EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Employment Agreement"), dated as of this 23rd
day of January, 1998 (the "Effective Date"), is entered into by and between
Digital Video Systems, Inc. ("Company"), and Xxxxxx Xxxxxx ("Executive"). In
consideration of the mutual covenants and agreements hereinafter set forth, the
parties agree as follows:
1. EMPLOYMENT.
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1.1 Position. During the Employment Term (as hereinafter defined) and
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subject to the terms and conditions set forth herein, the Company agrees to
employ Executive as its Chief Financial Officer, reporting directly to Xxx
Xxxxxxxxx, President and Chief Operating Officer of the Company.
1.2 Duties. Executive will be employed as Chief Financial Officer.
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Executive shall diligently, and to the best of his ability, perform all such
duties incident to his position and use his best efforts to promote the
interests of the Company.
1.3 Time to be Devoted to Employment. During the Employment Term,
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Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the Company. Executive hereby represents that he is
not a party to any agreement which would be an impediment to entering into this
Employment Agreement and that he is permitted to enter into this Employment
Agreement and perform the obligations hereunder.
2. COMPENSATION AND BENEFITS.
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2.1 Annual Salary. In consideration of and as compensation for the
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services agreed to be performed by Executive hereunder, the Company agrees to
pay Executive a starting annual base salary of One Hundred Thirty-Five Thousand
Dollars ($135,000), payable in accordance with the Company's regular payroll
schedule ("Base Salary"), less applicable withholdings and deductions. The Base
Salary will be subject to change at the sole discretion of the Board of
Directors of the Company (the "Board").
2.2 Bonus. The Company shall pay Executive an annual bonus, payable at
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the end of each fiscal year of the Employment Period, of a minimum of twenty
percent (20%) of his then current Base Salary and a maximum of fifty percent
(50%) of his then current Base Salary 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 and Chief Operating Officer.
2.3 Stock Options. Subject to Board approval, Executive shall be granted
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an option pursuant to the 1996 Stock Option Plan to purchase 135,000 shares of
Common Stock of Digital Video Systems, Inc. (the "Option"). The Option shall be
an incentive stock option to the extent permissible by law, and the exercise
price per share will be equal to the fair market value of a share of the
Company's Common Stock on the option grant date. The Option shall vest and
become exercisable in a series of forty-eight (48) equal successive monthly
installments upon Executive's completion of each month of service with the
Company over the forty-eight (48) month period measured from Executive's first
date of employment. The Option shall be evidenced by the Company's form Stock
Option Agreement, a copy of which is attached hereto as Exhibit A, and shall be
subject to all the terms of the Stock Option Agreement and the Company's 1996
Stock Option Plan under which the Option is granted and which is attached hereto
as Exhibit B.
2.4 Participation in Benefit Plans. During the Employment Term, Executive
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shall be entitled to participate in any pension, group insurance, medical
hospitalization, annual physical, disability or other similar benefit plan, to
the extent permitted by law, that may from time to time be adopted by the Board,
that is generally available to the other executive officers of the Company. The
Company reserves the right to amend, modify or terminate any employee benefits
at any time for any reason.
2.5 Reimbursement of Expenses. The Company shall reimburse Executive for
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all reasonable business expenses incurred by Executive on behalf of the Company
during the Employment Term, provided that: (i) such reasonable expenses are
ordinary and necessary business expenses incurred on behalf of the Company, and
(ii) Executive provides the Company with itemized accounts, receipts and other
documentation for such reasonable expenses as are reasonably required by the
Company.
2.6 Paid Time Off. During the Employment Term, Executive will be entitled
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to three (3) weeks of paid time off per annum.
3. EMPLOYMENT TERM.
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3.1 Employment Term. The "Employment Term" means the period commencing on
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the week of January 12, 1998 and terminating on the earlier of April 15, 1999 or
as set forth in Section 4.1.
3.2 Notice of Renewal. At least thirty (30) days prior to April 15, 1999
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and thirty (30) days prior to each one year anniversary thereafter, if
applicable, the Company shall give Executive written notice of whether the
Company will be seeking a one-year extension of Executive's services under this
Employment Agreement or subsequent one-year period, if applicable. Unless such
notice indicates that there will be no extension, the terms of this Employment
Agreement shall be automatically renewed for successive one-year periods.
