Exhibit 10.8
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 Xxxx Xxxxxx ("Xxxxxx").
1. Employment.
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1.1 Employment as Executive Vice President and Chief Operating
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Officer (Atlanta). The Company agrees to employ Xxxxxx, and Xxxxxx agrees to be
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employed by the Company, as the Executive Vice President of Business Development
for the Company and Chief Operating Officer of the Company's Atlanta, Georgia
operations (the "Division") for the period beginning on August 1, 1997 or such
earlier date as the Company and Xxxxxx may agree to (the "Commencement Date")
and ending on the second anniversary of the Commencement Date, unless such
employment is terminated earlier pursuant to Section 3 (the "Employment
Period").
1.2 Duties as Employee. Xxxxxx agrees to serve as Executive Vice
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President of Business Development for the Company and Chief Operating Officer of
the Division during the Employment Period. Xxxxxx'x duties shall be those
customary for holders of similar positions at a company similar to the Company
and such other duties as are specified by the Company's President or Board of
Directors (the "Board"). Xxxxxx 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 Xxxxxx'x duties hereunder as it deems appropriate in good
faith. During the Employment Period, Xxxxxx shall devote full time to, and use
his best efforts to advance, the business and welfare of the Company. Xxxxxx
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 Xxxxxx a salary at
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the annual rate of $180,000 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
Xxxxxx an annual bonus (payable at the end of each year of the Employment
Period) of a minimum of $40,000 and a maximum of $80,000, with the amount of the
total annual bonus for each year of the Employment Period to be based upon
performance standards to be determined by the Company's President. Xxxxxx'x
salary and bonus for the period 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 the second year in
an amount determined in the same manner as in the first year of the Employment
Period, unless otherwise mutually agreed to by the Board and Xxxxxx.
(b) Incentive, Savings and Retirement Plans. Xxxxxx 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. Xxxxxx 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. Xxxxxx shall be entitled to three weeks paid time
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off per year of service during the Employment Period. To the extent paid time
off is not taken in any year, it shall be accrued and may be taken in subsequent
years.
(e) Expenses. Xxxxxx 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. Xxxxxx shall be entitled to fringe benefits
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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 Xxxxxx'x 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 Xxxxxx options (the "Options") to purchase 125,000 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 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 Xxxxxx
continues to be employed as the Company's Executive Vice President of Business
Development and Chief Operating Officer of the Division, so that all of the
Shares may be purchased on or after the fourth anniversary of the grant date if
Xxxxxx has continued to be employed as the Company's Executive Vice President of
Business Development and Chief Operating Officer of the Division
2.
through that date. In the event that Xxxxxx'x 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 Xxxxxx'x employment under this Agreement may
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terminate as hereinafter provided, in which case (i) Xxxxxx shall be entitled to
the amounts set forth in Section 3.4 hereof and (ii) Xxxxxx 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 second anniversary
of the Commencement Date unless agreed to in writing by Xxxxxx and the Company.
3.1 Death or Disability. If Xxxxxx dies or becomes disabled during
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the Employment Period, Xxxxxx'x 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 Xxxxxx 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 Xxxxxx'x 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. Xxxxxx'x 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) Xxxxxx'x 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 Xxxxxx'x employment pursuant to
this subsection (a) shall not constitute valid termination for cause unless
Xxxxxx shall have first received written notice from the Board stating with
specificity the nature of such failure or refusal and affording Xxxxxx at least
15 days to correct the act or omission complained of;
(b) Gross negligence, material violation by Xxxxxx of any duty of
loyalty to the Company or any other material misconduct on the part of Xxxxxx,
provided that termination of Xxxxxx'x employment pursuant to this subsection (b)
shall not constitute valid termination for cause unless Xxxxxx shall have first
received written notice from the Board stating with specificity the nature of
such failure or refusal and affording Xxxxxx at least 15 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) Xxxxxx'x conviction by, or entry of a plea of guilty or nolo
con tendere 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
3.
(d) Xxxxxx'x 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 Xxxxxx. Xxxxxx may terminate this Agreement at any time
upon 90 days 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 Xxxxxx receives a notice of termination
under this Section 3.3(b), Xxxxxx shall facilitate an orderly transition of his
duties within 30 days, after which time he may continue to report to his 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 Employ
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ment Period the parties have not agreed in writing to extend the term of
Xxxxxx'x employment with the Company, Xxxxxx 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 Xxxxxx be entitled to receive additional salary,
bonus, options or compensation of any other kind hereunder.
(b) Death or Disability. In the event of Xxxxxx'x termination as
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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 Xxxxxx be entitled to receive
additional salary, bonus, options or compensation of any other kind hereunder.
(c) Good Cause. In the event of Xxxxxx'x termination as set forth
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in Section 3.2 hereof, he shall receive his salary 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 Xxxxxx be
entitled to receive additional salary, bonus, options or compensation of any
other kind hereunder.
(d) Other Termination. In the event of Xxxxxx'x 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
4.
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 Xxxxxx be entitled to receive any other additional
salary, bonus, options or compensation of any other kind hereunder.
4. Ownership of Intangibles. Xxxxxx 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 Xxxxxx 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 Xxxxxx 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., Xxxxxx hereby grants an exclusive,
perpetual, royalty-free, worldwide license to use such Invention.
5. Confidential Information. Xxxxxx 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
foregoing, it is understood that Xxxxxx 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. Xxxxxx 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 Xxxxxx 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 Xxxxxx'x 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. Xxxxxx 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, Xxxxxx shall promptly deliver to the Company all books,
memoranda, records
5.
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. Xxxxxx 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). Xxxxxx
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
Xxxxxx'x 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. Xxxxxx 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 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. Xxxxxx 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, Xxxxxx 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
6.
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 Xxxxxx 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: Secretary, or (b) Xxxxxx, 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.
8.4 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.
7.
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 Xxxxxx'x 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.
XXXX XXXXXX: THE COMPANY:
DIGITAL VIDEO SYSTEMS, INC.
___________________________ By:__________________________
Xxxx Xxxxxx
Address:
___________________________
___________________________
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8.
