EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 24, 1997
by and between Princeton Video Image, Inc., a New Jersey corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxx (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 President and Chief
Executive Officer, 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 President and Chief
Executive Officer, or such other senior executive position or positions as the
Company may request from time to time, for a period beginning on the date hereof
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.
(a) During the Term of Employment, the Employee will serve as
President and Chief Executive Officer, subject to the terms of this Agreement
and the direction and control of the Board of Directors of the Company and its
Chairman. The primary location of the Employee's employment hereunder shall be
the headquarters of the Company (currently Princeton, New Jersey) and New York
City. The Employee will, during the Term of Employment, serve the Company
faithfully, diligently and competently and to the best of his ability, and will,
consistent with the dignity of the President and Chief Executive Officer of the
Company, hold, in addition to the offices of President and Chief Executive
Officer 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.
(b) At or before the next annual meeting of the Company's
shareholders, the Company will use its best efforts to obtain the nomination of,
and so long thereafter as the Employee is President and Chief Executive Officer
of the Company, the election of the Employee as a director of the Company. In
the event that the Employee is, or is elected as, a director of the Company, the
Employee shall perform all duties incident to such directorship faithfully,
diligently and competently.
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 $225,000 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,
and the Board, in the exercise of its sole discretion, will have the option to
increase such Salary from time to time. 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 Compensation
Committee of the Board after consultation with the Employee.
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; and provided, further, that any employee benefit
plans and programs instituted by the Company for the benefit of its officers
generally will be made available to Employee on terms no less favorable to
Employee than those terms offered to any other officer of the Company.
(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.
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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 105,000 shares of Common Stock of the
Company ("Common Stock") with an exercise price equal to $40 per share. 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 four year period at the rate of
1/48 for each calendar month of Employee's employment with the Company.
(d) Within thirty days of the first anniversary of this Agreement,
provided the Employee is then employed by the Company, the Company shall grant
to the Employee a stock option, pursuant to the Plan, to purchase 21,000 shares
of Common Stock with an exercise price equal to the then fair market value of
the Common Stock as determined by the Board of Directors pursuant to the Plan.
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 then in effect. 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 after the grant.
(e) The Company has provided to Employee, and the Employee
acknowledges receipt of, a copy of the Plan and information concerning the
current the capital structure of the Company, including the number of shares of
Common Stock and other securities currently issued and outstanding, and the
number of shares of Common Stock issuable in connection with outstanding
warrants and options.
(f) The stock option grant agreements for the options described in
Section 4(c) and (d) of this Agreement will also provide that all unvested
options will become exercisable
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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, such
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 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 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 of the directors then
still in office who were directors at the beginning of the period.
(g) In the event that the acceleration, as set forth in Section 4(f)
of this Agreement, of any option to be granted to the Employee pursuant to the
Plan, as the case may be, which causes the option to be exercisable immediately
(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(g), 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.
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
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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 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, 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), the Company shall pay the
Employee, in twelve (12) equal semi-monthly installments, an aggregate amount
equal to six (6) 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 six-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
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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 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
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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
proposes 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) 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;
(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 11.
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
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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.
(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 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
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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 ninety (90) days' 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 six (6)
months; provided, however, that if the Company elects to terminate this
Agreement during the Employee's first year of employment with the Company, such
amount shall be limited to three (3) months' salary. The payments described in
the preceding sentence shall be made without regard to whether Employee has
sought or obtained any other employment during such period. In the event the
Employee elects to terminate the Employee's employment under this Agreement,
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.
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.
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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.
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:
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(a) If to the Employee:
Xxxxxxx X. Xxxxxxxx
00 Xxxxx Xxxx
X-00 Xxxxxxxxxx, XX 00000
(b) If to the Company:
Princeton Video Image, Inc.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Chairman of the Board of Directors
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.
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.
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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/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx F Xxxxxxxx
Title: Chairman of the Board
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
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