EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of the twenty-third day of March, 1998 between InnovaCom, Inc., a
Nevada corporation (the "Company"), and Xxxxxx X. Xxxxx, an individual
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the Executive
as the President and Chief Executive Officer of the Company and as a
member of the Board of Directors of the Company on the terms and
conditions set forth herein; and
WHEREAS, the Executive is willing to serve as the President and
Chief Executive Officer of the Company and as a member of the Board of
Directors of the Company on the terms and conditions set forth herein;
and
WHEREAS, the Board of Directors of the Company has approved and
authorized the Company's execution, delivery and performance of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties hereto do hereby agree as follows:
1. Employment Period.
The Company shall employ and otherwise retain the services of
the Executive, and the Executive shall serve the Company, for a
period (the "Employment Period") commencing as of the Commencement
Date (as defined below) and continuing through and until five (5)
years thereafter, subject to the terms and conditions contained in
this Agreement. On the first anniversary of the Commencement Date
and on each anniversary date thereafter, the Employment Period shall
automatically be extended for an additional period of one (1) year;
provided, however, that either party hereto may elect not to so
extend the Employment Period by giving notice thereof to the other
party at least three (3) months prior to the relevant anniversary
date. As used herein, the "Commencement Date" shall mean May 1,
1998 or such later date as the Executive may hereafter designate in
writing (but in no event later than June 1, 1998). Notwithstanding
the foregoing, the Executive's employment hereunder may be earlier
terminated subject to Section 5 hereof.
2. Position and Duties.
During the Employment Period, the Company agrees to employ and
otherwise retain the services of the Executive as the President and
Chief Executive Officer of the Company and as a member of both the
Board of Directors of the Company (sometimes referred to herein as
the "Board of Directors" or the "Board") and, if one exists, the
Executive Committee of thc Board. During and throughout the
Employment Period, the Executive shall report directly and
exclusively to the Board of Directors and shall exercise such
authority, perform such executive duties and functions and discharge
such responsibilities as are reasonably associated with the
Executive's position, commensurate with the authority vested in the
Executive pursuant to this Agreement and consistent with the bylaws
of the Company. As President and Chief Executive Officer, the
Executive shall have effective supervision and control over, and
responsibility for, the strategic direction and general and active
day-to-day management of the Company and its direct and indirect
subsidiaries. Toward that end, all management and other personnel
of the Company and its direct and indirect subsidiaries shall report
to the Executive. The Executive shall perform his services
hereunder primarily at the Company's current headquarters in Santa
Clara, California or such other location not more than twenty-five
(25) miles distant therefrom as the Board of Directors may hereafter
prescribe as the Company's headquarters. During the Employment
Period, the Executive shall devote substantially his full business
time, skill and efforts to the business of the Company.
Notwithstanding the foregoing, the Executive shall have the right to
devote time to other directorships and other business, professional,
civic, educational and charitable endeavors so long as such
activities do not materially impair the Executive's performance of
his duties hereunder.
3. Compensation and Benefits.
(a) Signing Bonus. Promptly following the execution and
delivery of this Agreement, the Company shall pay to the Executive
that amount which, after deduction of the full amount of any and all
income, employment and other taxes thereon (including federal income
tax at the highest marginal rate applicable to a citizen or resident
of the United States and California personal income tax at the
highest marginal rate applicable to a full-time resident), shall
equal the sum of $200,000.
(b) Base Salary. During the Employment Period, the Company
shall pay to the Executive, as compensation for the performance of
his duties and obligations under this Agreement, an annual base
salary at the initial rate of $250,000, payable in approximately
equal installments not less frequently than monthly and otherwise in
accordance with the normal payroll practices of the Company. Such
annual base salary shall be subject to review each year for possible
increase by the Board of Directors in its sole discretion, but shall
in no event shall such annual base salary for the second or any
subsequent year during the Employment Period be increased by less
than ten percent (10%) from its rate during the immediately
preceding year of the Employment Period.
