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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 30,
1999, by and between Princeton Video Image, Inc., a New Jersey corporation (the
"Company"), and Xxxx Xxxxxx (the "Employee").
WHEREAS, the Company and the Employee wish to enter into an agreement
whereby the Employee shall be employed by the Company as its Vice President,
Sales and Marketing, as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. Term of Employment. Subject to the terms and conditions hereof, the
Company will employ the Employee, and the Employee will serve the Company, as
Vice President, Sales and Marketing, or such other senior executive position or
positions as the Company may request from time to time, for a period beginning
on September 30 , 1999 (the "Date of Hire") and terminating on the first
anniversary of such date (the "Initial Term"). Following the expiration of the
Initial Term and of each extension period referred to in this sentence, the term
of this Agreement automatically shall be extended for a period of one (1) year
thereafter (such term, as it may be shortened by termination of the Employee's
employment hereunder pursuant to the provisions hereof or extended, the "Term of
Employment").
2. Duties. During the Term of Employment, the Employee will serve as
Vice President, Sales and Marketing, subject to the terms of this Agreement and
the direction and control of the President of the Company and its Chairman. The
primary location of the Employee's employment hereunder shall be the offices of
the Company in New York City, New York. The Employee will hold, in addition to
the office of Vice President, Sales and Marketing the Company, such other
offices in the Company to which he may be appointed or assigned from time to
time by the Board of Directors of the Company and will discharge such duties in
connection therewith. The Employee shall devote all of his business time to the
performance of his duties hereunder, provided, that the Employee shall not be
precluded from serving as a member of up to two boards of directors or advisory
boards of companies or organizations so long as such service does not violate
the provisions of Section 9 of this Agreement or interfere with the performance
of the Employee's duties hereunder.
3. Compensation. The Company will, during the Term of Employment, pay
to the Employee as compensation for the performance of his duties and
obligations hereunder an initial base salary at the rate of $175,000 per annum
("Salary"), payable in equal semi-monthly installments. Such Salary shall be
reviewed annually by the Board of Directors of the Company in accordance with
the Company's compensation program solely for the purpose of determining
increases. During the Term of Employment, the Employee shall be eligible to
receive a bonus, to be awarded at the sole discretion of the Board of Directors
of the Company, upon the attainment of stated goals and objectives for the
Employee to be set by the Chairman, the President, or the
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Compensation Committee of the Board after consultation with the Employee;
provided, however, that the Employee shall receive a bonus of no less than
$75,000 upon the satisfactory completion of the Initial Term.
4. Other Benefits. During the Term of Employment:
(a) The Employee shall be entitled to participate in employee
benefit plans and programs of the Company to the extent that his position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Company does not guarantee the adoption or continuance of any
particular employee benefit plan or program during the Term of Employment, and
the Employee's participation in any such plan or program shall be subject to the
provisions, rules, regulations and laws applicable thereto; provided, however,
that the Employee shall be entitled to health and hospital insurance benefits
consistent with the past practices of the Company in effect with respect to
Company personnel generally.
(b) While employed hereunder, the Employee shall be entitled
to vacation benefits consistent with the past practices of the Company in effect
with respect to Company personnel generally, plus one additional week per year.
Such vacation may be taken by the Employee at such times as do not unreasonably
interfere with the business of the Company. The accumulation of annual vacation
time earned but not taken will be in accordance with the Company policy
guidelines. Additional vacation will be earned in accordance with Company
policy.
(c) Within thirty days of the date of this Agreement, the
Company shall grant to the Employee a stock option, pursuant to the Company's
1993 Stock Option Plan (the "Plan"), to purchase 65,000 shares of Common Stock
of the Company ("Common Stock") with an exercise price equal to the fair market
value of the shares on the Date of Hire. Such option shall be for a term of ten
years, subject to earlier termination ninety days after termination of
Employee's employment (or such later date after such termination as is as
provided in the Plan or Stock Option Grant Agreement), and shall be in the form
of, and on such terms and conditions as provided in, the Company's standard form
of Stock Option Grant Agreement in effect as of the date of this Agreement. Such
option grant shall provide, on condition that the Employee is employed by the
Company on the relevant vesting dates, that such options shall vest and become
exercisable over a three year period at the rate of 1/36 for each calendar month
of Employee's employment with the Company.
