EXHIBIT 10.42.3
ACTV, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of August, 1995,
by and between ACTV, INC., a Delaware corporation, having an office at 000 Xxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 10003(hereinafter referred to as "Employer")
and XXXXX XXXXXXX, an individual residing at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer employs, and desires to continue to employ,
Employee as its President of Enhanced Media Services; and
WHEREAS, Employee is willing to continue to be employed as
Employer's President of Enhanced Media Services in the manner provided for
herein, and to perform the duties of President of Enhanced Media Services, upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:
1. Employment of President of Enhanced Media Services.
Employer hereby employs Employee as President of Enhanced Media Services, in
which capacity Employee shall serve as President of Enhanced Media Services,
Inc.
2. Term. Subject to Section 9 below, the term of this
Agreement shall commence on the date hereof and end on December 31, 2004. Each
12 month period from January 1 through December 31 during the term hereof shall
be referred to as an "Annual Period." During the term hereof, Employee shall
devote substantially all of his business time and efforts to Employer and its
subsidiaries and affiliates.
3. Duties. The Employee shall perform any and all duties and
shall have any and all powers as may be prescribed by the Chairman of ACTV, Inc.
and shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly and solely to the Chairman or his designee.
4. Compensation.
a. (i) Employee shall be paid a minimum of $345,000 for each
Annual Period. Employee shall be paid periodically in accordance with the
policies of the Employer during the term of this Agreement, but not less than
monthly.
(ii) Employee is eligible for yearly bonuses, if any,
which will be determined and paid in accordance with policies set from time to
time by the Board.
(iii)Employee shall be entitled to a leased car of
his choice.
b. (i) In the event of a "Change of Control" whereby
(A) A person (other than a person who is an officer or a
Director of Employer on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes, or
obtains the right to become, the beneficial owner of Employer securities having
30% or more of the combined voting power of then outstanding securities of the
Employer that may be cast for the election of directors of the Employer;
(B) At any time, a majority of the Board-nominated slate of
candidates for the Board is not elected;
(C) Employer consummates a merger in which it is not the
surviving entity;
(D) Substantially all Employer's assets are sold; or
(E) Employer's stockholders approve the dissolution or
liquidation of Employer; then
(ii) (A) All stock options, warrants and stock appreciation
rights ("Rights") granted by Employer to Employee under any plan or otherwise
prior to the effective date of the Change of Control, shall become vested,
accelerate and become immediately exercisable; and in addition the employee, at
his option, shall receive a special compensation payment for the exercise cost
of all vested options upon exercising those options any time within twelve
months after the effective date of the change of control, adjusted for any stock
splits and capital reorganizations having a similar effect, subsequent to the
effective date hereof. In the event Employee owns or is entitled to receive any
unregistered securities of Employer, then Employer shall use its best efforts to
effect the registration of all such securities as soon as practicable, but no
later than 120 days after the effective date of the registration statement;
provided, however, that such period may be extended or delayed by Employer for
one period of up to 60 days if, upon the advice of counsel at the time such
registration is required to be filed, or at the time Employer is required to
exercise its best efforts to cause such registration statement to become
effective, such delay is advisable and in the best interests of Employer because
of the existence of non-public material information, or to allow Employer to
complete any pending audit of its financial statements;
(B) If at any time within three years of said Change of
Control, (i) a new Chief Executive Officer of Employer is appointed and (ii)
Employee is not retained in his immediately prior position or a substantially
similar position with Employer or the surviving entity, as applicable, then in
addition, Employee shall be eligible to receive a one-time bonus, equal on an
after-tax basis to two times his average compensation for the two previous
fiscal years. Such compensation shall include salary, bonus, and restricted
stock awards. To effectuate this provision, the bonus shall be "grossed-up" to
include the amount necessary to reimburse Employee for his federal, state and
local income tax liability on the bonus and on the "gross-up" at the respective
effective marginal tax rates. In no event shall this bonus exceed 2.7 times
Employee's then current base salary. Said bonus shall be paid within thirty (30)
days of the Change of Control.
c. Employer shall include Employee in its health insurance
program available to Employer's executive officers.
d. Employer shall maintain a life, accidental death and
dismemberment insurance policy on Employee for the benefit of a beneficiary
named by Employee in an amount not less than $2,000,000. Ownership of the policy
shall be assigned to Employee upon termination of Employee's employment under
this Agreement.
e. Employee shall also be entitled to participate pari passu
in any other program established by Employer pursuant to which any executive
officers receive a share of the profits of Employer.