(c) Annual Bonus. For each fiscal year ending during the
Employment Period, the Executive shall be eligible to receive an
annual target bonus (the "Bonus") of at least two (2) times the
Executive's annual base salary at the rate in effect as of the close
of the year to which the Bonus relates based upon the Company's
achievement of its target performance goals for such year (the
"Annual Target"). In the event the Company achieves eighty percent
(80%) of its Annual Target for any fiscal year, the Bonus for such
year shall equal one (1) times the Executive's annual base salary at
the rate in effect at the close of such year. In the event the
Company achieves more than eighty percent (80%), but less than 100%,
of its Annual Target for any year, the Bonus for such year shall
equal the sum of (i) one (1) times the Executive's annual base
salary at the rate in effect at the close of such year and (ii) the
product of one (1) times such annual base salary and a fraction, the
numerator of which is the difference between the Company's
percentage achievement of its Annual Target and eighty percent (80%)
and the denominator of which is twenty percent (20%). At the sole
discretion of the Board of Directors, a payment in excess of two (2)
times the Executive's annual base salary may be made. The
establishment of Annual Targets shall be mutually agreed upon by the
Executive and the Board of Directors by July 31 in the case of the
1998 fiscal year and by March 31 in the case of each fiscal year
thereafter. In all cases, such Annual Targets shall be reasonable
and shall be based solely on factors capable of objective
measurement. In the event that the Executive and the Board of
Directors do not reach an agreement regarding the establishment of
the Annual Target by the applicable date in any fiscal year, the
Annual Target shall be as follows: in the case of the 1998 fiscal
year, such Annual Target as the Compensation Committee of the Board
of Directors shall determine in its reasonable discretion; and in
the case of any subsequent fiscal year, the consensus estimate for
earnings per share of the Company as published by Xxxxxx
Publications as of such date or, if there shall be none, the Annual
Target established for the immediately preceding year. Each Bonus
shall accrue upon, and be payable not later than forty-five (45)
days after, the completion of the fiscal year concerned. In the
event that the Board of Directors shall approve a change in the
fiscal year of the Company, the parties shall promptly negotiate an
amendment to this Section 3(c) which takes into account the change
in fiscal year but does not have an adverse financial impact on the
Executive.
(d) Equity Participation. The Executive shall be granted
stock options (the "Options") to purchase an aggregate of 1,000,000
shares of the common stock of the Company in accordance with and
subject to the following:
(i) The per-share exercise price of the Options shall be
equal to the lower of $1.75 per share and the closing price per
share of the Company's common stock on the trading day
immediately preceding the day on which the Company makes a
public announcement of this Agreement.
(ii) Subject to the terms and conditions of this
Agreement and of the Plan, the Options shall vest and become
exercisable in the following increments and at the following
times: 33.3334% of the Options, entitling the Executive to
purchase 333,334 shares of the Company's common stock, shall
vest and become exercisable on the Commencement Date; 33.3333%
of the Options, entitling the Executive to purchase 333,333
shares of the Company's common stock, shall vest and become
exercisable on the day immediately preceding the first
anniversary of the Commencement Date; and 33.3333% of the
Options, entitling the Executive to purchase 333,333 shares of
the Company's common stock, shall vest and become exercisable
on the day immediately preceding the second anniversary of the
Commencement Date (the "Final Vesting Date"). Notwithstanding
the preceding sentence, in the event of a Change in Control of
the Company as defined in Section 6 hereof or in the event that
the Executive's employment hereunder shall be terminated by the
Company without Cause (as defined below) or by the Executive
for Good Reason (as defined below) at any time prior to the
Final Vesting Date, then the above vesting schedule shall be
accelerated and all of the Options (entitling the Executive to
purchase an aggregate of 1,000,000 shares of the Company's
common stock) that have not previously vested and become
exercisable shall immediately vest and become exercisable.
(iii) Except as expressly provided otherwise in Section 5
of this Agreement, the Options shall remain exercisable until,
and shall not expire earlier than, ten (10) years from the date
of grant.
(iv) As soon as practicable following the Executive's
request therefor (whether during or after the Employment
Period), the Company shall register the shares of the Company's
common stock subject to the Options under the federal
securities laws and shall take such other steps as may be
necessary or advisable to enable such shares to be offered and
sold to the public under the federal securities laws and any
other applicable laws.
