Exhibit 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated September 9, 2004 by and between NTN
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxxxx (the "Executive").
1. Term of Employment
Subject to the provisions of Section 10 below, the Company shall employ the
Executive, and the Executive shall serve the Company in the capacity of Chief
Executive Officer for a term of one (1) year commencing as of March 1, 2004 and
ending February 28, 2005 (the "Term of Employment").
2. Duties
During the Term of Employment, the Executive will serve as the Company's
Chief Executive Officer and will report directly to the Board of Directors.
Executive will serve the Company faithfully, diligently, and competently and to
the best of his ability. During the Term of Executive's employment under this
Agreement, the Executive will be a member of the Company's Board of Directors.
3. Compensation
During the Term of Employment, the Company shall pay to the Executive as
compensation for the performance of his duties and obligations hereunder a
salary at the rate of $380,000 per annum. Such salary shall be paid bi-weekly.
In addition, the Executive will be included in the Company executive bonus pool
in a manner consistent with the 2004 executive bonus program.
4. Expenses and Other Benefits.
All travel, entertainment and other reasonable business expenses incident
to the rendering of services by the Executive hereunder will be promptly paid or
reimbursed by the Company subject to submission by the Executive in accordance
with the Company's policies in effect from time to time.
The Executive shall be entitled during the Term of Employment to
participate in employee benefit and welfare plans and programs of the Company
including any employee incentive stock option plans, qualified or unqualified,
to the extent that any other executives or officers of the Company or its
subsidiaries are eligible to participate and subject to the provisions, rules,
regulations, and laws applicable thereto. Notwithstanding the foregoing, the
Company shall provide the Executive, at a minimum, with the following benefits:
(a) Coverage, at no expense to the Executive, of the Executive, his wife,
if any, and those of his children who qualify as his dependents under Section
152 of the Internal Revenue code of 1954, under a major medical insurance
program with an annual cumulative deductible amount of no more than $500;
(b) Coverage of the Executive by term life insurance, payable to his
designated beneficiary, in the amount of $1,000,000, and, in the event of
accidental death or dismemberment, in the amount of $2,000,000. The premium
relating to such coverage shall not exceed $4,000 per year. Coverage shall begin
the first day of the Term of Employment hereunder and shall continue throughout
the Term of Employment; and
(c) A paid vacation of five (5) weeks, in addition to any authorized
holidays of the Company, during the Term of Employment.
(d) Deferred Stock Compensation - The Company will grant the Executive
50,000 stock units (SU's) under terms of the yet-to-be-approved 2004 Performance
Incentive Program. The SUs shall vest ratably over the 6 months beginning August
16, 2004. The form of such share grant is attached hereto as Exhibit A. In the
event the 2004 Performance Incentive Plan does not achieve stockholder approval,
the Company and Executive agree to negotiate a comparable compensation
component. Notwithstanding anything to the contrary contained in the options,
all of the Executive's options will immediately vest upon a "Change of Control
Event," as defined in Section 10 hereof.
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(e) Stock Options - The Employee will be granted incentive stock options to
purchase 300,000 shares of the Company's Common Stock. The exercise price of
options to purchase the shares shall be $1.86 per share. The options will vest
monthly at a rate of 1/6 per month, beginning August 16, 2004. The form of such
options is attached hereto as Exhibit B. Notwithstanding anything to the
contrary contained in the options, all of the Executive's options will
immediately vest upon a "Change of Control Event," as defined in Section 10
hereof.
5. Death or Disability
This Agreement shall be terminated by the death of the Executive and also
may be terminated by the Board of Directors of the Company if the Executive
shall be rendered incapable by illness or any physical or mental disability
(individually, a "disability") from substantially complying with the terms,
conditions and provisions to be observed and performed on his part for a period
in excess of six months (whether or not consecutive) during any 12 months during
the Term of Employment. If this Agreement is to be terminated by reason of
illness, or any physical or mental disability of the Executive, the Company
shall give thirty days' written notice to that effect to the Executive in the
manner provided herein and the Executive shall be entitled to the greater of: i)
one year's additional compensation; or ii) the compensation that was to accrue
during the balance of the Term of Employment; and, in each case, including those
benefits described in Sections 4(a), (b), (c), (d) and (e) hereof.
