Exhibit 10.9
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of August
1, 1997, by and between Digital Video Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxxxxx ("Xxxxxxxx").
1. Employment.
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1.1 Employment as Executive Vice President of Engineering. The
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Company agrees to employ Maslaney, and Maslaney agrees to be employed by the
Company, as the Company's Executive Vice President of Engineering for the period
beginning on August 1, 1997 or such earlier date as the Company and Maslaney may
agree to (the "Commencement Date") and ending on the third anniversary of the
Commencement Date, unless such employment is terminated earlier pursuant to
Section 3 (the "Employment Period").
1.2 Duties as Employee. Maslaney agrees to serve the Company as
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Executive Vice President of Engineering during the Employment Period.
Maslaney's duties shall be those customary for an Executive Vice President of
Engineering of a company similar to the Company and such other duties as are
specified by the Company's President or Board of Directors (the "Board").
Maslaney shall report directly to Xxxxxx X. Xxxxxxxxx, the Company's President.
In case of a reorganization, merger, consolidation, liquidation, dissolution,
sale of all or substantially all of the Company's assets or similar event, the
Board reserves the right, in its sole discretion, to change or modify Maslaney's
duties hereunder as it deems appropriate in good faith. During the Employment
Period, Maslaney shall devote full time to, and use his best efforts to advance,
the business and welfare of the Company. Maslaney shall not directly or
indirectly render any service of a business, commercial, or professional nature
to any other person, organization or other entity, whether for compensation or
otherwise, directly or indirectly, without the prior written consent of a
majority of the members of the Board.
1.3 Salary and Benefits.
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(a) Salary and Bonus. The Company shall pay Maslaney a salary at
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the annual rate of $150,000 per year payable at least as frequently as monthly
and subject to such payroll deductions as may be necessary or customary in
respect of the Company's salaried employees in general. The Company shall pay
Maslaney an annual bonus (payable at the end of each year of the Employment
Period") equal to the sum of (a) and (b) below, each calculated as follows:
(a) The Company shall pay Maslaney a bonus of a minimum of $25,000 and a
maximum of $40,000 based on the performance of the Company's Atlanta,
Georgia operations (the "Atlanta bonus"), with the total amount of the
Atlanta bonus to be based upon performance standards to be determined by
the Company's President; and
(b) The Company shall pay Maslaney a bonus of a minimum of $10,000 and a
maximum of $40,000 based upon the performance of the Company's operations
as a whole (the
"DVS bonus"), with the total amount of the DVS bonus to be based
upon performance standards to be determined by the Company's President
Maslaney's salary and bonus for the periods after the first year of the
Employment Period shall continue at the same rate of salary as for the first
year of the Employment Period, and with a bonus to be paid at the end of each of
the second and third years in amounts determined in the same manner as in the
first year of the Employment Period, unless otherwise mutually agreed to by the
Board and Maslaney.
(b) Incentive, Savings and Retirement Plans. Maslaney shall be
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entitled to participate at the discretion of the Board in all annual bonus,
incentive, stock option, savings and retirement plans, practices, policies and
programs applicable generally to other senior executives of the Company.
(c) Welfare Benefit Plans. Maslaney shall be eligible for
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participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to other senior executives of the Company.
(d) Vacations. Maslaney shall be entitled to three weeks paid
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vacation per year of service during the Employment Period. To the extent
vacation is not taken in any year, it shall be accrued and may be taken in
subsequent years.
(e) Expenses. Maslaney shall be entitled to receive prompt
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reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other senior executives of the Company.
(f) Fringe Benefits. Maslaney shall be entitled to fringe
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benefits in accordance with the plans, practices, programs and policies as in
effect generally with respect to other senior executives of the Company.
2. Additional Compensation.
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2.1 1996 Plan Options.
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(a) In further consideration for Maslaney's performance of his
obligations under this Agreement, and pursuant to an option agreement to contain
such terms as are customarily provided for by the Company's 1996 Stock Option
Plan (the "Option Plan"), the Company, subject to the approval of the Option
Plan by its shareholders and the approval of the grant by the Company's Board,
shall grant to Maslaney options (the "Options") to purchase 100,000 shares of
the Company's common stock (the "Shares") during the five-year period from the
date of grant, at an exercise price per share equal to the closing price of the
Company's
2.
common stock on the Nasdaq National Market on the later of the date of
this Agreement or the date on which the Board approves this grant.