(v) In the event that the outstanding shares of the
Company's common stock are increased or decreased in number or
are changed into or exchanged for a different number or kind of
securities of the Company or any other corporation by reason of
any recapitalization, reclassification, stock split, reverse
stock split, combination of shares, stock dividend or other
similar event or by reason of any combination of the foregoing,
an appropriate adjustment of the number and kind of securities
with respect to which the Options may be exercised and the
exercise price at which the Options may be exercised shall be
made.
(vi) The Options shall be granted to the Executive
outside the terms of the Company's 1996 Incentive and
Nonstatutory Stock Option Plan, as amended.
(vii) The parties intend that the Options shall be
subject to a stock option agreement to be negotiated in good
faith between the parties on terms and conditions consistent
with this Section 3(d) and the other provisions of this
Agreement. Notwithstanding the foregoing, the Options shall be
effective as of the date of grant in accordance with the terms
and conditions contained herein, irrespective of whether such a
stock option agreement is or has been executed by the parties.
(e) Office Facilities. During the Employment Period, the
Company shall provide the Executive with, and the Executive shall be
allowed full use of, office facilities, secretarial and clerical
assistance and other Company property and services of a quality,
nature and extent no less favorable to the Executive than the
offices facilities, secretarial and clerical assistance and other
Company property and services now or hereafter provided to the
Company's Chairman of the Board or to other senior executives of the
Company or its subsidiaries.
(f) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans,
policies, programs and practices of the Company on a basis no less
favorable than that applicable to other senior executives of the
Company or its subsidiaries, but in no event shall the Executive be
entitled to less than thirty (30) days of paid vacation per year
during the Employment Period and in no event shall the number of
accrued unused vacation days permitted to be accumulated by the
Executive be less than sixty (60) days.
(g) Other Benefits. During the Employment Period, the
Executive shall be entitled to participate in all of the employee
benefit plans, programs, policies and arrangements of the Company in
effect during the Employment Period which are generally available to
senior executives of the Company or its subsidiaries, subject to and
on a basis consistent with the terms, conditions and overall
administration of such plans, programs, policies and arrangements.
Without limiting the foregoing, the Executive shall be entitled to
full participation, on a basis commensurate with his position with
the Company and no less favorable to the Executive than that
accorded to any other officer or director of the Company or its
subsidiaries, in all present and future plans of accident,
disability, medical, dental, health, welfare, pension, savings,
deferred compensation, profit sharing, stock option, stock purchase,
incentive compensation and similar benefits which generally are made
available to senior executives of the Company or its subsidiaries.
In addition, during the Employment Period, the Executive shall be
entitled to fringe benefits and perquisites no less favorable to the
Executive than those of other senior executives of the Company or
its subsidiaries. Without limiting the foregoing, the Company shall
provide the Executive with the following: (i) medical, dental,
optical and other health insurance coverage for the Executive and
his dependents pursuant to traditional indemnity insurance plans,
with reasonable contributions, deductibles and reimbursement
payments and with no pre-existing condition exclusions and no
waiting periods for coverage; and (ii) long-term disability
insurance coverage paying benefits equal to at least 100% of the
Executive's then-current annual base salary and annual target bonus
for the duration of any permanent and total disability of the
Executive, either through an individual disability insurance policy
or otherwise.
(h) Life Insurance. During the Employment Period, the
Company shall fund the premiums payable on a life insurance policy
of the Executive's choice. Such policy shall be issued by an
insurer satisfactory to the Executive, shall be owned by the
Executive and shall have a death benefit of $1,500,000 payable to
such beneficiary or beneficiaries as the Executive shall designate.
(i) Automobile Allowance. During the Employment Period, the
Company shall pay to the Executive an automobile allowance of $1,000
per month.
(j) Housing Allowance. For a period of twenty-four (24)
consecutive months commencing on the Commencement Date or such later
date not more than ninety (90) days thereafter as the Executive
shall designate, the Company shall pay to the Executive a housing
allowance of $7,500 per month.
