EMPLOYMENT AGREEMENT
AGREEMENT made as of this 15th day of December, 1995 by and between ACTV,
INC., a Delaware corporation, having an office at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Employer") and Xxxxx Xxxxxxx, an individual
residing at 000 Xxxxxxxx, Xxxxx 0-X, Xxx Xxxx, Xxx Xxxx 00000 (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee as Executive Vice
President and President, ACTV Interactive, Inc.; and
WHEREAS, the Employee is willing to be employed as Executive Vice President
and President of ACTV Interactive, Inc. in the manner provided for herein, and
to perform the duties of the Employer 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 Employee. The Employer hereby employs the Employee as
Executive Vice President and President of ACTV, Interactive, Inc. During the
term hereof, the Employee shall devote all of his business time and efforts to
the Employer.
2. Duties. The Employee shall serve Employer and shall perform such
services and duties and have such powers as may be prescribed by the President
and Chief Executive Officer. The Employee shall report to the President and
Chief Executive Officer of the Company.
3. Compensation.
a. (i) The Employee shall initially be paid a salary at the rate of
$150,000 per year, less applicable withholding taxes and other payroll
deductions required by law, payable in accordance with Employer's customary
payroll practices.
(ii) The Employee is eligible for semi-annual bonuses, if any,
which will be determined and paid in accordance with policies set from time to
time by the Board.
b. (i) In the event of a "Change of Control" whereby
(A) A person (other than The Washington Post Company or 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 the 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 any exercise price of
10 cents per share if applicable, 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) Any outstanding principal and interest on loans to
Employee pursuant to Section 4.g.(ii), below, shall be recalculated and
reconstituted as if the exercise price of the Rights financed thereby were, ab
initio, 10 cents per share.
(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 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. 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. 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.
e. Employee shall have the right to participate in any other employee
benefit plans established by Employer.
f. 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, if 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
(iii) by any combination of cash and (ii) or (iii), above.
4. Termination.
a. For Cause. 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.
b. Without Cause. The Employer may terminate this Agreement without
cause with no notice to Employee. In the event that Employee is terminated
without cause, Employer shall pay Employee severance pay equal to thirteen
weeks, six months after August 1, 1996, and one year after August 1, 1998. If
the employee resigns, no severance pay shall be payable to Employee.
c. Other. This Agreement automatically shall terminate upon the
death of the Employee, except that the Employee's estate shall be entitled to
receive any amount accrued under paragraph 4 (a) for the period prior to the
Employee's death and any other amount to which the Employee was entitled to the
time of his death.
5. Expenses. The Employee shall be reimbursed for all reasonable,
actual out-of-pocket expenses incurred in the performance of the Employee's
duties hereunder, provided such expenses are acceptable to the Employer, and
that the Employee shall submit to the Employer detailed, bi-weekly expense
reports and receipts with respect thereto. All air travel shall be by coach
except for international and west coast travel which shall be by business class.
6. Vacation. The Employee shall be entitled to receive three weeks
paid vacation time during each year of employment on dates to be agreed upon
between the Employer and the Employee.
7. Confidentiality. At no time shall the Employee disclose to anyone
any confidential or secret information (not already constituting information
available to the public) of the Employer and/or its affiliates concerning (a)
internal affairs or proprietary business operations of the Employer and/ or its
affiliates or (b) any trade secrets, new product developments, patents, programs
or programming, especially unique processes or methods. The Employee
acknowledges that he has previously executed a confidentiality/non-disclosure
agreement with Employer and that such agreement is binding and still in effect
and covers any of Employee's work for or related to the Employer and/or its
affiliates.
8. Covenant Not to Compete. The 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, business, or company, whether or not for profit, which
is competitive with the business of the Employer and/or its affiliates 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. However the ownership of, by
the Employee, his spouse of his children, of not more than four percent (4%) of
the total debt or equity capital or any such competitive enterprise or business,
where the stock is listed on a national securities exchange or on the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"),
shall not be deemed in violation of the covenants contained in this paragraph.
As used in this Agreement, the business of the Employer and/or its affiliates
shall be deemed to include the development and implementation of interactive
television technology or programs directly competitive with ACTV.
Nothing herein is meant to restrict the employee from working in the
general education or distance learning business as long as such employment is
not competitive to the interactive television programming business of the
company.
9. Proprietary Rights - Ownership of Inventions. The Employee
acknowledges that in the event the Employee creates or invents any products or
technology or improves any existing products or technology of the Employer
and/or its affiliates during the term of this Agreement, all patents or other
proprietary rights shall be the exclusive property of the Employer and/or its
affiliates. Employee agrees to execute any documents required to confirm the
Employer's and/or its affiliates' ownership of all rights in and to any
inventions of the Employee made during the term of this Agreement. The Employee
agrees not to challenge the Employer's and/or its affiliates' ownership of any
such invention or the validity of any of the Employer's and/or its affiliates'
patents or other rights relating to such inventions. The Employee acknowledges
that he has previously executed a confidentiality/non-disclosure agreement with
the Employer and that he has read and understood section 2 "Right to Inventions"
of such agreement that such agreement and section are binding and still in
effect and upon any of Employee's work related to or for the Employer and/or its
affiliates.
10. Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the employment contemplated herein and
supersedes any prior agreement or understanding between the Employer and the
Employee with respect to the Employee's employment by the Employer. The
unenforceability of any provision of this Agreement shall not effect the
enforceability of any other provision. This agreement may not be amended,
modified or changed in any way except by an agreement in writing signed by the
Employee and the Employer. 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.
11. Assignment. This Agreement shall not be assigned to other parties,
except that the Employer shall be able to assign the Agreement to a Subsidiary
or affiliate.
12. Indemnification. If employee is named in litigation for acts
committed during employment that are not grossly negligent, then the employer
shall indemnify employee for all expenses of employee in defending himself.
13. Arbitration. All demands, disputes and misunderstandings between
parties hereto arising out of this Agreement shall be submitted to and
determined by arbitration in the City of New York. If the parties to a dispute
arising out of this Agreement are unable to agree on an arbitrator within ten
(10) days after any party shall have given written notice to the other that it
desires to submit any issue to arbitration, then the American Arbitration
Association shall be designated by any party to appoint an arbitrator to
arbitrate the matter under its rules. Any decision by the arbitrator shall be in
writing and shall set forth findings of fact.
14. 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 conflict of laws principles
thereof.
15. 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 by telecopier, (with receipt confirmed), provided
that a copy is mailed by registered mail, return receipt requested; or
c. received by the addressee as sent by express delivery
service (receipt requested) in each case to the appropriate addresses or
telecopier 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, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Gersten, Savage, Kaplowitz & Xxxxxx
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxxx Xxxxxxx
000 Xxxxxxxx
Xxxxx 0-X
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Agins, Dolgin, Xxxxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
IN WITNESS WHEREOF, THE UNDERSIGNED HAVE EXECUTED THIS AGREEMENT THE
DAY AND YEAR FIRST ABOVE WRITTEN.
ACTV, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX
President and CEO
/s/Xxxxx Xxxxxxx
XXXXX XXXXXXX
