EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of September 27, 1997, by and among
VIDEOLAN TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and JACK
SHIRMAN (the "Executive").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Executive to enter the employ of
the Company for the period provided in this Agreement in accordance with the
terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept such employment with the
Company on a full-time basis in accordance with such terms and conditions;
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. Employment.
A. The Company hereby employs the Executive as Chief Executive Officer of
the Company, and the Executive hereby accepts such employment with the Company,
for the period set forth in Section 2 hereof, all upon the terms and conditions
hereinafter set forth.
B. The Executive affirms and represents that he is under no obligation to
any former employer or other party which is in any way inconsistent with, or
which imposes any restriction upon, the Executive's acceptance of employment
hereunder with the Company, the employment of the Executive by the Company, or
the Executive's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as hereinafter provided,
the term of the Executive's employment under this Agreement shall be for a
period beginning on the date September 27, 1997 (the "Employment Date") and
ending on September 26, 1999 (such period referred to as the "Initial Term").
Unless earlier terminated as hereinafter provided, the term of the Executive's
employment under this Agreement shall be automatically extended on a
year-to-year basis (September 30 through September 29 of each successive year)
(such one-year periods referred to as "Additional Terms") upon the expiration of
the Initial Term or any Additional Term, unless prior to the commencement of a
90-day period expiring at the end of such Initial Term or any Additional Term,
the Company or the Executive shall have given written notice to the other
stating that the term of this Agreement shall not be extended. For purposes of
this
Agreement, the term "Employment Term" shall mean the Initial Term plus all
Additional Terms.
3. Duties. The Executive shall be employed as Chief Executive Officer of
the Company and shall faithfully and competently perform such employment duties
and responsibilities as the Board of Directors of the Company may from time to
time prescribe. The Executive shall perform his duties at such places and times
as the Board of Directors of the Company may reasonably prescribe. Except as may
otherwise be approved in advance by the Board of Directors of the Company, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other disability, the Executive shall devote his
full time throughout the Employment Term to the services required of him
hereunder. The Executive shall render his services exclusively to the Company
during the Employment Term. The Executive agrees to perform his duties hereunder
to the best of his ability and at a level of competency consistent with the
position occupied, to act on all matters in a manner he reasonably believes to
be in and not opposed to the best interests of the Company, and to use his best
efforts, skill and ability to promote the profitable growth of the Company. The
Executive and the Company agree that the Executive shall perform his duties
primarily at the Company's corporate office and that he shall travel as
necessary to perform his duties.
4. Compensation.
A. Salary. As compensation for the complete and satisfactory performance by
the Executive of the services to be performed by the Executive hereunder during
the Employment Term, the Company shall pay the Executive a base salary ("Base
Salary") at the annual rate of not less than Two Hundred Twenty Five Thousand
Dollars ($225,000). Any Base Salary payable hereunder shall be paid in regular
intervals in accordance with the Company's payroll practices.
B. Annual Bonuses. The Executive shall be entitled to receive annual
bonuses under an annual executive bonus plan to be developed by the Executive,
if such plan is approved by the Company's Board of Directors.
C. Withholding, etc. The payment of any Base Salary and bonuses hereunder
shall be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company's employee benefit plans.
5. Benefits. During the Employment Term, the Executive shall:
A. be eligible to participate in all employee fringe benefits and any
pension and/or profit sharing plans that may be provided by the Company for its
key executive employees in accordance with the provisions of any such plans, as
the same may be in effect on and after the date hereof, excluding equity or
bonus plans unless specifically granted by the Board of Directors of the
Company;
B. be entitled to the same period of paid vacation provided by the Company
for its key executive employees;
C. be entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable on and after the date
hereof to key executive employees;
D. be entitled to reimbursement for all reasonable and necessary itemized
out-of-pocket business expenses incurred by the Executive in the performance of
his duties hereunder in accordance with the Company's policies applicable (on
and after the date hereof) thereto;
E. car allowance of $600.00 per month;
F. be entitled to reimbursement of the Executive's reasonable interim
expenses including weekly business class round-trip airfare between the
Executive's current residence and the company's corporate offices, local
housing, (i.e., apartment or hotel) and local transportation within reasonable
distance of the company's corporate offices.
G. be entitled to reimbursement of the costs incurred in connection with
the preparation of the Executive's income tax return in an amount not to exceed
$2,000 annually.