(k) Business Expenses. The Company shall promptly pay or
reimburse the Executive for all reasonable business expenses
(including travel and entertainment expenses, home office expenses,
cellular telephone and other mobile communications expenses and the
costs of membership in clubs, trade associations and other
organizations) incurred by the Executive in the performance of his
duties under this Agreement upon the submission of appropriate
vouchers or receipts to the Company in accordance with the Company's
policies.
(l) Relocation Expenses. Upon the submission of appropriate
vouchers or receipts, the Company shall pay or reimburse the
Executive for all of the relocation expenses incurred by the
Executive in changing his principal residence from McLean, Virginia
to the Santa Clara, California and surrounding area, including all
packing, shipping, insurance, storage and similar expenses and
further including those amounts necessary to cover up to three (3)
"househunting" trips by the Executive and his spouse and up to
ninety (90) days of hotel or other temporary accommodations for the
Executive and his spouse.
(m) Tax Gross-up. To the extent that the Executive shall be
required to pay federal, state, local or other tax in respect of any
expense reimbursement, allowance or other benefit paid or provided
pursuant to subsections (h), (i), (j), (k) and (l) of this Section
3, the Company shall pay to the Executive promptly upon request such
amount or amounts as may be necessary to place the Executive in the
same after-tax financial position that the Executive would have been
in if the Executive had not incurred any tax liability in respect of
such expense reimbursement, allowance or other benefit and if the
Executive had not received any amount or amounts pursuant to this
provision.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment
hereunder shall terminate automatically upon the Executive's death
during the Employment Period. If any Disability (as defined below)
of the Executive shall occur during the Employment Period, the
Company, through its Board of Directors, may give to the Executive
notice in accordance with Section 12 hereof of its intention to
terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on
the sixtieth day after receipt of such notice by the Executive (the
"Disability Effective Date") unless the Executive shall have
returned to substantially full time performance of the Executive's
duties hereunder within sixty (60) days after receipt of such
notice. For purposes of this Agreement, "Disability" shall mean the
absence of the Executive from the performance of the Executive's
duties with the Company on a full time basis for the entire period
of six (6) consecutive months as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by an independent physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's legal
representative. Notwithstanding the foregoing, in no event shall
the Executive be terminated by reason of any Disability unless the
Executive is eligible for and has qualified to receive the long-term
disability benefits described in Section 3(g) hereof.
(b) Cause. The Company, through its Board of Directors, may
terminate the Executive's employment hereunder at any time during
the Employment Period for Cause or without Cause. For purposes of
this Agreement, "Cause" shall mean solely the following: (i) the
conviction of the Executive for, or the plea by the Executive of
nolo contendere to, a charge of commission of a felony involving
specific intent; (ii) the consistent, willful failure of the
Executive to substantially perform his stated duties hereunder
(other than such failure resulting from physical or mental
incapacity), but only if such failure has a material adverse effect
on the Company; (iii) the willful commission by the Executive of an
act of fraud, but only if such act of fraud has a material adverse
effect on the Company; or (iv) an act of willful gross misconduct by
the Executive which is materially and demonstrably injurious to the
Company. Notwithstanding the foregoing, no act or failure to act by
the Executive shall be considered "willful" unless committed without
good faith and without a reasonable belief that the act or failure
to act was in the Company's best interest, and no act or failure to
act shall constitute "Cause" unless the Board of Directors shall
have notified the Executive in writing of the conduct allegedly
constituting Cause and the Executive shall have failed to correct
such conduct within thirty (30) days after the date of his receipt
of such notice. Moreover, the termination of the Executive's
employment hereunder shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice
shall have been provided to the Executive and the Executive shall
have been given an opportunity, together with counsel, to be heard
before the Board), finding that Cause exists in the good faith
opinion of the Board and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment hereunder may be
terminated by the Executive at any time during the Employment Period
for Good Reason or without Good Reason. For purposes of this
Agreement, "Good Reason" shall mean any of the following:
(i) The assignment to the Executive of any duties
inconsistent with the Executive's position (including his
offices, titles, status and reporting relationship), authority,
duties or responsibilities as contemplated by Section 2 hereof,
or any removal of the Executive from or any failure to
nominate, elect or appoint the Executive to any of the offices
or positions referred to in Section 2 hereof, or any other act
or omission by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding
for these purposes an isolated and insubstantial action not
taken in bad faith which is remedied by the Company promptly
after receipt by the Company of notice thereof given by the
Executive. For purposes of this subsection (c), any act or
omission of the Board of Directors or the stockholders of the
Company that would give rise to "Good Reason" if it were an act
or omission of the Company shall be attributed to, and be
deemed to constitute an act or omission of, the Company.