(b) The Shares vested and subject to exercise shall be 2.083333%
of such Shares at the end of each month after the grant date during which
Maslaney continues to be employed as the Company's Executive Vice President of
Engineering, so that all of the Shares may be purchased on or after the fourth
anniversary of the grant date if Maslaney has continued to be employed as the
Company's Executive Vice President of Engineering through that date. In the
event that Maslaney's employment with the Company terminates for any reason, all
Options shall either be vested or cancelled as set forth in Section 3.4 hereof.
3. Termination. The term of Maslaney's employment under this Agreement
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may terminate as hereinafter provided, in which case (i) Maslaney shall be
entitled to the amounts set forth in Section 3.4 hereof and (ii) Maslaney shall
remain subject to the provisions of Sections 4, 5 and 6 hereof to the extent
applicable. The Employment Period shall not extend for any period beyond the
third anniversary of the Commencement Date unless agreed to in writing by
Maslaney and the Company.
3.1 Death or Disability. If Maslaney dies or becomes disabled during
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the Employment Period, Maslaney's employment under this Agreement shall
automatically terminate upon death or after three consecutive months of
disability, as the case may be. "Disability" shall mean any physical or mental
illness that renders Maslaney unable to perform his agreed-upon services under
this Agreement for any three consecutive months. Such disability shall be
determined by a licensed physician not affiliated with the parties to this
Agreement. In the event of Maslaney's death, the amounts due him pursuant to
this Agreement through the date of his death shall be paid to whomever he has
previously designated or, in the event no such designation is made, to his
estate, or to the beneficiaries of his estate.
3.2 Good Cause. Maslaney's employment under this Agreement may be
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terminated by the Company for "good cause," as determined in good faith by the
Board. The term "good cause" is defined as any one or more of the following
occurrences:
(a) Maslaney's continuing repeated willful failure or refusal to
perform his duties as required by this Agreement or other material breach of
this Agreement, provided, that termination of Maslaney's employment pursuant to
this subsection (a) shall not constitute valid termination for cause unless
Maslaney shall have first received written notice from the Board stating with
specificity the nature of such failure or refusal and affording Maslaney at
least 15 days to correct the act or omission complained of;
(b) Gross negligence, material violation by Maslaney of any duty
of loyalty to the Company or any other material misconduct on the part of
Maslaney, provided that termination of Maslaney's employment pursuant to this
subsection (b) shall not constitute valid termination for cause unless Maslaney
shall have first received written notice from the Board stating with specificity
the nature of such failure or refusal and affording Maslaney at least 15
3.
days to fully correct the act or omission complained of and to indemnify the
Company for any damage caused to it by such act or omission;
(c) Maslaney's conviction by, or entry of a plea of guilty or
nolo contender in, a court of competent and final jurisdiction for any crime
involving moral turpitude or punishable by imprisonment in excess of six months
in the jurisdiction involved; or
(d) Maslaney's commission of an act of fraud, whether prior to or
subsequent to the date hereof, upon the Company.
3.3 Other Termination.
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(a) By Maslaney. Maslaney may terminate this Agreement at any
time upon six months prior written notice.
(b) By the Company. The Company may terminate this Agreement at
any time during the first year of the Employment Period upon nine months prior
written notice. Thereafter, the Company may terminate this Agreement at any time
upon 180 days prior written notice. If Maslaney receives a notice of termination
under this Section 3.3(b), Maslaney shall facilitate an orderly transition of
his duties within 30 days, after which time he may continue to report to work at
his option.
(c) The foregoing notice requirements shall not apply to any
termination pursuant to Section 3.2 of this Agreement.
3.4 Payments Upon Termination.
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(a) Completion of Employment Period. If at the end of the
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Employment Period the parties have not agreed in writing to extend the term of
Maslaney's employment with the Company, Maslaney shall receive his salary and
any guaranteed minimum bonus through the date of such termination. Options
vested at such termination date shall be exercisable in accordance with the
terms of the Option Plan. Options not vested at such termination date shall be
immediately cancelled. In no event shall Maslaney be entitled to receive
additional salary, bonus, options or compensation of any other kind hereunder.
(b) Death or Disability. In the event of Maslaney's termination
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as set forth in Section 3.1 hereof, he shall receive his salary and the pro rata
portion of any guaranteed minimum bonus through the date of such termination.