(d) The stock option grant agreement for the options described
in Section 4(c) of this Agreement will also provide that the applicable number
of all unvested options will become exercisable immediately upon a merger,
consolidation, acquisition of property or stock, reorganization (other than a
mere reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
the Company's Common Stock. In addition, the applicable number of all unvested
options shall become immediately exercisable in the event of a change in control
of the Company. A change in control of the Company shall be deemed to occur if
(a) the Company is merged with or into or consolidated with another
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corporation or other entity under circumstances where the shareholders of the
Company immediately prior to such merger or consolidation do not own after such
merger or consolidation shares representing at least fifty percent (50%) of the
voting power of the Company or the surviving or resulting corporation or other
entity, as the case may be, or (b) if the Company is liquidated or sells or
otherwise disposes of substantially all of its assets to another corporation or
entity, or (c) if any person (as such term is used in Sections 13(d) and 14 (d)
(2) of the Securities Exchange Act of 1934) shall become the beneficial owner
(within the meaning of Rule 13d-3 under such Act) of forty (40%) percent or more
of the Common Stock of the Company other than pursuant to a plan or arrangement
entered into by such person and the Company or otherwise approved by the Board
of Directors, or (d) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the entire Board of Directors
shall cease for any reason to constitute a majority of the Board unless the
election or nomination for election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the period. For the
purpose of this Section 4(d), the "applicable number" of all unvested options
shall mean: (i) at commencement of the first twelve (12) months of the
Employee's employment, fifty percent (50%) of such unvested options, such number
to increase linearly during such twelve-month period to one hundred percent
(100%), and (ii) following such twelve-month period, one hundred percent (100%)
of such unvested options.
(e) In the event that the acceleration, as set forth in
Section 4(d) of this Agreement, of any option to be granted to the Employee
pursuant to the Plan which causes the option to be exercisable immediately (such
options, the "Accelerated Options") (i) constitutes a "parachute payment" within
the meaning of section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) but for this Section 4(e), would be subject to the excise
tax imposed by section 4999 of the Code (the "Excise Tax"), then the amount of
the Accelerated Options may be reduced to the largest amount which the Employee,
in his sole discretion, determines would result in no portion of the Accelerated
Options (or only such portion thereof as is acceptable to the Employee) being
subject to the Excise Tax. The determination by the Employee of any reduction
shall be conclusive and binding upon the Company. The Company shall reduce such
Accelerated Options only upon written notice by the Employee indicating the
amount of such reduction.
(f) The Employee will receive a signing bonus in the amount of
$70,000, which shall be paid as follows: (i) $35,000 thirty days after the Date
of Hire; and (ii) $35,000 thirty days after the first anniversary of the Date of
Hire.
5. Expenses. During the Term of Employment, all travel and other
reasonable business expenses incident to the rendering of services by the
Employee under this Agreement will be paid or reimbursed by the Company subject
to the submission of appropriate vouchers and receipts in accordance with the
Company's policy from time to time in effect.
6. Death or Disability.
(a) The Employee's employment under this Agreement shall be
terminated by the death of the Employee. In addition, the Employee's employment
under this Agreement may be
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terminated by the Board of Directors of the Company if the Employee shall be
rendered incapable by illness or any other disability from complying with the
terms, conditions and provisions on his part to be kept, observed and performed
for a period in excess of 180 days (whether or not consecutive) or 90 days
consecutively, as the case may be, during a 12-month period during the Term of
Employment ("Disability"). If the Employee's employment under this Agreement is
terminated by reason of Disability of the Employee, the Company shall give
notice to that effect to the Employee in the manner provided herein. In the
event that the Employee receives disability insurance benefits for which payment
was made by the Company after the date of this Agreement and prior to
termination of the Employee's employment under this Agreement pursuant to this
Section 6(a), the Employee's Salary shall be reduced by an amount equal to such
disability insurance benefits during such period.
(b) In addition to and not in substitution for any other
benefits which may be payable by the Company in respect of the death of the
Employee, in the event of such death after the Employee's employment has begun,
the Salary payable hereunder shall continue to be paid at the then current rate
for three (3) months after the termination of employment, and any bonus to which
the Employee would have been entitled for the year in which his death occurs
shall be pro rated to the date of his death and paid not later than three (3)
months after the termination of employment. All sums payable pursuant to this
Section 6(b) shall be paid to the Employee's personal representative.