(ii) Any failure by the Company to comply with any of the
provisions of Section 3 hereof (including, for this purpose,
any material reduction by the Company in the Executive's
employee benefit package as in effect immediately prior to such
reduction), other than an isolated and insubstantial failure
not occurring in bad faith which is remedied by the Company
promptly after receipt by the Company of notice thereof given
by the Executive.
(iii) Any material breach by the Company of the
provisions of this Agreement (including Section 11 hereof
regarding the assumption of this Agreement by any successor of
the Company) or any other agreement with the Executive.
(iv) Any relocation of the Executive's principal place of
employment in a manner inconsistent with that provided in
Section 2 hereof or any requirement that the Executive travel
on the Company's business to an extent materially greater than
the Executive's normal business travel obligations.
(v) Any failure by the Company to extend the Employment
Period by giving the Executive notice to that effect as
provided in Section 1 hereof.
(vi) The occurrence of a Change in Control of the Company
as defined in Section 6 hereof.
(d) Notice of Termination. Any termination of the
Executive's employment hereunder by the Company for Cause, or by the
Executive for Good Reason, shall be communicated to the other
relevant party by a Notice of Termination (as defined below). In
the case of a termination by the Executive for Good Reason, such
Notice of Termination shall be given within ninety (90) days of the
occurrence of the event that is claimed as serving the basis for the
termination as a condition of such claim being treated as a Good
Reason termination hereunder. For purposes of this Agreement, a
"Notice of Termination" means a notice given in accordance with
Section 12 hereof which (i) indicates the specific termination
provision in this Agreement that is relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii)
if the Date of Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination date (which
date shall be not more than thirty (30) days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. As used herein, the "Date of
Termination" shall mean the following: (i) if the Executive's
employment is terminated by the Company for Cause or by the
Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein that is within
thirty (30) days of the date of receipt of such notice; (ii) if the
Executive's employment is terminated by the Company without Cause,
the Date of Termination shall be the date on which the Company
notifies the Executive of such termination or any later date
specified therein that is within thirty (30) days of the date of
receipt of such notice; (iii) if the Executive's employment is
terminated by the Executive without Good Reason, the date specified
in the Notice of Termination (which date shall not be less than
sixty (60) days after the date of receipt of such notice); and (iv)
if the Executive's employment is terminated by reason of the death
or Disability of the Executive, the Date of Termination shall be the
date of death or the Disability Effective Date, as the case may be.
5. Consequences of Termination.
(a) Without Cause or for Good Reason. In the event of a
termination of the Executive's employment hereunder by the Company
without Cause (other than by reason of any Disability of the
Executive) or by the Executive for Good Reason, the Company shall
pay and provide to the Executive all of the following:
(i) Lump-sum Payment. A lump-sum cash payment, payable
not later than ten (10) days after the Date of Termination,
equal to the sum of the amounts specified in clauses (A), (B)
and (C) below (subject to the limitation specified in clause
(D) below):
(A) Salary. The Executive's then-current annual base
salary (subject to increase from year to year by the minimum percentage
amount specified in Section 3(b) hereof) payable over the remainder of
the then-current Employment Period, discounted to the then-present value
by applying a discount rate equal to four percent (4%) per annum (the
"Discount Rate") to each future payment of salary from the time when it
otherwise would have become payable to the Date of Termination. For all
purposes of this Agreement, the term "then-current Employment Period"
shall include any extensions of the Employment Period which shall have
become effective on or before the Date of Termination and shall be
determined without regard to the termination of the Executive's
employment hereunder except that such term shall not include any
extensions of the Employment Period that would or might have become
effective after the Date of Termination.
