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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
_________________________________ACTV, Inc._________________________
(Exact name of registrant as specified in its charter)
Delaware 94-2907258
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1270 Avenue of the Americas
New York, New York 10020
(Address of principal executive offices) (Zip Code)
(212) 262-2570 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (g) of the Act:
Title of each class Name of exchange on which registered
Common Stock, Par Value $0.10 Boston Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $0.10 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of
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Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of August 5, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant (based on the NASDAQ Stock Market closing bid
price on August 2, 1996) was $37,546,669.
As of August 5, 1996, there were 11,891,105 shares of the registrant's common
stock outstanding.
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ITEM 10. MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of April 22, 1996, the
date of the filing of the Company's Form 10-K/A-1, are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
William C. Samuels 53 Chairman, Chief Executive
Officer and Director
David Reese 39 Executive Vice-President,
President - ACTV
Entertainment, Inc. and
Director
Bruce Crowley 38 Executive Vice-President,
President - ACTV Interactive,
Inc. and Director
Christopher C. Cline 45 Vice President, Chief Financial
Officer and Secretary
Jay M. Kaplowitz 49 Director
Howard Squadron 69 Director
Richard Hyman 44 Director
</TABLE>
WILLIAM C. SAMUELS has served as President and a Director of the Company since
August 1, 1989, and became the Chief Executive Officer in 1993 and Chairman of
the Board in November 1994. He also served as Chairman of ACTV Interactive, a
partnership with the Post Company, from July 1992 through March 1994, when the
Company acquired the Post Company's interest in ACTV Interactive, Inc. ("ACTV
Interactive"). Mr. Samuels is a trustee of the Howard J. Samuels Institute at
City College. Mr. Samuels has a JD from Harvard Law School (1968) and a BS in
Economics and Engineering from the Massachusetts Institute of Technology (1965).
In July 1996, Mr. Samuels was elected to a three year term as Director.
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DAVID REESE has been Executive Vice President of the Company since November 1992
and has been President of ACTV Entertainment, Inc., a subsidiary of the Company
("ACTV Entertainment"), since 1994. He has been employed by the Company since
December 1988, and served as the Company's Vice President of Finance from
September 1989 through November 1992. He has been a Director since 1992. Mr.
Reese has a BS from Pennsylvania State University (1978). In July 1996, Mr.
Reese was elected to a two year term as Director.
BRUCE CROWLEY joined the Company as President-Distance Learning in October 1994,
became Executive Vice President in October 1995, and became President of ACTV
Interactive and a Director of the Company in December 1995. Prior thereto, he
had been employed by KDI Corporation since 1988, and was most recently
responsible for KDI Corporation's education division. Mr. Crowley has a BA from
Colgate University (1979) and an MBA from Columbia University (1984). In July
1996, Mr. Crowley was elected to a one year term as Director.
CHRISTOPHER C. CLINE has been Vice President-Finance and Chief Financial Officer
of the Company since November 1993. From 1991 to 1993 he was employed by
Showcase Communications Network, Ltd. ("Showcase"), a multimedia computer
software and publishing company, first as Vice President-Finance and later as
President and Chief Executive Officer. In May 1993, a Chapter 7 bankruptcy
petition was entered against Showcase in United States Bankruptcy Court and was
not contested by the company. Showcase was adjudged a bankrupt in December 1993.
From 1988 to 1990, Mr. Cline was Vice President of Intercontinental Trade and
Finance Corp., a cross-border financial trading and consulting company. Mr.
Cline received a BA from Haverford College (1973) and an MBA from Stanford
University (1976).
JAY M. KAPLOWITZ has been a Director of the Company since December 1988. Mr.
Kaplowitz has for more than the past 20 years engaged in the practice of law in
New York, New York. For the last 18 years, he has been a member of the law firm
of Gersten, Savage, Kaplowitz & Curtin, LLP, general counsel to the Company. Mr.
Kaplowitz resigned as a Director effective April 29, 1996.
RICHARD HYMAN has been a Director since December 1994. For more than the past
five years, he has been the President of Triquest Financial Services, Inc. Mr.
Hyman received a BA from the University of Wisconsin (1974). In July 1996, Mr.
Hyman was elected to a one year term as Director.