(c) In addition to and not in substitution for any other
benefits which may be payable by the Company in respect of the Disability of the
Employee, in the event of the termination of the Employee's employment hereunder
due to such Disability pursuant to Section 6(a) after the Employee's employment
has begun, the Company shall pay the Employee, in six (6) equal semi-monthly
installments, an aggregate amount equal to three (3) months' Salary at the rate
in effect on the effective date of such termination; provided, however, that the
Company shall deduct from such payments the amount of any and all disability
insurance benefits paid during such three-month period with respect to the
Employee that were paid for by the Company during any period for which payment
was made by the Company after the date of this Agreement and prior to the
termination of the Employee's employment. In addition, any bonus to which the
Employee would have been entitled for the year in which such termination of
employment occurs shall be pro rated to the date of such termination and paid
not later than twelve (12) months after such termination.
7. Disclosure of Information, Inventions and Discoveries. The Employee
shall promptly disclose to the Company all processes, trademarks, inventions,
improvements discoveries and other information related to the business of the
Company (collectively, "Developments") conceived, developed or acquired by him
alone or with others during the Term of Employment or during any earlier period
of employment by the Company or any predecessor of the Company, whether or not
during regular working hours or through the use of materials or facilities of
the Company. All such Developments shall be the sole and exclusive property of
the Company, and, upon request, the Employee shall promptly deliver to the
Company all drawings, sketches, models and other data and records relating to
such Developments. In the event any such Development shall be deemed by the
Company to be patentable, the Employee shall, at the expense of the Company,
assist the Company
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in obtaining a patent or patents thereon and execute all documents and do all
such other acts and things necessary or proper to obtain letters patent and to
invest in the Company full right, title and interest in and to such
Developments.
8. Non-Disclosure. The Employee shall not, at any time during or after
the Term of Employment or any earlier period of employment by the Company or any
predecessor of the Company, divulge, furnish or make accessible to anyone
(otherwise than in the regular course of business of the Company) or use for his
own account or for the account of any other person any knowledge or information
with respect to confidential or secret processes, inventions, discoveries,
improvements, formulae, plans, materials, devices or ideas or other know-how,
whether patentable or not, with respect to any confidential or secret
development or research work or with respect to any other confidential or secret
aspects of the Company's business (including, without limitation, customer
lists, supplier lists and pricing arrangements with customers or suppliers)
(collectively, the "Confidential Information"). This Section 8 shall not apply
to any information which (i) is or becomes generally available to the public
other than as a result of a disclosure directly or indirectly by the Employee,
or (ii) is or becomes available to the Employee on a non-confidential basis from
a person other than the Company or its officers, directors or agents who, to the
Employee's knowledge after due inquiry, is not and was not bound by a
confidentiality obligation to the Company and was not otherwise prohibited from
transmitting such information to the Employee.
9. Non-Competition. The Company and the Employee agree that the
services rendered by the Employee are unique and irreplaceable. In addition to
and in furtherance of Section 8 of this Agreement, the Company and the Employee
agree that the Employee has had, and will continue to have, unlimited access to
the Confidential Information and that preserving the proprietary nature of the
Confidential Information is of utmost importance to the Company. By giving the
Employee an opportunity or incentive to breach his obligations to the Company
under Section 8 of the Agreement, any relationship between the Employee and a
competitor of the Company during or following the Term of Employment will
potentially cause the Company irreparable injury, regardless (in the event of
termination or expiration of the Term of Employment) of the circumstances under
which the Term of Employment ends, and even if the Employee is terminated by the
Company for cause. Therefore, in light of the foregoing, the Employee agrees
that during the Term of Employment and for a period of two (2) years thereafter,
the Employee shall not, directly or indirectly, through any other person, firm,
corporation or other entity (whether as an officer, director, employee, partner,
consultant, holder of equity or debt investment, lender or in any other manner
or capacity):
(a) in any geographical area in the United States or in those
foreign countries where the Company, during the Term of Employment, conducts or
has undertaken activities to begin to conduct business or initiate activities,
design, manufacture, sell, market, offer to sell or supply video or television
technology similar to that being developed or sold by the Company on the date of
the termination of Employee's employment under this Agreement for any reason;
(b) initiate conversations to solicit, induce, encourage or
attempt to induce or encourage any employee of the Company to terminate his or
her employment with the Company or to breach any other obligation to the
Company;
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(c) solicit, interfere with, disrupt, alter or attempt to
disrupt or alter the relationship, contractual or otherwise, between the Company
and any customer, potential customer, or supplier of the Company; or
(d) engage in or participate in any business conducted under
any name that shall be the same as or similar to the name of the Company or any
trade name used by it,
provided, however, that in the event the Employee's employment is terminated by
the Company for cause pursuant to Section 11 of this Agreement, then following
such termination Employee shall have no further obligations under this Section 9
unless the Company, in its sole discretion, elects to make additional payments
to Employee as provided under Section 12.
