, or ceases to be an employee but continues to provide substantial services in another capacity, such as pursuant to a
consulting agreement, the determination of whether a termination of employment has occurred shall be determined in accordance with Final Regulations Section 1.409A-1(h)(1)(ii), or
any successor thereto. 

(C)  Any
pro-rated Bonus payable pursuant to Section 6 shall be paid at the time and in the form that such Bonus would have been paid but for the Employee's termination
of employment. 

(D)  In
no event whatsoever shall the Employer be liable for any additional tax, interest or penalties that may be imposed on the Employee by Section 409A or any damages for failing
to comply with Section 409A. 

(j)    Withholding.    The Company may withhold from any and all amounts payable under this Agreement
such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. 

(k)    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. Photographic, electronically scanned and facsimiles of such signed counterparts may be used in lieu of the
originals for any purpose. 

9

 

 
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. 

 

 

					
	 	 	TAKE-TWO INTERACTIVE SOFTWARE, INC.
	

 	
 	
By:	
 	
/s/ BEN FEDER

 

Ben Feder

Chief Executive Officer
	

 	
 	
 	
 	
/s/ SETH KRAUSS

 

Seth Krauss

 

 10

QuickLinks

Exhibit 10.2

EMPLOYMENT AGREEMENT

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