HOWARD SQUADRON has been a Director since January 1995. He has been engaged in
the practice of law for more than 40 years, since 1954, with the firm of
Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin. Mr. Squadron received his BA
from City College (1946) and his JD from Columbia University (1947). Mr.
Squadron resigned as a Director
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effective May 10, 1996.
At the 1996 annual meeting of stockholders, the following two Directors were
elected by the stockholders:
WILLIAM A. FRANK has been a Director since April 1996. He currently serves as
the Chief Executive Officer of Greenwich Entertainment Group (the "Greenwich
Group"), a position he has held since August 1994. The Greenwich Group is a
licensee of the Company's Programming Technology for use in malls and museums.
Mr. Frank also currently serves as Chairman of the Board of Corsearch, a data
research company. From October 1993 to July 1994, Mr. Frank was employed by the
Company as President of Private Networks. Prior thereto, he was employed for a
period of eighteen years at Alexander Proudfoot Company, a strategic management
consulting company. Mr. Frank has a B.S. from the University of Missouri (1970).
In July 1996 Mr. Frank was elected to a three year term as Director.
STEVEN W. SCHUSTER has been a director of the Company since May 1996. He has
been engaged in the practice of law for more than 16 years, since January 1996
with the firm of McLaughlin & Stern LLP. From June 1993 to December 1995 he was
a member of the law firm of Shane & Paolillo, P.C., and from January 1991 to May
1993 he was a member of the law firm of Gersten, Savage, Kaplowitz & Curtin,
LLP, counsel to the Company. Mr. Schuster received his BA from Harvard
University (1976) and his JD from New York University School of Law (1980). In
July 1996, Mr. Schuster was elected to a two year term as Director.
Executive officers are appointed by the Board of Directors and serve at the
pleasure of the Board of Directors. At the 1996 annual meeting of stockholders,
the stockholders adopted an amendment to the By-Laws of the Company to elect
directors to staggered three year terms. Pursuant to the amended By-Laws, two
directors were elected to serve three year terms, two directors were elected to
serve two year terms and two directors were elected to serve a one year term.
KEY EMPLOYEES AND CONSULTANTS
MICHAEL J. FREEMAN, Ph.D. has been Advanced Product Development Liaison since
November 1994. Prior thereto, he had been a director and Chairman of the Board
of Directors since June 1985. He is the inventor of the Programming Technology
and the founder of the Company. Dr. Freeman devotes a substantial amount of his
business time to the Company. Prior to his association with the Company and
interactive television, Dr. Freeman was involved in developing interactive
products principally in the toy and telecommunications industries. Dr. Freeman
has a Ph.D. from City University of New York (1977) and an MBA from Bernard
Baruch College (1970).
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EMPLOYMENT AGREEMENTS
The Company and Mr. Samuels entered into an employment agreement in August 1995.
Mr. Samuels serves as Chairman of the Board, President and Chief Executive
Officer of the Company. For the five-year term of the agreement, Mr. Samuels
will be paid a minimum annual salary of $190,000, and a bonus paid in cash
and/or in unregistered securities equal to 2% of the increase over a twelve
month period in the total marked capitalization of the Company over fifty
million dollars. Mr. Samuels' employment agreement contains non-competition
provisions pursuant to which he agreed not to engage in a business that is
competitive with the Company during the term of his employment agreement and for
one year thereafter.
Mr. Samuels currently holds fully vested options to purchase an aggregate of
533,035 shares of common stock at an exercise price of $2.50 per share,
exercisable through various dates between August 1997 through June 2001. Upon
the issuance of any stock dividends, stock splits or combinations, the number of
shares issuable upon the exercise of options for 533,035 of such shares may be
adjusted to avoid dilution. Options for 120,000 of such 533,035 shares may also
be adjusted to avoid dilution from the issuance from August 1989 through July
1993 by the Company of any Common Stock (including Common Stock issued after
July 1993 based on options granted during the August 1989 to July 1993 period)
as a result of any financing, joint venture or other business transaction. In
addition, Mr. Samuels has unvested options to purchase an aggregate of 310,000
shares of Common Stock at an exercise price of $3.25 per share, a third of which
vest on January 1, 1997, 1998 and 1999, respectively, which options are
exercisable through 2003 may be adjusted to avoid dilution. During 1995, Mr.