The Employee acknowledges that the foregoing geographic, activity and
time limitations contained in this Section 9 are reasonable and properly
required for the adequate protection of the Company's business. In the event
that any such geographic, activity or time limitation is deemed to be
unreasonable by a court, the Employee shall submit to the reduction of either
said activity or time limitation to such activity or period as the court shall
deem reasonable. In the event that the Employee is in violation of the
restrictive covenants set forth in this Section 9, then the time limitation for
such covenants shall be extended for a period of time equal to the pendency of
any proceedings brought to enforce such covenants, including any appeals.
10. Remedies.
(a) The Employee acknowledges that irreparable injury would
result to the Company if the provisions of Section 7, 8, 9 or 14 of this
Agreement were not specifically enforced and agrees that the Company shall be
entitled to any appropriate legal, equitable or other remedy, including
injunctive relief, in respect to any failure to comply with the provisions of
Section 7, 8, 9 or 14, as determined by a court of competent jurisdiction.
(b) In furtherance of and not in limitation of Section 10(a),
in the event that, subsequent to the Term of Employment, the Employee breaches
any of his obligations to the Company under Section 7, 8, 9 or 14 of this
Agreement, then the Company's obligation to make further payments to the
Employee pursuant to this Agreement shall terminate. Any such termination shall
not limit or affect the Company's right to pursue any other remedy available to
the Company at law or in equity.
11. Termination for Cause. In addition to any other remedy available to
the Company, either at law or in equity, the Employee's employment with the
Company may be terminated by the Board of Directors for cause, which shall
include (i) the Employee's conviction from which no further appeal may be taken
for, or plea of nolo contendere to, a felony or a crime involving moral
turpitude, (ii) the Employee's commission of a breach of fiduciary duty
involving personal profit in connection with the Employee's employment by the
Company, (iii) the Employee's commission of an act which the Board of Directors
shall reasonably have found to have involved willful misconduct
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or gross negligence on the part of the Employee, in the conduct of his duties
under this Agreement, (iv) habitual absenteeism, (v) the Employee's material
breach of any material provision of this Agreement which remains uncured for a
period of thirty (30) days following notice by the Company, or (vi) the willful
and continued failure by the Employee to perform substantially his duties with
the Company (other than any such failure resulting from his incapacity due to
physical or mental illness). With respect to the matters set forth in
subsections (iii), (iv), (v) and (vi) of this Section 11, the Company may not
terminate the Employee's employment unless the Employee has first been given
notice of the conduct forming the cause for such termination and an opportunity
to explain such conduct to the Company. In the event of termination under this
Section 11, the Company's obligations under this Agreement shall cease, and the
Employee shall forfeit all rights to receive any future compensation under this
Agreement. Notwithstanding any termination of this Agreement pursuant to this
Section 11, the Employee, in consideration of his employment hereunder to the
date of such termination, shall remain bound by the provisions of Section 7, 8,
9 and 14 hereof following any such termination.
12. Termination Without Cause.
(a) Each of the Company and the Employee may terminate the
Employee's employment under this Agreement at any time for any reason
whatsoever, without any further liability or obligation of the Company to the
Employee or of the Employee to the Company from and after the date of such
termination (other than liabilities or obligations accrued but unsatisfied on,
or surviving, the date of such termination), by sending prior notice to the
other party. In the event the Company elects to terminate the Employee's
employment under this Agreement pursuant to this Section 12, the Company shall
continue to pay the Employee, in equal semi-monthly installments, the full
Salary (inclusive of paid medical plan, but exclusive of bonuses, if any) as
such Salary otherwise would have accrued for a period equal to three (3) months.