6. Termination.
A. The Executive's employment hereunder shall be terminated upon the
occurrence of any of the following:
(i) death of the Executive;
(ii) termination of the Executive's employment hereunder by the
Executive at any time for any reason whatsoever (including, without limitation,
resignation or retirement);
(iii) termination of the Executive's employment hereunder by the
Company because of the Executive's inability to perform his duties on account of
disability or incapacity for a period of 90 or more days or for shorter periods
aggregating a period of ninety or more days, whether or not consecutive,
occurring within any period of 12 consecutive months;
(iv) termination of the Executive's employment hereunder by the
Company at any time "for cause," such termination to take effect immediately
upon written notice from the Company to the Executive; and
(v) termination of the Executive's employment hereunder by the Company
at any time, other than termination by reason of disability or incapacity as
contemplated by clause (iii) above or termination by the Company "for cause" as
contemplated by clause (iv) above.
The following actions, failures or events by or affecting the Executive
shall constitute "cause" for termination within the meaning of clause (iv)
above: (1) conviction of having committed a felony, (2) acts of dishonesty or
moral turpitude that are materially detrimental to the Company and/or its
Affiliates, (3) acts or omissions which the Executive knew or should have
reasonably known were likely to materially damage the business of the Company
and/or any Affiliate of the Company, (4) failure by the Executive to obey the
reasonable and lawful directions of the Board of Directors of the Company, (5)
gross negligence by the Executive in the performance of, or continuing failure
by the Executive to perform, his obligations hereunder, or (6) the Executive's
willful breach of any material agreement or covenant of this Agreement or any
fiduciary duty owed to the Company.
B. In the event that the Executive's employment is terminated pursuant to
clause (i), (iii) or (v) of paragraph (a) above at any time, then the Company
shall continue to pay to the Executive, as severance pay or liquidated damages
or both, the amount of his Base Salary and bonus, if any, which the Executive
would have otherwise been entitled to receive pursuant to Section 4(a) and (c)
hereof had the Executive's employment not been so terminated, from the date of
termination through the later of (i) the date that is twelve months after the
date of such termination and (ii) September 26, 1999 (such amount being herein
referred to as the "Severance Payments" and such period being herein referred to
as the "Severance Period"); provided, however, that the Severance Payments
payable pursuant to this paragraph (b) shall be reduced by any amounts earned by
the Executive as a result of his employment by any business (whether as a
director, officer, employee, manager, owner, consultant, independent contractor,
advisor or otherwise) during the Severance Period; provided, further, however,
that nothing in this paragraph (b) shall be construed to require the Executive
to seek employment or otherwise mitigate or reduce the Severance Payments to be
made hereunder. The Severance Payments shall be made at the same intervals as
the Base Salary and bonuses were payable immediately prior to termination.
C. Notwithstanding anything to the contrary expressed or implied herein,
except as required by applicable law, in the event that:
(i) any person other than the Company shall acquire more than 50% of
the Company's then outstanding Common Stock through a tender offer, exchange
offer or otherwise; or there shall be a sale of all or substantially all of the
assets of the Company (either such event being referred to as the "Change in
Control"); and
(ii) within one year from the date of the Change in Control: (A) the
Executive's employment is terminated by the Company pursuant to clause (v) of
paragraph (a) above; or (B) the Executive resigns his employment with the
Company after there is a material reduction in his title, duties and
responsibilities with the Company following such Change in Control (other than
the failure of the Executive to assume responsibilities over new operations
acquired by the Company as a result of the Change in Control);
then the Executive shall be entitled to receive as severance pay or liquidated
damages or both, the amount of Base Salary and bonus, if any, which the
Executive would have otherwise been entitled to receive pursuant to Section 4(a)
and (c) hereof had the Executive's employment not been so terminated, from the
date of termination until the end of the Initial Term or the date that is twelve
months after the date of such termination, whichever is later.
D. Notwithstanding anything to the contrary expressed or implied herein,
except as required by applicable law and except as set forth in paragraphs (b)
and (c) above, the Company (and its Affiliates) shall not be obligated to make
any payments to the Executive or an his behalf of whatever kind or nature by
reason of the Executive's cessation of employment (including, without
limitation, by reason of termination of the Executive's employment by the
Company for "cause"), other than (i) such amounts, if any, of his Base Salary
and bonus, if any, as shall have accrued and remained unpaid as of the date of
said cessation and (ii) such other amounts which may be then otherwise payable
to the Executive from the Company's benefits plans or reimbursement policies, if
any.
E. No interest shall accrue on or be paid with respect to any portion of
any payments due under this Section 6.
F. Amounts payable pursuant to this Section 6 are in lieu of any severance
pay that would otherwise be payable to the Executive upon termination of his
employment with the Company under the Company's severance pay policies, if any.
7. Confidentiality. The Executive hereby covenants, agrees and acknowledges as
follows:
A. The Executive's employment hereunder creates a relationship of
confidence and trust between the Executive and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of, or supplier to, the Company or its Affiliates which may be made known to the
Executive by the Company or any of its Affiliates or by any client or customer
of, or supplier to, the Company or any of its Affiliates or learned by the
Executive during the period of his employment by the Company.
