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EXHIBIT 10.50
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated July 1, 1998 by and between NTN
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and Gerald Sokol,
Jr. (the "Executive").
1. Term of Employment
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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
President and Chief Executive Officer for a term of two (2) years commencing as
of July 1, 1998 and ending June 30, 2000 (the "Term of Employment").
2. Duties
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During the Term of Employment, the Executive will serve the Company
faithfully, diligently, and competently and to the best of his ability, will
devote full regular working time to his employment with management and executive
authority and responsibility for the business, affairs and operations of the
Company any subsidiaries thereof, subject to the terms of this Agreement and the
direction and control of the Board of Directors.
3. Compensation
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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 $262,500 per annum during the first year and the term of
this Agreement. After the first year, the Executive's salary shall be increased
on the anniversary date each year during the Term of Employment in proportion to
any upward changes in Consumer Price Index of the U.S. Bureau of Labor
Statistics of Urban Wage Earners and Clerical Workers, U.S. City Average
(1967=100) during the calendar year immediately preceding each such anniversary
date (in the event that such index shall be changed or discontinued, the index
published by the United States Government which is most nearly the same as such
index shall be used to make the foregoing calculations).
In addition, Executive will be paid a bonus for the 1998 fiscal year
based upon the "Operating Cash Flow" of the Company for 1998. Operating Cash
Flow is defined herein to mean revenue less operating and SG&A expenses,
excluding depreciation, amortization, interest expense and any one time or
extraordinary charges. Operating Cash Flow shall exclude all business activity
(including charges associated with the acquisition or sale) of any entity which
is acquired by, or which acquires, the Company. Such bonus shall be paid within
60 days after the determination of Operating Cash Flow. A schedule setting forth
the formula for calculating such bonus is attached hereto as Exhibit A. The
Compensation Committee of the Board of Directors and the Executive will mutually
agree on a bonus program for the period of this Agreement occurring after
December 1998.
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4. Expenses and Other Benefits.
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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 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. 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 four (4) weeks, in addition to any
authorized holidays of the Company, during each 12-month period during the Term
of Employment.
5. Death or Disability
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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 75% of the
Executive's compensation that was to accrue during the balance of the Term of
Employment, including those benefits described in Sections 4(a) and (b) hereof.
6. Disclosure of Information; Inventions and Discoveries
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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 or during any earlier or later period of employment by the Company,
whether or not during regular working hours or through the use
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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
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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 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
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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).
9. Remedies
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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 Section 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.
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10. Termination
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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 Section 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 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 entire remaining balance due
him as compensation pursuant to this Agreement.
Executive's employment with the Company may be terminated at any time
by Executive upon sixty (60) days' notice to the Company (which period shall not
be shortened by the Board of Directors). In the event Executive performs his
duties hereunder in good faith during such sixty (60) day period, Executive
shall be entitled to receive twelve (12) months salary but, if Executive's
employment is terminated prior to the end of the Company's fiscal year,
Executive shall not be entitled to receive a pro rata portion of the bonus to
which Executive would otherwise have been entitled had he remained employed by
the Company.
Notwithstanding anything to the contrary contained herein, 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 by
Executive following a Change in Control Event, Executive shall be entitled to
receive [one] year's salary as provided in Section 3 together with a pro rata
portion of the bonus to which Executive would have been entitled. In the event
of such termination by the Company following a Change in Control Event Executive
shall be entitled to receive the greater of (i) one year's salary together with
a pro rata portion of the bonus to which Executive would have been entitled; or
(ii) the entire remaining balance due Executive 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
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Voting Securities"); 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
(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
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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 an officer of the Company and/or
Director of the Company to the Board of Directors, such resignation to become
effective immediately.
12. Data
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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 on account of his past or current
status as a director or shareholder of the Company.
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13. Arbitration
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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
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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
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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
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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.
17. Notices
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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.
5966 La Place Court
Suite 100
Carlsbad, CA 92008
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The Executive:
Gerald Sokol, Jr.
2220 Sara Way
Carlsbad, CA 92008
or to such other address as either party may from time to time designate by like
notice to the other.
18. General
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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 Executives 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/ F. Kevin Loughran
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Vice President
AGREED TO AND ACCEPTED:
By: /s/ Gerald Sokol, Jr.
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Gerald Sokol, Jr.
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