In the event the Employee terminates his employment hereunder within ninety (90)
days after a Detrimental Change (as hereinafter defined), the Company shall
continue to pay the Employee, in equal semi-monthly installments, the full
Salary (inclusive of paid medical plan, but exclusive of bonuses, if any) as
such Salary otherwise would have accrued for a period equal to three (3) months.
In the event the Employee elects to terminate the Employee's employment under
this Agreement, other than as set forth in the immediately preceding sentence,
prior to the end of the Term of Employment, the Company's obligation to pay
Salary shall cease as of the effective date of termination. Any termination of
the Employee's employment under this Agreement by the Company as provided in
this Section 12 shall be in addition to, and not in substitution for, any rights
with respect to termination of the Employee which the Company may have pursuant
to Section 11. Notwithstanding any termination of the Employee's employment
under this Agreement pursuant to this Section 12, the Employee, in consideration
of his employment hereunder to the date of such termination, shall remain bound
by the provisions of Section 7, 8, 9 and 14 hereof following any such
termination.
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(b) As used in this Agreement, "Detrimental Change" shall mean
a detrimental change in the nature or scope of the Employee's employment or
duties which is inconsistent with those duties customarily performed by a
company's Vice President, Sales and Marketing. Detrimental Change shall include,
without limitation, the assignment of the Employee to any duties substantially
inconsistent with those of senior executive management, a reduction in Salary or
other employee benefits, the failure by the Company to continue to provide the
Employee with substantially similar bonus opportunities, the relocation of the
Employee's primary office of employment to a location other than Lawrenceville,
New Jersey and more than fifty (50) miles from the location of such office prior
to the relocation, and substantially increased travel requirements.
13. Resignation. In the event that the Employee's services under this
Agreement are terminated under any of the provisions of this Agreement (except
by death), the Employee agrees that he will deliver to the Board of Directors
his written resignation from all positions held with the Company, such
resignation to become effective immediately; provided, however, that nothing
herein shall be deemed to affect the provisions of Section 7, 8, 9 and 14 hereof
relating to the survival thereof following termination of the Employee's
services hereunder; and provided, further, that except as expressly provided in
this Agreement, the Employee shall be entitled to no further compensation
hereunder.
14. Data. Upon expiration or termination of the Term of Employment or
termination pursuant to Section 1, 6, 11 or 12 hereof, the Employee 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 or control.
15. Insurance. 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 Employee, and the
Employee agrees to submit to usual and customary medical examinations and
otherwise to cooperate with the Company in connection with the procurement of
any such insurance and any claims thereunder.
16. Waiver of Breach. Any waiver of any breach of this Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of the Employee or the Company.
17. Assignment. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company upon any sale of all or
substantially all of the Company's assets, or upon any merger or consolidation
of the Company with or into any other entity (including, without limitation, any
change in control of the Company), all as though such successors and assigns of
the Company and their respective successors and assigns were the Company.
Insofar as the Employee is concerned, this Agreement, being personal, may not be
assigned, and any such purported assignment shall be void and of no effect.
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18. Severability. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom, and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Agreement be in excess of that which is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, extent or activities which may be validly and
enforceably covered.
19. Notices. All notices, requests and other communications pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given,
if delivered in person or by courier, telegraphed, telexed or by facsimile
transmission (receipt confirmed) or five (5) business days after being sent by
registered or certified mail, return receipt requested, postage paid, addressed
as follows:
(a) If to the Employee:
Xxxx Xxxxxx
00 Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
Fax No.:
(b) If to the Company:
Princeton Video Image, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attn: President & CEO
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Any party may, by written notice to the other in accordance with this Section
19, change the address to which notices to such party are to be delivered or
mailed.
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20. General. Except as otherwise provided herein, the terms and
provisions of this Agreement shall constitute the entire agreement by the
Company and the Employee with respect to the subject matter hereof and shall
supersede any and all prior agreements or understandings between the Employee
and the Company, whether written or oral. This Agreement shall be construed and
enforced in accordance with the laws of the State of New Jersey. This Agreement
may be amended or modified only by a written instrument executed by the Employee
and the Company. The headings of the sections of this Agreement are for
convenience of reference only and do not constitute part of this Agreement. This
Agreement may be executed in any number of counterparts, each of which, when
executed, shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties have executed or caused to be
executed by its duly authorized representative this Employment Agreement as of
the day and year first above written.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx, President
and Chief Executive Officer
/s/ Xxxx Xxxxxx
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XXXX XXXXXX
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