B. The Executive agrees that he will not without the prior written consent
of the Board of Directors of the Company use for his benefit or disclose at any
time during his employment by the Company, or thereafter, except to the extent
required by the performance by him of his duties as an employee of the Company,
any information obtained or developed by him while in the employ of the Company
with respect to any actual or potential customers, clients, suppliers, products,
services, employees, financial affairs, technologies, applications, patents,
patent application processes, or methods of marketing, service or procurement of
the Company or any of its Affiliates, or any confidential matter regarding the
business of the Company or any of its Affiliates that, except information that
at the time is generally known to the public other than as a result of
disclosure by him not permitted hereunder (collectively, "Confidential
Information").
C. Upon written request of the Executive, the Company will provide, from
time to time, written notice stating whether or not it considers any particular
item of information to be Confidential Information. In any event, the Executive
agrees to contact the Company prior to any disclosure of any information
acquired during the term of his employment by the Company, to determine whether
the Company considers the information subject to the continuing obligations
hereunder.
D. The Executive agrees that upon termination of his employment by the
Company for any reason, the Executive shall forthwith return to the Company all
documents and papers relating to Confidential Information and other physical
property in his possession belonging to the Company or any of its Affiliates.
E. Without limiting the generality of Section 12 hereof, the Executive
hereby expressly agrees that the foregoing provisions of this Section 7 shall be
binding upon the Executive's heirs, successors and legal representatives.
8. Ownership of Certain Works Created by the Executive. The Executive will
promptly disclose and describe to the Company all inventions, improvements,
discoveries, technical developments and works of authorship, whether or not
patentable or copyrightable, made or conceived by him either alone or with
others during the Employment Term. All such works, made, devised or discovered
by the Executive,
whether by himself or jointly with others, which relate or pertain in any way to
the business of the Company or any of its Affiliates ("Work Products") shall
inure to the benefit of the Company or such Affiliate and become and remain the
Company's or such Affiliate's sole and exclusive property. Work Products may be
created within or without the facilities of the Company or its Affiliates and
before, during or after normal business hours. Work Products are specifically
intended to be works made for hire by the Executive, but in any event, the
Executive agrees to execute an assignment (and does hereby assign) to the
Company, the Executive's entire right, title and interest in and to Work
Products, and to execute any other instruments and documents that may be
requested by the Company for the purpose of applying for and obtaining patents
or registration of copyright with respect thereto in the United States and in
all foreign countries. The Executive further agrees, whether or not in the
employ of the Company, to cooperate to the extent and in the manner reasonably
requested by the Company in the prosecution or defense of any litigation or
other proceedings involving any Work Products, but all of the Executive's
reasonable expenses in connection therewith shall be paid by the Company. If a
patent application or copyright registration is filed by the Executive, or on
the Executive's behalf, within one year after leaving the Company's employ,
describing a work within the scope of the Executive's work for the Company or
any of its Affiliates or which otherwise relates to the business of the Company
or any of its Affiliates, it is to be conclusively presumed that such work was
conceived by the Executive during the period of his employment hereunder and
that the work is to be treated as a Work Product for all purposes hereunder.
9. Non-Assignability.
A. Neither this Agreement nor any right or interest hereunder shall be
assignable by the Executive, his beneficiaries, or legal representatives without
the prior written consent of the Company, provided, however, that nothing in
this Section 9(a) shall preclude the Executive from designating a beneficiary to
receive any benefit payable hereunder upon his death or incapacity.
B. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
10. Competition, etc. Until the termination of the Executive's employment
hereunder and during the two-year period following the termination of the
Executive's employment hereunder for any reason whatsoever:
A. The Executive will not make any statement or perform any act intended to
advance an interest of any existing or prospective competitor of the Company or
any of its Affiliates in any way that will or may injure an interest of the
Company or any of its Affiliates in its relationship and dealings with existing
or potential suppliers, customers
or clients, or solicit or encourage any other employee of the Company or any of
its Affiliates to do any act that is disloyal to the Company or any of its
Affiliates, inconsistent with the interest of the Company or any of its
Affiliate's interests or in violation of any provision of this Agreement;
B. The Executive will not make any statement or perform any act intended to
cause any existing or potential customers or clients of the Company or any of
its Affiliates to make use of the services or purchase the products of any
existing or future business in which the Executive has or expects to acquire a
proprietary interest or in which the Executive is or expects to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise, if such services or products in any way compete with the
services or products sold or provided or expected to be sold or provided by the
Company or any of its Affiliates to any existing or potential customer or
client;
C. The Executive will not directly or indirectly (as an employee, officer,
director, manager, consultant, independent contractor, advisor or otherwise)
engage in competition with, or acquire any proprietary interest in, perform any
services for, lend his name to, participate in or be connected with any business
involved in the research, development, commercialization, manufacture, assembly,
sale, licensing, sublicensing, distribution, supplying or marketing of any
service or product which in any way compete with the services or products sold
or provided or expected to be sold or provided by the Company to any existing or
potential customer or client, as such services or products currently exist or
are developed in the future, including, without limitation, desktop video
conferencing and video on demand products, from any location in the United
States of America or elsewhere where the Company conducts business during the
term of this Agreement;
D. The Executive agrees that, when the Executive has or expects to acquire
a proprietary interest in, or is or expects to be made an employee, officer,
director, manager, consultant, independent contractor, advisor or otherwise of,
any existing or future business that provides or may provide services or
products which in any way compete with the services or products sold or provided
or expected to be sold or provided by the Company or any of its Affiliates to
any existing or potential customer or client, the Executive will immediately
furnish to the Company all information that may reasonably be of assistance to
the Company in acting promptly to protect its relationships with any existing or
potential suppliers, customers or clients with whom the Executive has had any
dealings as a result of his employment by the Company or any of its Affiliates;
E. The Executive will not directly or indirectly solicit for employment, or
advise or recommend to any other person that they employ or solicit for
employment, any employee of the Company or any of its Affiliates; and
F. The Executive will not directly or indirectly hire, engage, send any
work to, place orders with, or in any manner be associated with any supplier,
contractor,
subcontractor or other person or firm which rendered manufacturing or other
services, or sold any products, to the Company or any of its Affiliates if such
action by him would have a material adverse effect on the business, assets or
financial condition of the Company or any of its Affiliates.
In connection with the foregoing provisions of this Section 10, the
Executive represents that his experience, capabilities and circumstances are
such that such provisions will not prevent him from earning a livelihood. The
Executive further agrees that the limitations set forth in this Section 10
(including, without limitation, any time or territorial limitations) are
reasonable and properly required for the adequate protection of the businesses
of the Company and its Affiliates. It is understood and agreed that the
covenants made by the Executive in this Section 10 (and in Sections 7 and 8
hereof) shall survive the expiration or termination of this Agreement.
For purposes of this Section 10, proprietary interest in a business is
ownership, whether through direct or indirect stock holdings or otherwise, of
one percent (1%) or more of such business. The Executive shall be deemed to
expect to acquire a proprietary interest in a business or to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise of such business if such possibility has been discussed
with any officer, director, employee, agent, or promoter of such business.
11. Injunctive Relief. The Executive acknowledges and agrees that a remedy at
law for any breach or threatened breach of the provisions of Sections 7, 8, or
10 hereof would be inadequate and, therefore, agrees that the Company and any of
its Affiliates shall be entitled to injunctive relief in addition to any other
available rights and remedies in cases of any such breach or threatened breach;
provided, however, that nothing contained herein shall be construed as
prohibiting the Company or any of its Affiliates from pursuing any other rights
and remedies available for any such breach or threatened breach.
12. Binding Effect. Without limiting or diminishing the effect of Section 9
hereof, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors, legal representatives and
assigns.
13. Affiliate. For the purposes of this Agreement, the term "Affiliate" or
"Affiliates" shall mean any entity which (i) directly or indirectly, controls
the Company, (ii) is controlled, directly or indirectly, by the Company or (iii)
is under common control, directly or indirectly, with the Company.
14. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and either delivered in person or sent by
first class certified or registered mail, postage prepaid, if to the Company, at
the Company's principal place of business, and if to the Executive, at his home
address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto.
15. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
16. Severability. The Executive agrees that in the event that any court of
competent jurisdiction shall finally hold that any provision of Sections 7, 8 or
10 hereof is void or constitutes an unreasonable restriction against the
Executive, the provisions of such Sections 7, 8 or 10 hereof shall not be
rendered void but shall apply with respect to such extent as such court may
judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Sections 7, 8 or 10
hereof is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part by reason of any rule of law or
public policy, such part shall be deemed to be severed from the remainder of
this Agreement for the purpose only of the particular legal proceedings in
question and such part and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant
or provision shall be deemed dependent upon any other covenant or provision.
17. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
18. Entire Agreement; Modifications. This Agreement and the Stock Option
Agreement constitute the entire and final expression of the agreement of the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements, oral and written, between the parties hereto with respect to
the subject matter hereof and thereof, including without limitation, the
Employment Offer Term Sheet. This Agreement may be modified or amended only by
an instrument in writing signed by both parties hereto.
19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have duly executed and
delivered this Agreement as of the day and year first above written.
VIDEOLAN TECHNOLOGIES, INC.
By: ___________________________
Steven B. Rothenberg
Vice President Finance
Chief Financial Officer
____________________________
Jack Shirman
Chief Executive Officer