EXHIBIT 10.1
ACTV, INC.
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT made as of this 1st day of August,
1995 by and between ACTV, INC., a Delaware corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "Employer") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (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 Chairman of the Board of Directors, President
and Chief Executive Officer of Employer; and
WHEREAS, Employee is willing to continue to be employed
as the Chairman of the Board of Directors, President and Chief
Executive Officer of Employer in the manner provided for herein,
and to perform the duties of the Chairman of the Board of
Directors, President and Chief Executive Officer of 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 Chairman of the Board of Directors,
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President and Chief Executive Officer.
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Employer hereby employs Employee as Chairman of the Board of
Directors, President and Chief Executive Officer of Employer.
2. Term.
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a. Subject to Section 10 below and further subject
to Section 2(b) 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.
b. Subject to Section 10 below, unless the Board
of Directors of the Company (the "Board") of Employer shall
determine to the contrary and shall so notify Employee in writing
on or before the end of any Annual Period, then at the end of each
Annual Period, the term of this Agreement shall be automatically
extended for one (1) additional Annual Period to be added at the
end of the then current term of this Agreement.
EXHIBIT A
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3. Duties. The Employee shall perform those functions
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generally performed by persons of such title and position, shall
attend all meetings of the stockholders and the Board, shall
perform any and all related duties and shall have any and all
powers as may be prescribed by resolution of the Board, 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 Board.
4. Compensation.
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a. (i) Employee shall be paid a minimum of
$190,000 through and including December 31, 1995 and for each
Annual Period thereafter; provided, however, that Employee's salary
shall be increased annually at the beginning of each Annual Period
commencing January 1, 1996 by an amount equal to 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 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
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(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 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 principle 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.
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(C) If upon said Change of Control,
Employee is not retained as Chief Executive Officer or
substantially similar position of Employer or the surviving entity,
as applicable, under terms and conditions substantially similar to
those herein, 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 $750,000. Ownership of the policy shall be assigned to
Employee upon termination of Employee's employment under this
Agreement.
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e. (i) A bonus plan shall be instituted for Employee
which shall take account of the efforts of Employee in generating
value to Employer's shareholders. Under said plan, Employee shall
be entitled to an annual bonus payable for each 12 month period
commencing April 1, 1995 in cash and/or unregistered securities of
Employer, at the option of the Compensation Committee of the Board,
equal to 2% of the increase for said 12 month period in the total
market capitalization of Employer calculated upon the excess of the
total of the average daily closing bid (if applicable) price of
each class of Employer's shares for the last 90 days of the 12
month period, multiplied by the number of shares of each class
outstanding as reported by Employer's Certified Public Accountants,
(the "90 Day Average") over the Base, which shall be the greater of
$50,000,000 or the highest previous 90 Day Average against which a
bonus was paid under this bonus plan, if any. Should the
Compensation Committee elect hereunder to pay Employee in
unregistered securities, said securities shall be valued at 60% of
the most recent 90 Day Average. Should Employer's shares no longer
be publicly traded, the current 90 Day Average shall be determined
by a 3 person panel, 1 person appointed each by Employer and
Employee and 1 appointed by the former 2. Employee shall be
entitled to receive compensation under this plan for five fiscal
years following expiration or termination of this employment
contract, except that if Employee is terminated for cause as
defined in Section 10.a.(i) hereof or resigns other than for
reasons of disability, then said compensation shall continue for
three fiscal years.
(ii) 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 pro-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
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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.
5. Board of Directors. Employer agrees that so long as
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this Agreement is in effect, Employee will be nominated to the
Board as part of management's slate of Directors.
6. Expenses. Employee shall be reimbursed for all of
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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.
7. Vacation. Employee shall be entitled to receive
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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.
8. Secrecy. At no time shall Employee disclose to
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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.
9. Covenant Not to Compete. Subject to, and limited
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by, Section 11(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
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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 interactive
television technology or programs.
10. Termination.
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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 10 (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. In no event shall
alleged incompetence of Employee in the performance of Employee's
duties be deemed grounds for termination for Cause.
(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 10(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 an 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.
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(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 (F) or within three years
following the occurrence of event (G):
(A) Employee is not elected or retained
as Chairman of the Board of Directors, President and Chief
Executive Officer of Employer.
(B) Employer acts to materially reduce
Employee's duties and responsibilities hereunder. Employee's
duties and responsibilities shall not be deemed materially reduced
for purposes hereof solely by virtue of the fact that Employer is
(or substantially all of its assets are) sold to, or is combined
with, another entity, provided that Employee shall continue to have
the same duties and responsibilities with respect to Employer's
interactive business, and Employee shall report directly to the
chief executive officer and/or board of directors of the entity (or
individual) that acquires Employer or its assets.
(C) 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.
(D) 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;
(E) A failure by Employer to obtain the
assumption of this Agreement by any successor;
(F) A material breach of this Agreement
by Employer, which is not cured within thirty (30) days of written
notice of such breach by Employer;
(G) 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 10(a)(i) of this Agreement), or if Employee
shall terminate this Agreement under Section 10(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.
11. Consequences of Breach by Employer;
Employment Termination
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a. If this Agreement is terminated pursuant to
Section 10 (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 10.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 10(b)(i)(G),
then Employee shall not be entitled to receive a bonus under this
Section 11.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 10(b)(i) of this Agreement, the
provisions of Section 9 shall not apply to Employee.
12. Remedies
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Employer recognizes that because of Employee's
special talents, stature and opportunities in the interactive
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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 10 (a)(i) or (iii), or in
the event of termination by Employee under Section 10(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.
13. Excise Tax. In the event that any payment or
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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.
14. Arbitration. Any controversies between Employer and
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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 8 and 9 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.
15. Attorneys' Fees and Costs. If any action at law or
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in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable
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attorney's fees, costs and necessary disbursements in addition to
any other relief to which he may be entitled.
16. Entire Agreement; Survival. This Agreement contains
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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, 8, 9, 10(a)(ii),
10 (a)(iii), 10 (c), 11, 12, 13, 14, 15, 18, 19 and 20 shall survive
the termination of this Agreement.
17. Assignment. This Agreement shall not be assigned to
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other parties.
18. Governing Law. This Agreement and all the
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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.
19. Notices. All notices, responses, demands or other
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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.
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Gersten, Savage, Kaplowitz & ▇▇▇▇▇▇
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Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telefax: (212) 980-5i92
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Employee:
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20. Severability of Agreement. Should any part of this
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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/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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