6. Disclosure of Information; Inventions and Discoveries
Except as provided in the California Labor Code, the Executive shall
promptly disclose to the Company all processes, trademarks, inventions,
improvements, discoveries and other information (collectively, "developments")
directly related to the business of the Company conceived, developed or acquired
by him alone or with others during the Term of Employment by the Company,
whether or not during regular working hours or through the use of material or
facilities of the Company. For the purpose of Sections 6, 7 and 8 hereof, the
business of the Company includes without limitation the fields of electronically
simulated sports games or interactive television applications. All such
developments shall be the sole and exclusive property of the Company, and upon
request the Executive shall deliver to the Company all drawings, sketches,
models and other data and records relating to such development. In the event any
such development shall be deemed by the Company to be patentable, the Executive
shall, at the expense of the Company, assist the Company in obtaining a patent
or patents thereon and execute all documents and do all other things necessary
or proper to obtain letters patent and invest the Company with full title
thereto.
7. Non-Competition
The Company and the Executive agree that the services rendered by the
Executive hereunder are unique and irreplaceable. During his employment by the
Company and to the extent permitted by law, for a period of one year thereafter,
the Executive shall not become an executive officer (other than an officer whose
function substantially relates to financial matters) of any business in the
fields of electronically simulated sports games or interactive television, which
in the judgment of the Company is, or as a result of the Executive's engagement
or participation would become, directly competitive with any aspect of the
business of the Company.
8. Non-Disclosure
The Executive will not at any time after the date of this Employment
Agreement divulge, furnish or make accessible to anyone (otherwise than in the
regular course of business of the Company) any knowledge or information with
respect to confidential or secret processes, inventions, discoveries,
improvements, formulas, plans, material, devices, ideas or other know-how,
whether patentable or not, with respect to any confidential or secret
engineering, development or research work or with respect to any other
confidential or secret aspect of the business of the Company (including, without
limitation, customer lists, supplier lists and pricing arrangements with
customers or suppliers), except to the extent such disclosure is (a) in the
performance of his duties under this Agreement, (b) required by applicable law,
(c) lawfully obtainable from other sources, (d) authorized in writing by the
Company, or (e) when required to do so by legal process, that requires him to
divulge, disclose or make accessible such information.
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9. Remedies
The Company may pursue any appropriate legal, equitable or other remedy,
including injunctive relief, in respect of any failure by the Executive to
comply with the provisions of Sections 6, 7 or 8 hereof, it being acknowledged
by the Executive that the remedy at law for any such failure would be
inadequate. If the Company shall have failed to cure any material breach by the
Company of any material provision of this Agreement within 30 days after notice
by the Executive to the Company specifying such breach with particularity, the
Executive may, in addition to other remedies, give notice to the Company of
acceleration of the entire amount of compensation which was to accrue to the
Executive during the balance of the Term of Employment, and such amount shall be
immediately due and payable to the Executive.
10. Termination
The Executive's employment with the Company may be terminated by the Board
of Directors of the Company (i) upon three (3) days' notice to the Executive in
the event of the Executive's personal dishonesty, willful misconduct or breach
of fiduciary duty or (ii) upon thirty (30) days' notice to the Executive if the
Executive shall be in material breach of any material provision of this
Employment Agreement other than as provided in clause (i) above and shall have
failed to cure such breach during such thirty day period. Any such notice to the
Executive shall specify with particularity the reason for termination or
proposed termination. In the event of termination under this Section 10 or under
Section 5 (except as provided therein), the Company's unaccrued obligations
under this Agreement shall cease and the Executive Shall forfeit all right to
receive any unaccrued compensation or benefits hereunder but shall have the
right to reimbursement of expenses already incurred. Notwithstanding any
termination of the Agreement pursuant to this Section 10 or by reason of
disability under Section 5, the Executive, in consideration of his employment
hereunder to the date of such termination, shall remain bound by the provisions
of Sections 6, 7 and 8 (unless this Agreement is terminated on account of the
breach hereof by the Company) of this Agreement except that if this Agreement is
terminated following a Change in Control Event (as defined below) then the
Executive shall remain bound only by the provisions of Sections 6 and 8.
Termination without cause or any attempt by the Board of Directors of the
Company to reassume any of the responsibilities or duties from the Executive or
to change the duties of the Executive without cause shall be deemed a breach of
this Agreement by the Company without cause and shall immediately entitle the
Executive, as liquidated damages therefore, to the greater of: i) one year's
additional compensation; or ii) the compensation that was to accrue during the
balance of the Term of Employment; and, in each case, including those benefits
described in Sections 4(a), (b), (c), (d) and (e) hereof.
Notwithstanding anything to the contrary contained herein, the Executive or
the Company shall have the option to terminate this Agreement at any time
following a "Change in Control Event." In the event of such termination either
by the Company or by the Executive following a Change in Control Event, the
Executive shall immediately entitle the Executive, as liquidated damages
therefore, to the entire remaining balance due him as compensation pursuant to
this Agreement. A "Change in Control Event" shall mean:
(a) The acquisition by any individual entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person") of beneficial ownership of 50% or more
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Voting Securities") or
any approval of such acquisition by the Board of Directors of the Company,
provided that such acquisition is accomplished within six months of such
approval; provided, however, that the following acquisitions shall not
constitute a Change in Control Event: (A) any acquisition by the Company or (B)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company.