Samuels exercised 100,000 options at $2.50 per share and 80,000 at $3.50 per
share, therefore increasing his shareholdings to 240,950 shares of Common Stock.
The Company has also issued to Mr. Samuels' 255,000 outstanding SARs.
The Company and Mr. Reese entered into an employment agreement in August 1995.
For the five year term of the agreement, Mr. Reese will be paid a minimum annual
base salary of $150,000. Mr. Reese's employment agreement contains
non-competition provisions pursuant to which he agreed not to engage in a
business that is competitive with the Company during the term of his employment
agreement and for one year thereafter.
The Company has granted to Mr. Reese fully vested options to purchase 49,683
shares of common stock at an exercise price of $2.50 per share, which are
exercisable through March 1997. The Company has also granted Mr. Reese fully
vested options to purchase 55,317 shares of common stock at an exercise price of
$3.50 per share which are exercisable through January 2002. In addition, Mr.
Reese has unvested options to purchase 310,000 shares of Common Stock at an
exercise price of $3.25 per share, each third of which vest on January 1, 1997,
1998 and 1999, respectively, which options are
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exercisable through 2003 and may be adjusted to avoid dilution. The Company has
also issued to Mr. Reese 138,000 outstanding SARs.
The Company and Mr. Crowley entered into an employment agreement in December
1995. Mr. Crowley has agreed to serve at an annual base salary of $150,000. Mr.
Crowley's employment agreement contains non-competition provisions pursuant to
which he agreed not to engage in a business that is competitive with the Company
during the term of his employment agreement and for one year thereafter.
The Company has issued to Mr. Crowley currently outstanding fully vested options
to purchase an aggregate of 100,000 shares of common stock at an exercise price
of $3.50, as well as 120,000 SARs. In addition, Mr. Crowley has unvested options
to purchase an aggregate of 310,000 shares of Common Stock at an exercise price
of $3.25 per share, a third of which vest on January 1, 1997, 1998 and 1999,
respectively, which options are exercisable through 2003 and may be adjusted to
avoid dilution.
Mr. Samuels', Mr. Reese's and Mr. Crowley's employment contracts contain a
change of control provision whereby, in certain circumstances, including the
possibility that a person other than the Post Company becomes the owner of 30%
or more of the outstanding securities of the employer and they are not retained,
they receive a bonus not to exceed 2.7 times the then current base salary and
the exercise price on all options is reduced to $.10 per option.
The Company and Michael J. Freeman entered into an employment agreement in
November 1994, whereby Dr. Freeman agreed to serve as Advanced Product
Development Liaison for a term of five years from the original date of the
agreement. Dr. Freeman is paid at the rate of $167,000 per year. Dr. Freeman is
required to devote as much time as he, in his discretion, deems necessary to
discharge his duties. The employment agreement of Dr. Freeman contains
non-competition provisions pursuant to which he agreed not to engage in a
business that is competitive with the Company during the term of his employment
agreement and for one year thereafter.
At the time of issuance, all options to the Company's employees were granted at
an exercise price equal to or greater than the prevailing market price for the
Company's Common Stock.
SECTION 16(a) REPORTING
As under the securities laws of the United States, the Company's
directors, its executive (and certain other) officers, and any persons holding
ten percent or more of the Company's Common Stock must report on their ownership
of the Company's Common Stock and any changes in that ownership to the
Securities and Exchange Commission and to the National Association of Securities
Dealers, Inc.'s Automated
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Quotation System. Specific due dates for these reports have been established.
During the year ended December 31, 1995, all reports for all transactions were
filed on a timely basis, except for inadvertent late filings of a Form 3 for
each of Howard Squadron and Richard Hyman, relating to their appointment as
directors in January 1995. Upon discovery of these oversights, a Form 3 setting
forth an initial statement of beneficial ownership for each of Howard Squadron
and Richard Hyman was promptly filed.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf, in accordance with Rule 12b-15 by the undersigned thereunto duly
authorized in the City of New York and State of New York on the fifth day of
August 1996.
ACTV, Inc.
By: /s/ William C. Samuels
______________________
William C. Samuels
Chairman and Chief
Executive Officer
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