(B) Bonuses. The maximum annual bonus amounts payable
for each fiscal year of the Company that would have been completed during
the remainder of the then-current Employment Period, with such bonus
amounts to be calculated based on the Executive's then-current annual
base salary (subject to increase from year to year by the minimum
percentage amount specified in Section 3(b) hereof) and the applicable
bonus percentages that would have been used for such years. In the case
of any fiscal year that would only have been partially completed during
the remainder of the then-current Employment Period, for purposes of this
provision, such fiscal year shall be deemed to have been completed on the
date when the then-current Employment Period would otherwise have
expired, and the bonus amount for such fiscal year shall be calculated as
described above except that such bonus amount shall be pro
rated by a fraction, the numerator of which shall be the number of
calendar days during such fiscal year prior to the date when the then-
current Employment Period would otherwise have expired and the
denominator of which shall be 365 days. All such amounts shall be
discounted to the then-present value by applying the Discount Rate to
each future payment of bonus from the time when it otherwise would have
become payable to the Date of Termination.
(C) Accrued but Unpaid Amounts. The sum of any
previously earned but unpaid salary through the Date of Termination, any
previously earned but unpaid bonus amounts for any fiscal year completed
on or before such date, the value of any accrued but unused vacation days
through such date and the aggregate amount of any previously incurred but
unreimbursed business expenses or other amounts due to the Executive as
of such date.
(D) Limitation. Notwithstanding the foregoing, the
lump-sum cash payment payable to the Executive under this Section 5(a)(i)
shall not exceed $1,000,000 until such time as the EBITDA of the Company
(as defined below) shall, as of any calculation date specified below
occurring on or before the Date of Termination, exceed $2,000,000. For
purposes of this Agreement, the "EBITDA of the Company" shall mean the
Company's earnings before deduction of any interest, taxes, depreciation,
amortization or similar items and before deduction of any non-recurring
or non-cash items (such as non-cash stock compensation expenses) during
the period commencing on the Commencement Date and continuing through and
until the Date of Termination and shall be calculated and determined on a
cumulative basis as of the last day of each calendar month during such
period.
(ii) Equity. To the extent that any portion of the
Options shall not have vested prior to the Date of Termination,
such portion shall immediately vest in the Executive. In no
event shall the ten-year option terms of the Options be
truncated. To the extent that the Executive shall not have
exercised all or any portion of the Options (including any
portion whose vesting was accelerated as described above) prior
to the Date of Termination, the Executive shall be entitled to
exercise the same in such increments and at such times as the
Executive shall determine in his sole discretion for so long as
the ten-year option terms shall remain unexpired.
(iii) Employee Benefits. During the remainder of the
then-current Employment Period, the Executive (and, where
applicable, his dependents) shall be entitled to continued
participation in all health, welfare, life, accident,
disability and similar employee benefit plans, programs and
arrangements of the Company on the same basis as that which
applied immediately prior to the Date of Termination, provided
that continued participation is possible under the general
terms and provisions of such plans, programs and arrangements.
In the event that participation by the Executive (and, where
applicable, his dependents) in any such plan, program or
arrangement is barred, the Company shall arrange to provide the
Executive (and, where applicable, his dependents) with benefits
substantially similar to those which the Executive (and, where
applicable, his dependents) would otherwise have been entitled
to receive under such plans, programs and arrangements at the
same or lower after-tax cost to the Executive. During the
remainder of the then-current Employment Period, the Executive
shall also be entitled to continue with those benefits
described in subsections (h), (i), (j), (l) and (m) of Section
3 hereof. If and to the extent that the Executive and his
dependents are covered under substitute benefit plans, programs
or arrangements of another employer prior to the expiration of
the then-current Employment Period, the Company will no longer
be obligated to continue the respective coverages provided for
in this Section 5(a)(iii).