f. Employee shall have the right to participate in any other
employee benefit plans established by Employer.
g. Unless a pre-existing plan of Employer expressly forbids
it, Employee may pay the exercise price (the "Exercise Price") of any and all
Rights that are or become exercisable at any time during the term hereof (the
respective Employer securities underlying any such Rights being herein referred
to as the "Underlying Securities"), by any, or any combination, of the following
means:
(i) by Employee's execution and delivery of a full recourse
promissory note drawn payable to Employer in a principal amount equal to the
Exercise Price, which note shall bear interest at the lowest rate, if any,
required to be charged by applicable Federal law, shall (without limiting the
full recourse nature thereof) be secured by such of the respective Underlying
Securities as Employee shall thereby be exercising upon, shall become due and
payable on not later than the due date specified therein, the expiration date of
this Agreement or, on a pro rata basis, the disposition of any or all of the
Underlying Securities constituting security therefor, and shall provide that the
principal amount thereof (together with all interest accrued thereon) may be
prepaid in its entirety at any time without penalty, and shall be paid in its
entirety when the same shall become due and payable, either in cash or pursuant
to subsection (ii) hereof, or by any combination thereof, as Employee may elect
with respect to any such payment;
(ii) by Employee's transfer to Employer of such number of
Underlying Securities and/or, at Employee's discretion, such number of identical
Employer securities held by Employee, as will, when valued at the highest
trading price of those securities during the six months period immediately
preceding the respective date of Employee's transfer thereof to Employer (less
the respective Exercise Price thereof, in the case of any unexercised Underlying
Securities then being so transferred) equal or minimally exceed the Exercise
Price; or
(iii) by a cash amount equal to all or such portion of the
Exercise Price as Employee may elect to pay in cash.
5. Expenses. Employee shall be reimbursed for all of his
actual out-of-pocket expenses incurred in the performance of his duties
hereunder, provided such expenses are acceptable to Employer, which approval
shall not be unreasonably withheld, for business related travel and
entertainment expenses, and that Employee shall submit to Employer reasonably
detailed receipts with respect thereto.
6. Vacation. Employee shall be entitled to receive three (3)
weeks paid vacation time after each year of employment upon dates agreed upon by
Employer. Upon separation of employment, for any reason, vacation time accrued
and not used shall be paid at the salary rate of Employee in effect at the time
of employment separation.
7. Secrecy. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary business
operations of Employer or (b) any trade secrets, new product developments,
patents, programs or programming, especially unique processes or methods.
8. Covenant Not to Compete. Employee acknowledges and confirms
that the Company is placing its confidence and trust in Employee. Accordingly,
Employee covenants and agrees that he will not, during the term of his
employment, and for a period of one (1) year thereafter, either directly or
indirectly, engage in any business, either directly or indirectly (whether as a
creditor, guarantor, financial backer, stockholder, director, officer,
consultant, advisor, employee, member, inventor, producer, or otherwise), with
or for any company, enterprise, institution, organization or other legal entity
(whether a sole proprietorship, a corporation, a partnership, a limited
liability company, an association, or otherwise, and whether or not for profit),
which is in competition with the ACTV Business (as defined herein). As used in
this Agreement, the term "ACTV Business" shall mean the invention, development,
application, implementation, extension, operation and/or management by ACTV
and/or any ACTV affiliate of any invention, software, technology, business,
service or product of ACTV and/or any ACTV affiliate, including without
limitation the convergence and digital television technologies commonly referred
to by ACTV as "Individualized Television", "HyperTV" and "eSchool".
Furthermore, Employee will not during the term of his
employment, and for a period of one (1) year thereafter, individually or through
any entity, directly or indirectly, without the express prior written consent of
ACTV, become an employee, consultant, advisor, director, officer, producer,
partner or joint or co-venturer of or to, or enter into any contract, agreement
or arrangement with, any entity or business venture of any kind to or of which
ACTV and/or any ACTV affiliate is a licensor or licensee or with which ACTV
and/or any ACTV affiliate is a joint or co-venturer, partner or otherwise
engaged in any on-going business relationship or discussions or negotiations
with a view to entering into such a relationship to provide services or
products. Nor shall Employee, during the term of his employment, and for a
period of three (3) years thereafter, individually or through any entity,
directly or indirectly, without the express prior written consent of ACTV, make
or otherwise extend any offer of full-time or part-time employment to any
officer or employee of ACTV and/or of any ACTV affiliate, or otherwise solicit
any officer or employee of ACTV and/or of any ACTV affiliate to seek or accept
any full-time or part-time employment, by or with any person or entity other
than ACTV or any ACTV affiliate.