Options vested at such termination date shall be exercisable in accordance with
the terms of the Option Plan. Options not vested at such termination date shall
be immediately cancelled. In no event shall Maslaney be entitled to receive
additional salary, bonus, options or compensation of any other kind hereunder.
(c) Good Cause. In the event of Maslaney's termination as set
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forth in Section 3.2 hereof, he shall receive his salary through the date of
such termination. Options
4.
vested at such termination date shall be exercisable in accordance with the
terms of the Option Plan. Options not vested at such termination date shall be
immediately cancelled. In no event shall Maslaney be entitled to receive
additional salary, bonus, options or compensation of any other kind hereunder.
(d) Other Termination. In the event of Maslaney's termination as
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set forth in Section 3.3 hereof, he shall receive his salary and the pro rata
portion of any guaranteed minimum bonus through the date of such termination
(which termination shall occur six months from the date on which Maslaney gives
notice (the "Termination Date")). In addition, Maslaney shall receive salary,
benefits and the pro rata portion of any guaranteed minimum bonus for an
additional six months following the Termination Date. Options vested at the
Termination Date shall be exercisable in accordance with the terms of the Option
Plan. Options not vested at the Termination Date shall be immediately cancelled;
provided that on the Termination Date, the Administration shall cause the
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vesting to be accelerated on the portion of the Options that would have vested
if he had continued to be employed in the six-month period following the
Termination Date; provided further that the Administration shall hold such
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Options in an escrow until the date six months from the Termination Date and
that such Options shall be released to Maslaney on the date six months from the
Termination Date. In no event shall Maslaney be entitled to receive any other
additional salary, bonus, options or compensation of any other kind hereunder.
4. Ownership of Intangibles. Maslaney hereby grants and assigns to the
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Company all of his right, title and interest in and to any ideas, designs,
techniques, processes, trademarks, inventions and improvements (collectively,
"Inventions") arising during the term of this Agreement, which Inventions relate
to the business of the Company or any of its affiliates, or to actual or
demonstrably anticipated research or development of the Company or any of its
affiliates, or results from work performed by Maslaney for the Company or any of
its affiliates, together with all patents that are pending or have been issued
in the United States and in all foreign countries during the term of this
Agreement with respect to such Inventions (the "Proprietary Rights"). All such
Proprietary Rights shall be the sole and exclusive property of the Company and
shall remain such notwithstanding the subsequent termination of employment under
this Agreement. To the extent that any Proprietary Rights or other ideas,
designs, techniques, processes, trademarks, inventions or improvements used by
the Company during the term of this Agreement rely upon or use patented or
unpatented Inventions that Maslaney has made or conceived prior to the date of
this Agreement that has not otherwise been transferred to the Company pursuant
to the Asset Purchase Agreement dated as of August 1, 1997 by and between the
Company and Arris Interactive L.L.C., Maslaney hereby grants an exclusive,
perpetual, royalty-free, worldwide license to use such Invention.
5. Confidential Information. Maslaney agrees that during the Employment
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Period, he will be dealing with proprietary, nonpublic and confidential
information, including inventions and processes developed by the Company or any
of its affiliates, relating to the present and prospective business, assets and
good will of the Company or any of its affiliates (all of the foregoing referred
to as "confidential information"). Without limiting the generality of the
5.
foregoing, it is understood that Maslaney will have access to information
regarding intellectual property of the Company or any of its affiliates,
inventions and ideas under development by them, and information regarding the
actual and prospective business and customers of the Company or any of its
affiliates. Maslaney agrees that he will not disclose to anyone, directly or
indirectly, any of such confidential matters, or use them other than in the
course of performing his obligations under this Agreement. All documents
prepared by Maslaney in connection with the services provided herein, and all
confidential information (however embodied or recorded) that might be given to
him are the exclusive property of the Company and shall be returned to the
Company at its request. After termination of Maslaney's employment with the
Company, he shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it in writing. Maslaney acknowledges that such actions could cause
irreparable harm to the Company and that the Company may obtain an injunction or
other equitable relief to enforce this provision. Furthermore, upon termination
of this Agreement, Maslaney shall promptly deliver to the Company all books,
memoranda, records and written data in original form of every kind relating to
the business and affairs of the Company that may then be in his personal
possession.
