Exhibit 10.41
ACTV, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of August, 1995, and
amended February 22, 1999, by and between ACTV, INC., a Delaware corporation,
having an office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(hereinafter referred to as "Employer") and XXXXX XXXXX, an individual residing
at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 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 and Chief Operating Officer; and
WHEREAS, Employee is willing to continue to be employed as the
President and Chief Operating Officer of ACTV, Inc. in the manner provided for
herein, and to perform the duties of the President and Chief Operating Officer
of ACTV, Inc. 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 and Chief Operating Officer of ACTV, Inc.
Employer hereby employs Employee as its President and Chief Operating Officer of
ACTV, Inc.
2. Term. Subject to Section 9 below, the term of this Agreement shall
commence on August 1, 1995 and end on December 31, 2000. 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 and Chief Executive
Officer 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 and Chief
Executive Officer.
4. Compensation.
a. (i) Employee shall be paid a minimum of $245,000 for each Annual
Period, commencing January 1, 1998; provided, however, that Employee's salary
shall be increased annually at the beginning of each Annual Period commencing
January 1, 1999 by an amount equal to no less than the amount of his annual
salary for the immediately preceding
Annual Period times the percentage increase in the CPIW (New York) then in
effect as compared to the previous period for which the CPIW (New York) is
available. 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 quarterly 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,
the cost of which shall reduce the total cash compensation paid under section 4
(a)(i).
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; at an exercise price of 10(cent)
per stock appreciation right if applicable; 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;
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(B) Any outstanding principle and interest on loans to Employee
pursuant to Section 4.g.(ii), below, shall be recalculated and reconstituted as
if the rights were exercised under 4 (b) (ii).
(C) If upon 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 then current annual base salary. 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, all
Rights which may become exercisable during the term hereof shall be paid for in
cash only if Employee so elects, otherwise they may be paid for.
(i) by the transfer by Employee to Employer of so much of Employee's
Rights which, when valued at the highest trading price of the underlying
securities of Employer during the previous six months, will offset the price of
the Rights then being exercised;
(ii) by means of a non-recourse Note with interest at the lowest
rate, it any, required to be charged by any governmental authority, to accrue
and become due and payable with the principle, in an amount no greater than the
exercise price, given by Employee to Employer and secured solely by the shares
of stock being paid for thereby, which Note shall become due and payable at the
earlier of the expiration hereof or, on a pro rata basis, the sale by Employee
of all or part of the Rights or underlying stock which constitute security for
the Note; or
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(iii) by any combination of cash and (ii) or (iii), above.
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 four (4) 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. Subject to, and limited by, Section 10(b),
Employee will not, at any time, anywhere in the world, during the term of this
Agreement, and for one (1) year thereafter, either directly or indirectly,
engage in, with or for any enterprise, institution, whether or not for profit,
business, or company, competitive with the business (as identified herein) of
Employer as such business may be conducted on the date thereof, as a creditor,
guarantor, or financial backer, stockholder, director, officer, consultant,
advisor, employee, member, inventor, producer, director, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange or through
the NASDAQ Stock Market. As used in this Agreement, the business of Employer
shall be deemed to include the development and implementation of individualized
television technology or programs.
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
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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 30 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.
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(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
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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 contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof 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.
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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.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxxxxx X. Xxxxxxx
Telefax: (000) 000-0000
Telephone: (000) 000-0000
Gersten, Savage, Xxxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telefax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxxx Xxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 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
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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:
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XXXXXXX X. XXXXXXX
Chairman
-------------------------------
XXXXX XXXXX
President
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