Employee hereby acknowledges and agrees that the ACTV Business
extends throughout the United States, and that -- given the nature of the ACTV
Business -- ACTV and/or any ACTV affiliate can be harmed by competitive conduct
anywhere in the United States. Employee therefore agrees that the covenants not
to compete contained in this Section 8 shall be applicable in and throughout the
United States, as well as throughout such non-U.S. areas in which ACTV and/or
any ACTV affiliate may be (or has prepared written plans to be) doing business
as of the date of termination of Employee's employment. Employee further
warrants and represents that, because of his varied skill and abilities, he does
not need to compete with the ACTV Business, and that this Agreement will
therefore not prevent him/her from earning a livelihood. Employee acknowledges
that the restrictions contained in this Section 8 constitute reasonable
protections for ACTV and its affiliates in light of the foregoing and in light
of the promises to Employee contained herein. Employee and the Company hereby
agree that, if the period of time or the scope of the restrictive covenant not
to compete contained in this Section 8 shall be adjudged unreasonable by any
proper arbiter of a dispute hereunder, then the period of time and/or scope
shall be reduced accordingly, so that this covenant may be enforced in such
scope and during such period of time as is judged by such arbiter to be
reasonable.
9. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement upon written notice
for Cause. For purposes hereof, "Cause" shall mean (A) engaging by the Employee
in conduct that constitutes activity in competition with Employer; (B) the
conviction of Employee for the commission of a felony; and/or (C) the habitual
abuse of alcohol or controlled substances. Notwithstanding anything to the
contrary in this Section 9(a)(i), Employer may not terminate Employee's
employment under this Agreement for Cause unless Employee shall have first
received notice from the Board advising Employee of the specific acts or
omissions alleged to constitute Cause, and such acts or omissions continue after
Employee shall have had a reasonable opportunity (at least 10 days from the date
Employee receives the notice from the Board) to correct the acts or omissions so
complained of.
(ii) Employer may terminate Employee's employment under this
Agreement if, as a result of any physical or mental disability, Employee shall
fail or be unable to perform his duties under this Agreement for any consecutive
period of 90 days during any twelve-month period. If Employee's employment is
terminated under this Section 9(a)(ii): (A) for the first six months after
termination, Employee shall be paid 100% of his full compensation under Section
4(a) of this Agreement at the rate in effect on the date of termination, and in
each successive 12 month period thereafter Employee shall be paid an amount
equal to 67% of his compensation under Section 4(a) of this agreement at the
rate in effect on the date of termination; (B) Employer's obligation to pay life
insurance premiums on the policy referred to in Section 4(d) shall continue in
effect until five years after the date of termination; and (C) Employee shall
continue to be entitled, insofar as is permitted under applicable insurance
policies or plans, to such general medical and employee benefit plans (including
profit sharing or pension plans) as Employee had been entitled to on the date of
termination. Any amounts payable by Employer to Employee under this paragraph
shall be reduced by the amount of any disability payments payable by or pursuant
to plans provided by Employer and actually paid to Employee.
(iii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and the pro-rata amount payable under
Section 4(e) for the period prior to Employee's death and any other amount to
which Employee was entitled of the time of his death.
b. Termination by Employee
(i) Employee shall have the right to terminate his employment
under this Agreement upon 30 days' notice to Employer given within 90 days
following the occurrence of any of the following events (A) through (D) or
within three years following the occurrence of event (E):
(A) Employer acts to change the geographic location of the
performance of Employee's duties from the New York Metropolitan area. For
purposes of this Agreement, the New York Metropolitan area shall be deemed to be
the area within 10 miles of midtown Manhattan.
(B) A Material Reduction (as hereinafter defined) in
Employee's rate of base compensation, or Employee's other benefits. "Material
Reduction" shall mean a ten percent (10%) differential;
(C) A failure by Employer to obtain the assumption of this
Agreement by any successor;
(D) A material breach of this Agreement by Employer, which is
not cured within thirty (30) days of written notice of such breach by Employer;
(E) A Change of Control.