However, Executive's employment with Employer will continue unless terminated by
Executive or the Company as set forth in Section 4.1.
4. TERMINATION OF EMPLOYMENT.
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4.1 Method of Termination. Executive's employment pursuant to this
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Employment Agreement and the Employment Term provided for herein shall terminate
upon the first of the following to occur:
(i) Executive's death;
(ii) Date that written notice is deemed given or made by the
Company to Executive that as a result of any physical or mental injury or
disability, he is unable to perform the essential functions of his job, with or
without reasonable accommodation. Such notice may be issued when the Board has
reasonably determined that Executive has become unable to perform substantially
his services and duties hereunder with or without reasonable accommodation
because of any physical or mental injury or disability, and that it is
reasonably likely that he will not be able to resume substantially performing
his services and duties on substantially the terms and conditions as set forth
in this Employment Agreement;
(iii) Date that written notice is deemed given or made by the
Company to Executive of termination for "cause." For purposes of this Employment
Agreement, "cause" shall mean any one of the following:
(A) Gross negligence or the repeated failure of Executive to
perform his duties and responsibilities to the reasonable satisfaction of the
Board or any breach by Executive of his fiduciary duties to the Company or any
material term of this Employment Agreement. For purposes of this Employment
Agreement, any act or acts or omission or omissions by Executive that have a
material adverse effect on the Company's operations, prospects, reputation or
business shall be deemed to be a breach of his duties and responsibilities to
the Company; or
(B) The conviction of Executive for a felony.
(iv) Executive's resignation, voluntary departure, or departure
pursuant to Sections 4.1(i) or 4.1(ii) of this Employment Agreement as an
employee of the Company; or
(v) Date that written notice is deemed given or made by the
Company to Executive of Executive's termination without "cause."
Nothing herein alters Executive and the Company's separate right to terminate
the employment relationship at any time, for any reason, with or without cause.
4.2 Effect of Termination for Cause, Executive's Resignation or Other
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Events. Upon (i) the termination of Executive for cause; (ii) Executive's
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resignation or voluntary departure; or (iii) Executive's departure pursuant to
Section 4.1(i) (death) or 4.1(ii) (disability) of this Employment Agreement,
Executive will not be entitled to any additional compensation or other rights or
benefits from the Company; and, as a result, the Company shall be obligated to
pay Executive only that portion of his Base Salary that Executive has earned
prior to the effective date of the termination of Executive's employment with
the Company.
4.3 Effect of Termination without Cause. In the event the Company
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terminates Executive's employment with the Company without cause, Executive
shall receive his salary earned through the date of such termination and a lump
sum severance payment equal to twenty percent (20%) of his then existing Base
Salary.
4.4 Resignation as an Officer and Director. In the event Executive's
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employment with the Company terminates for any reason, Executive agrees to
immediately resign as an officer and/or director of the Company.
5. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE.
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5.1 Executive understands that the Company and its affiliates possess
Proprietary Information (as defined below) which is important to its business
and that this Employment Agreement creates a relationship of confidence and
trust between Executive and the Company and its affiliates with regard to
Proprietary Information.
Nothing in this Section 5 shall be deemed modified or terminated in the event of
the termination or expiration of this Employment Agreement.
5.2 For purposes of this Employment Agreement, "Proprietary Information" is
information that was or will be developed, created, or discovered by or on
behalf of the Company and its affiliates and predecessors, or is developed,
created or discovered by Executive while performing services under this
Employment Agreement, or which became or will become known by, or was or is
conveyed to the Company and its affiliates which has commercial value in the
Company's and its affiliates' business. "Proprietary Information" includes, but
is not limited to, trade secrets, ideas, techniques, business, product, or
franchise development plans, customer information, franchisee information and
any other information concerning the Company's and its affiliates' actual or
anticipated business, development, personnel information, or which is received
in confidence by or for the Company and its affiliates from any other person.