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual who becomes a director subsequent
to the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
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(c) Approval by the shareholders of the Company of a reorganization, merger
or consolidation (a "transaction"), unless, following such transaction in each
case, more than 50% of, respectively, the then outstanding shares of common
stock of the Company resulting from such transaction and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entitles who
were the beneficial owners, respectively, of the outstanding Common stock and
Outstanding Voting Securities immediately prior to such transaction; or
(d) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other disposition
of all or substantially all of the assets of the Company unless such assets are
sold to a corporation and following such sale or other disposition, the
condition described in paragraph (c) above is satisfied.
11. Resignation
In the event that the Executive's services hereunder are terminated under
Section 5 or 10 of this Agreement (except by death), the Executive agrees that
he will deliver his written resignation as a Director of the Company to the
Board of Directors, such resignation to become effective immediately.
12. Data
Upon expiration of the Term of Employment or termination pursuant to
Section 5 or 10 hereof, the Executive or his personal representative shall
promptly deliver to the Company all books, memoranda, plans, records and written
data of every kind relating to the business and affairs of the Company which are
then in his possession on account of his employment hereunder, but excluding all
such materials in the Executive's possession which are personal and not property
of the Company or which he holds on account of his past or current status as a
director or shareholder of the Company.
13. Arbitration
Any dispute or controversy arising under this Agreement or relating to its
interpretation or the breach hereof, including the arbitrability of any such
dispute or controversy, shall be determined and settled by arbitration in San
Diego, California pursuant to the Rules then obtaining of the American
Arbitration Association. Any award rendered herein shall be final and binding on
each and all of the parties, and judgment may be entered thereon in any court of
competent jurisdiction.
14. Insurance
The Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance
or any or all of them covering the Executive, and the Executive agrees to submit
to any usual and customary medical examination and otherwise to cooperate with
the Company in connection with the procurement of any such insurance, and any
claims thereunder.
15. Waiver of Breach
Any waiver of any breach of this Employment Agreement shall not be
construed to be a continuing waiver or consent to any subsequent breach on the
part either of the Executive or of the Company.
16. Assignment
Neither party hereto may assign his or its rights or delegate his or its
duties under this Employment Agreement without the prior written consent of the
other party; provided, however, that this Agreement shall inure to the benefit
of and be binding upon the successors and assignees of the Company, all as
though such successors and assignees of the Company and their respective
successors and assignees were of the Company, upon (a) a sale of all or
substantially all of the Company's assets, or upon merger or consolidation of
the Company with or into any other corporation, and (b) upon delivery on the
effective day of such sale, merger or consolidation to the Executive of a
binding instrument of assumption by such successors and assigns of the rights
and liabilities of the Company under this Agreement, provided, however, that no
such assignment or transfer will relieve the Company from its payment
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obligations hereunder in the event the transferee or assignee fails to timely
discharge them. No rights or obligations of the Executive under this Agreement
may be assigned or transferred other than his rights to compensation and
benefits, which may be transferred by will or operation of law or as otherwise
specifically provided or permitted hereunder or under the terms of any
applicable employee benefit plan.
17. Notices
Any notice required or desired to be given hereunder shall be in writing
and shall be deemed sufficiently given when delivered or 3 days after mailing in
United States certified or registered mail, postage prepaid, to the party for
whom intended at the following address:
The Company:
NTN COMMUNICATIONS, INC.
0000 Xx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
The Executive:
Xxxxxxx X. Xxxxxx
P. O. Box 3050
0000 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
or to such other address as either party may from time to time designate by like
notice to the other.
18. General
The terms and provisions of this Agreement shall constitute the entire
agreement by the Company and the Executive with respect to the subject matter
hereof, and shall supersede any and all prior agreements or understandings
between the Executive and the Company, whether written or oral. This Agreement
may be amended or modified only by a written instrument executed by the
Executive and the Company, and any such amendment or modification or any
termination of this Agreement shall become effective only after written approval
thereof has been received by the Executive. This Agreement shall be governed by
and construed in accordance with California law. In the event that any terms or
provisions of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining terms and provisions hereof. In the event of any judicial,
arbitral or other proceeding between the parties hereto with respect to the
subject matter hereof, the prevailing party shall be entitled, in addition to
all other relief, to reasonable attorneys' fees and expenses and court costs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
NTN COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Secretary
AGREED TO AND ACCEPTED:
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxx
------------------------- --------------------------
Xxxxxxx X. Xxxxxx Head of NTN Compensation Committee
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