(ii) Anything herein to the contrary notwithstanding, Employee
may terminate this Agreement upon thirty (30) days written notice.
c. If Employer shall terminate Employee's employment other
than due to his death or disability or for Cause (as defined in Section 9(a)(i)
of this Agreement), or if Employee shall terminate this Agreement under Section
9(b)(i), Employer's obligations under Section 4 shall be absolute and
unconditional and not subject to any offset or counterclaim and Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the amount of
compensation he may earn with respect to any other employment he may obtain.
10. Consequences of Breach by Employer;
Employment Termination
a. If this Agreement is terminated pursuant to Section 9(b)(i)
hereof, or if Employer shall terminate Employee's employment under this
Agreement in any way that is a breach of this Agreement by Employer, the
following shall apply:
(i) Employee shall receive as a bonus, and in addition to his
salary continuation pursuant to Section 9.c., above, a cash payment equal to the
Employee's total base salary as of the date of termination hereunder for the
remainder of the term plus an additional amount to pay all federal, state and
local income taxes thereon on a grossed-up basis as heretofore provided, payable
within 30 days of the date of such termination; except that if this Agreement is
terminated pursuant to Section 9.(b)(i)(E), then Employee shall not be entitled
to receive a bonus under this Section 10.a.(i) but shall instead receive a
lump-sum payout of Employee's total base salary for the remainder of the term
plus an additional amount to pay all federal, state and local income taxes
thereon on a grossed-up basis as heretofore provided, payable within 30 days of
the date of such termination.
(ii) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a), (b) and
(e) above.
b. In the event of termination of Employee's employment
pursuant to Section 9(b)(i) of this Agreement, the provisions of Section 8 shall
not apply to Employee.
11. Remedies. Employer recognizes that because of Employee's
special talents, stature and opportunities in the interactive television
industry, and because of the special creative nature of and compensation
practices of said industry and the material impact that individual projects can
have on an interactive television company's results of operations, in the event
of termination by Employer hereunder (except under Section 9(a)(i) or (iii), or
in the event of termination by Employee under Section 9(b)(i) before the end of
the agreed term, Company acknowledges and agrees that the provisions of this
Agreement regarding further payments of base salary, bonuses and the
exercisability of Rights constitute fair and reasonable provisions for the
consequences of such termination, do not constitute a penalty, and such payments
and benefits shall not be limited or reduced by amounts' Employee might earn or
be able to earn from any other employment or ventures during the remainder of
the agreed term of this Agreement.
12. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 or any
similar or successor provision then Employer shall assume all liability for the
payment of any such tax and Employer shall immediately reimburse Employee on a
"grossed-up" basis for any income taxes attributable to Employee by reason of
such Employer payment and reimbursements.
13. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 7 and 8 hereof, shall on the written request of either
party served on the other be submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the date
on which the party demanding arbitration first had notice of the existence of
the claim to be arbitrated, or the right to arbitration along with such claim
shall be considered to have been waived. An arbitrator shall be selected
according to the procedures of the American Arbitration Association. The cost of
arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to award
punitive damages to either party.
14. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
15. Entire Agreement; Survival. This Agreement, which has last
been modified effective January 1, 2001, contains the entire agreement between
the parties with respect to the transactions contemplated herein and supersedes,
any prior agreement or understanding between Employer and Employee with respect
to Employee's employment by Employer. The unenforceability of any provision of
this Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future rights.
b. The provisions of Sections 4, 7, 8, 9(a)(ii),
9(a)(iii), 9(c), 10, 11, 12, 13,
14, 17, 18 and 19 shall survive the termination of this Agreement.
16. Assignment. This Agreement shall not be assigned to other
parties.
17. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the state of New York, without regard to the conflicts of laws
principles thereof.
18. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when
a. delivered by hand;
b. sent be telex or telefax, (with receipt
confirmed), provided that a copy is
mailed by registered or certified mail, return receipt requested; or
c. received by the addressee as sent be express
delivery service (receipt requested)
in each case to the appropriate addresses, telex numbers and telefax numbers as
the party may designate to itself by notice to the other parties:
(i) if to the Employer:
ACTV, Inc. and Enhanced Media Services, Inc.
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Day X. Xxxxxxxxx
Telephone: (000) 000-0000
and
Gersten, Savage, Kaplowitz LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx, Esq.
Telefax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxxx Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
19. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties that they would have
executed the remaining portions of this Agreement without including any such
part, parts or portions which may, for any reason, be hereafter declared
invalid.
IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.
ACTV, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
XXXXXXX X. XXXXXXX
Chairman
/s/ Xxxxx Xxxxxxx
-----------------------------
XXXXX XXXXXXX