(b) Death, Disability or Without Good Reason After Five
Years. In the event of a termination of the Executive's employment
hereunder by reason of the death or Disability of the Executive or
by the Executive without Good Reason on or after completion of five
(5) years of employment, then subject to Section 5(f) hereof, the
Company shall pay and provide to the Executive all of the following:
(i) Accrued but Unpaid Amounts. A lump-sum cash
payment, payable not later than ten (10) days after the Date of
Termination, equal to the sum of any previously earned but
unpaid salary through the Date of Termination, any previously
earned but unpaid bonus amounts for any fiscal year completed
on or before such date, the value of any accrued but unused
vacation days through such date and the aggregate amount of any
previously incurred but unreimbursed business expenses or other
amounts due to the Executive as of such date.
(ii) Equity. To the extent that any portion of the
Options shall have vested on or before the Date of Termination,
such portion shall remain vested in the Executive and in no
event shall the ten-year option terms of the Options be
truncated. To the extent that the Executive shall not have
exercised all or any portion of the Options (excluding, for the
avoidance of doubt, any portion of the Options that has not
vested as described above) on or before the Date of
Termination, the Executive shall be entitled to exercise the
same thereafter in such increments and at such times as the
Executive shall determine in his sole discretion for so long as
the ten-year option terms shall remain unexpired.
(iii) Employee Benefits. During the Severance Period (as
defined below), the Executive (and, where applicable, his
dependents) shall be entitled to continued participation in all
accident, disability, medical, dental, health, welfare, life
and similar employee benefit plans, programs and arrangements
of the Company on the same basis as that which applied
immediately prior to the Date of Termination, provided that
continued participation is possible under the general terms and
provisions of such plans, programs and arrangements. In the
event that participation by the Executive (and, where
applicable, his dependents) in any such plan, program or
arrangement is barred, the Company shall arrange to provide the
Executive (and, where applicable, his dependents) with benefits
substantially similar to those which the Executive (and, where
applicable, his dependents) would otherwise have been entitled
to receive under such plans, programs and arrangements at the
same or lower after-tax cost to the Executive. As used herein,
the "Severance Period" shall mean the first twelve (12) months
following the Date of Termination if such date occurs on or
before the first anniversary of the Commencement Date or the
first twenty-four (24) months following the Date of Termination
if such date occurs after the first anniversary of the
Commencement Date. During the Severance Period, the Executive
shall also be entitled to continue with those benefits
described in subsections (h), (i), (j), (l) and (m) of Section
3 hereof. If and to the extent that the Executive and his
dependents are covered under substitute benefit plans, programs
or arrangements of another employer prior to the expiration of
the Severance Period, the Company will no longer be obligated
to continue the respective coverages provided for in this
Section 5(b)(iii).
(iv) Severance Payment. Solely in the event that the
Executive's employment hereunder is terminated by the Executive
without Good Reason on or after completion of five (5) years of
employment (and not in the event that the Executive's
employment is terminated by reason of death or Disability), the
Executive shall be entitled to receive a severance payment not
later than ten (10) days after the Date of Termination,, it
being understood and agreed that the amount of such severance
payment shall be determined by the Board of Directors in its
sole discretion.
(c) Termination for Cause or Without Good Reason Before Five
Years. In the event that the Executive's employment with the
Company is terminated during the Employment Period by the Company
for Cause or by the Executive without Good Reason prior to the
completion of five (5) years of employment, the following shall
apply:
(i) Accrued but Unpaid Amounts. The Company shall pay
to the Executive, not later than ten (10) days after the Date
of Termination, a lump-sum cash payment equal to the sum of any
previously earned but unpaid salary through the Date of
Termination, any previously earned but unpaid bonus amounts for
any fiscal year completed on or before such date, the value of
any accrued but unused vacation days through such date and the
aggregate amount of any previously incurred but unreimbursed
business expenses or other amounts due to the Executive as of
such date.
(ii) Lapse of Options. If and to the extent that any
portion of the Options shall not have vested prior to the Date
of Termination, such portion shall not vest in the Executive
and shall be forfeited. If and to the extent that any portion
of the Options shall have vested prior to the Date of
Termination and shall remain unexercised on such date, the
option terms of such portion shall expire ninety (90) days
after the Date of Termination.
(d) Other Arrangements. The benefits payable to the
Executive under this Agreement are not in lieu of any benefits
payable under any employee benefit plan, program or arrangement of
the Company, except as provided specifically herein, and upon
termination the Executive will receive such benefits or payments, if
any, as the Executive may be entitled to receive pursuant to the
terms of such plans, programs and arrangements.
