EXHIBIT 10.2
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 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 Executive Vice President and President of
ACTV Entertainment, Inc.; and
WHEREAS, Employee is willing to continue to be employed
as the Executive Vice President of Employer and President of ACTV
Entertainment, Inc. in the manner provided for herein, and to
perform the duties of the Executive Vice President of Employer and
President of ACTV Entertainment, 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 Executive Vice President of Employer
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and President of ACTV Entertainment, Inc. Employer hereby employs
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Employee as its Executive Vice President and as President of ACTV
Entertainment, Inc.
2. Term. Subject to Section 9 below, the term of this
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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
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duties and shall have any and all powers as may be prescribed by
the President 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 President and Chief
Executive Officer or his designee.
4. Compensation.
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a. (i) Employee shall be paid a minimum of
$150,000 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 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 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 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
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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.
(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 $750,000. 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.
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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
(iii) by any combination of cash and (ii) or (iii),
above.
5. 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.
6. 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.
7. 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.
8. Covenant Not to Compete. Subject to, and limited
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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
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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 interactive
television technology or programs.
9. 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 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 !0 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
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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 empicyee 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.
(ii) Anything herein to the contrary
notwithstanding, Employee may terminate this Agreement upon thirty
(30) days written notice.
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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
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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
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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
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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
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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.
13. 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 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
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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
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
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the entire agreement between the parties with respect to the
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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
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other parties.
17. 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.
18. 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.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxxxxx X. Xxxxxxx
Telefax: (000) 000-0000
Telephone: (000) 000-0000
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Xxxxxxx, Xxxxxx, Xxxxxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Kapiowitz, Esq.
Telefax: (000) 000-0000
Telephone: {212) 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
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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/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
President
/S/ Xxxxx Xxxxx
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XXXXX XXXXX
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