5.3 At all times, both during the term of this Employment Agreement and
after its termination, Executive will keep in confidence and trust, and will not
use or disclose, any Proprietary Information without the prior written consent
of the Board.
5.4 Executive understands that the Company and its affiliates possess or
will possess "Company Documents" which are important to its business. For
purposes of this Employment Agreement, "Company Documents" are documents or
other media that contain or embody Proprietary Information or any other
information concerning the business, operations or plans of the Company and its
affiliates, whether such documents have been prepared by Executive or by others.
"Company Documents" include, but are not limited to, blueprints, drawings,
photographs, charts, graphs, notebooks, customer lists, computer disks,
personnel files, tapes or printouts and other printed, typewritten or
handwritten documents. All Company Documents are and shall remain the sole
property of the Company. Executive agrees not to remove any Company Documents
from the business premises of the Company or deliver any Company Documents to
any person or entity outside the Company, except as required to do in connection
with performance of the services under this Employment Agreement. Executive
further agrees that, immediately upon the Company's request and in any event
upon completion of Executive's services, Executive shall deliver to the Company
all Company Documents, apparatus, equipment and other physical property or any
reproduction of such property.
5.5 During the term of this Employment Agreement and for one year
thereafter, Executive will not encourage or solicit any employee of the Company
or any affiliate to leave the Company or any affiliate for any reason.
5.6 Non-Competition.
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A. During the Employment Term, Executive shall not directly or
indirectly:
(i) own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed by or connected
in any manner with, any enterprise which is engaged in any business competitive
with that which the Company is at the time conducting or proposing to conduct;
provided, however, that such restriction shall not apply to any passive
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investment representing an interest of less than two percent (2%) of an
outstanding class of publicly traded securities of any corporation or other
enterprise which is not, at the time of such investment, engaged in a business
geographically competitive with the Company's business; or
(ii) encourage or solicit any Company employee to leave the
Company's employ for any reason or interfere in any material manner with
employment relationships at the time existing between the Company and its
current employees, except as may be required in any bona fide termination
decision regarding any Company employee.
5.7 Executive acknowledges that the specialized nature of his knowledge of
the Company's Proprietary Information, trade secrets and other intellectual
property are such that a breach of his covenant not to compete or
confidentiality obligations contained in this Section 5 of this Employment
Agreement would necessarily and inevitably result in a disclosure,
misappropriation and misuse of such Proprietary Information, trade secrets and
other intellectual property. Accordingly, Executive acknowledges and agrees that
such a breach would inflict unique and irreparable harm upon the Company and
that the Company shall be entitled, in addition to its other rights and
available remedies, to enforce, by injunction or decree of specific performance,
Executive's obligations set forth herein.
6. RESTRICTIVE COVENANT.
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During the Employment Term:
6.1 Executive shall devote substantially all of his time and energy to the
performance of Executive's duties described herein, except during periods of
illness or paid time off.
6.2 Executive shall not directly or indirectly provide services to or
through any person, firm or other entity except the Company, unless otherwise
authorized by the Company in writing.
6.3 Executive shall not render any services of any kind or character for
Executive's own account or for any other person, firm or entity without first
obtaining the Company's written consent.
6.4 Notwithstanding the foregoing, Executive shall have the right to
perform such incidental services as are necessary in connection with (i) his
private passive investments, but only if Executive is not obligated or required
to (and shall not in fact) devote any managerial efforts which interfere with
the services required to be performed by him hereunder, (ii) his charitable or
community activities or (iii) participation in trade or professional
organizations, but only if such incidental services do not significantly
interfere with the performance of Executive's services hereunder.
7. MISCELLANEOUS.
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7.1 Notices. All notices, demands and requests required by this
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Employment Agreement shall be in writing and shall be deemed to have been given
or made for all purposes (i) upon personal delivery, (ii) one day after being
sent, when sent by professional overnight courier service, (iii) five days after
posting when sent by registered or certified mail, or (iv) on the date of
transmission when sent by telegraph, telegram, telex, or other form of "hard
copy" transmission, to either party hereto at the address set forth below or at
such other address as either party may designate by notice pursuant to this
Section 7.