6. Noncompetition.
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6.1 No Competing Activities. Maslaney agrees that, while he is
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employed by the Company, he shall not engage or participate in any state of the
United States, directly or indirectly, either as an owner, partner, director,
trustee, officer, employee, consultant, advisor or in any other individual or
representative capacity, in any activity which is the same as, similar to or
competitive in any manner with the business of the Company or its members or
affiliates (herein, a "Competing Activity") or have any investment in a business
which is engaged in a Competing Activity (other than an ownership interest of
less than 5% of any company whose securities are listed on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market). Maslaney
further agrees that in the event of a termination for good cause as set forth in
Section 3.2 hereof upon the expiration of the term of this Agreement, or
Maslaney's election to terminate employment pursuant to Section 3.3 hereof, he
shall not, for a two-year period following such termination of employment,
engage in a Competing Activity or have any investment in a business which is
engaged in a Competing Activity (other than an ownership interest of less than
5% of any company whose securities are listed on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market).
6.2 Reasonable Limitations. Maslaney acknowledges that, given the
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nature of the Company's business, the covenants contained in this Section 6
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect the legitimate business interests of the Company. If,
however, this Section 6 is determined by any court of competent jurisdiction, or
in any arbitration, as the case may be, to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect or for any other
reason it will be interpreted to extend only over the longest period
6.
of time for which it may be enforceable and/or over the largest geographical
area as to which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such court, or
in such arbitration, as the case may be.
6.3 Acknowledgement. Maslaney understands that the restrictions in
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Section 6.1 hereof may limit his ability to earn a livelihood in a business
similar to the business of the Company, but he nevertheless believes that he has
received and will receive sufficient consideration hereunder and otherwise as an
employee of the Company to justify such restrictions which, in any event, given
his education, abilities and skills, Maslaney does not believe would prevent him
from earning a living.
7. WAIVER OF JURY. WITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN
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CONNECTION WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, EACH PARTY HEREBY
IRREVOCABLY WAIVES ALL RIGHTS IT MAY HAVE TO DEMAND A JURY TRIAL. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE AND EACH PARTY ACKNOWLEDGES
THAT NONE OF THE OTHER PARTIES NOR ANY PERSON ACTING ON BEHALF OF THE OTHER
PARTIES HAS MADE ANY REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE PARTIES EACH FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY
HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THE PARTIES EACH
FURTHER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION.
8. Miscellaneous.
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8.1 Modification and Waiver of Breach. No waiver or modification of
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this Agreement shall be binding unless it is in writing signed by the parties
hereto. No waiver of a breach hereof shall be deemed to constitute a waiver of
a future breach, whether of a similar or dissimilar nature.
8.2 Assignment. This Agreement shall inure to the benefit of and
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shall be binding upon the Company, its successors and assigns. The obligations
and duties of Maslaney hereunder are personal and not assignable, whether
voluntarily or involuntarily or by operation of law or otherwise.
8.3 Notices. All notices and other communications required or
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permitted under this Agreement shall be in writing, served personally on, or
mailed by certified or registered United States mail to, the party to be charged
with receipt thereof. Notices and other communications served by mail shall be
deemed given hereunder 72 hours after deposit of such notice or communication in
the United States Post Office as certified or registered mail with postage
prepaid and duly addressed to whom such notice or communication is to be given,
in the case of (a) the Company, 0000 Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000, Attention:
7.
Secretary, or (b) Maslaney, to the address set forth below his name on the
signature page hereof. Any such party may change said party's address for
purposes of this Section 9.3 by giving to the party intended to be bound
thereby, in the manner provided herein, a written notice of such change.
8.
8.4 Counterparts. This instrument may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
8.5 Governing Law. This Agreement shall be construed in accordance
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with, and governed by, the internal laws of the State of California.
8.6 Legal Fees. If any legal action or other proceeding is brought
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for the enforcement of this Agreement, or because of any alleged dispute,
breach, default or misrepresentation in connection with this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs it incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
8.7 Savings Clause. If any provision of this Agreement or the
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application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
8.8 Complete Agreement. This instrument constitutes and contains the
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entire agreement and understanding concerning Maslaney's employment and the
other subject matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matters hereof. This is an
integrated document.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day
and year first above written.
XXXXXXX XXXXXXXX: THE COMPANY:
DIGITAL VIDEO SYSTEMS, INC.
___________________________ By:__________________________
Xxxxxxx Xxxxxxxx
Address:
___________________________
___________________________
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9.