If to the Company, to:
Digital Video Systems, Inc.
000 Xxxxxxx Xx.
Xxx Xxxxx, XX 00000
If to Executive, to:
___________________________________
___________________________________
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7.2 Assignment. This Employment Agreement shall be binding on, and shall
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inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that Executive may
not assign, transfer or delegate his rights or obligations hereunder and any
attempt to do so shall be void.
7.3 Deductions. All amounts paid to Executive hereunder are subject to
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all withholdings and deductions required by law, as authorized under this
Employment Agreement, and as authorized from time to time.
7.4 Entire Agreement. This Employment Agreement contains the entire
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agreement of the parties with respect to the subject matter hereof, and all
prior agreements, written or oral, are merged herein and are of no further force
or effect.
7.5 Amendment. This Employment Agreement may be modified or amended only
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by a written agreement signed by a member of the Compensation Committee Board of
Directors of the Company and Executive.
7.6 Waivers. No waiver of any term or provision of this Employment
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Agreement will be valid unless such waiver is in writing signed by the party
against whom enforcement of the waiver is sought. The waiver of any term or
provision of this Employment Agreement shall not apply to any subsequent breach
of this Employment Agreement.
7.7 Counterparts. This Employment Agreement may be executed in several
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counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
7.8 Severability. The provisions of this Employment Agreement shall be
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deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the
extent reasonably necessary to make the provision, as so changed, legal, valid
and binding. If any provision of this Employment Agreement is held illegal, void
or invalid in its entirety, the remaining provisions of this Employment
Agreement shall not in any way be affected or impaired but shall remain binding
in accordance with their terms.
7.9 Governing Law. THIS EMPLOYMENT AGREEMENT AND THE RIGHTS AND
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OBLIGATIONS OF THE COMPANY AND EXECUTIVE HEREUNDER SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
AS APPLIED TO AGREEMENTS AMONG CALIFORNIA RESIDENTS ENTERED INTO AND TO BE
PERFORMED ENTIRELY WITHIN CALIFORNIA.
7.10 Arbitration. The Executive understands and agrees that, as a condition
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of his employment with the Company, any and all disputes that the Executive may
have with the Company, or any of its employees, officers, directors, agents or
assigns, which arise out of the Executive's employment or investment or
compensation shall be resolved through final and binding arbitration, as
specified in this Employment Agreement. This shall include, without limitation,
any controversy, claim or dispute of any kind, including disputes relating to
any employment by the Company or the termination thereof, claims for breach of
contract or breach of the covenant of good faith and fair dealing, infliction of
emotional distress, defamation and any claims of discrimination, harassment or
other claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Employee Retirement Income Securities Act, or any other federal, state or local
law or regulation now in existence or hereinafter enacted and as amended from
time to time concerning in any way the subject of the Executive's employment
with the Company or its termination. The only claims not covered by this
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Employment Agreement are claims for benefits under the unemployment insurance or
workers' compensation laws, and any claims pursuant to paragraph 5 of this
Employment Agreement which will be resolved pursuant to those laws. Any disputes
and/or claims covered by this Employment Agreement shall be submitted to final
and binding arbitration to be conducted in Santa Xxxxx County, California, in
accordance with the rules and regulations of the American Arbitration
Association. The Executive and the Company will split the cost of the
arbitration filing and hearing fees and the cost of the arbitrator. Each side
will bear its own attorneys' fees, and the arbitrator will not have authority to
award attorneys' fees unless a statutory section at issue in the dispute
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authorizes the award of attorneys' fees to the prevailing party, in which case
the arbitrator has authority to make such award as permitted by the statute in
question. The arbitration shall be instead of any civil litigation; this means
that the Executive is waiving any right to a jury trial, and that the
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arbitrator's decision shall be final and binding to the fullest extent permitted
by law and enforceable by any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
DIGITAL VIDEO SYSTEMS, INC.
By:
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Name: Xxx Xxxxxxxxx
Title: President and Chief Operating Officer
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Xxxxxx Xxxxxx