(e) No Mitigation or Offset. The Executive shall have no
obligation to mitigate damages or the amount of any payments or
benefits set forth in this Agreement (whether by seeking substitute
employment or otherwise), and except as specifically provided in the
last sentence of Section 5(a)(iii) hereof or the last sentence of
Section 5(b)(iii) hereof, there shall be no offset of or reduction
in the payments or benefits set forth in this Agreement by virtue of
any payments or benefits received by the Executive from any other
source (including any payments or benefits received by the Executive
from another employer).
(f) Designated Beneficiary. In the event of the death of the
Executive at any time when amounts are then payable or shall
thereafter be payable to the Executive under the provisions of this
Agreement, such payments shall thereafter be made to such person or
persons as the Executive may specifically designate (successively or
contingently) to receive payments under this Agreement following the
Executive's death by filing a written beneficiary designation with
the Company during the Executive's lifetime. Such beneficiary
designation shall be in such form as may be prescribed by the
Company and may be amended from time to time or may be revoked by
the Executive pursuant to written instruments filed with the Company
during his lifetime. Beneficiaries designated by the Executive may
be any natural or legal person or persons, including a fiduciary,
such as a trustee of a trust or the legal representative of an
estate. Unless otherwise provided by the beneficiary designation
filed by the Executive, if all of the persons so designated die
before the Executive on the occurrence of a contingency not
contemplated in such beneficiary designation, then the amount or
amounts payable under this Agreement shall be paid to the
Executive's estate.
6. Change in Control.
Notwithstanding any other provision of this Agreement, in the
event that a Change in Control of the Company shall occur, all of
the Options that have not previously vested and become exercisable
pursuant to Section 3(d) hereof shall immediately vest and become
exercisable and the Executive shall have Good Reason to terminate
his employment with the Company pursuant to Section 4(c) hereof.
For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if and when any of the following shall
occur:
(a) Individuals who as of the date six (6) months after the
Commencement Date (the "Six Month Date") constitute the entire Board
and any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, shall have
been approved by a vote of at least a majority of the directors then
in office who either were directors as of the Six Month Date or
whose election or nomination for election shall have been so
approved shall cease for any reason to constitute a majority of the
members of the Board.
(b) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall after the Commencement Date become the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the voting power of all
then-outstanding securities of the Company having the right under
ordinary circumstances to vote in an election of the Board (it being
understood and agreed that, for this purpose, any securities of the
Company that any person has the right to acquire pursuant to any
agreement, upon exercise of any conversion rights, warrants or
options or by any other means, shall be deemed beneficially owned by
such person).
(c) There shall be approved by a vote of the Company's
shareholders or other appropriate corporate action any corporate
transaction, including a consolidation or merger, involving the
Company (regardless of whether the Company is the continuing or
surviving corporation) or pursuant to which shares of the Company's
capital stock are converted into cash, securities or other property,
other than a consolidation or merger of the Company in which the
holders of the Company's voting stock immediately prior to the
consolidation or merger shall, upon consummation thereof, own that
number of shares of the capital stock of the continuing or surviving
corporation sufficient to provide such holders with at least fifty-
one percent (51%) of the voting power of all shares of the capital
stock of the continuing or surviving corporation.
(d) There shall be approved by a vote of the Company's
shareholders or other appropriate corporate action any sale, lease,
exchange or transfer (whether in a single transaction or a series of
related transactions) of all or substantially all of the assets or
business of the Company or any liquidation, dissolution or winding
up of the Company.
7. Excess Parachute Payments.
(a) Gross-up Payments. Subject to the provisions of Section
8 hereof, if the Executive becomes subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") on "excess parachute payments" as defined in Section
280G of the Code or the Executive incurs any interest or penalties
with respect to such excise tax (such excise tax, together with any
such interest or penalties, being hereinafter collectively referred
to as the "Excise Tax"), the Company shall promptly pay to the
Executive that amount (a "Gross-up Payment") that is necessary to
place the Executive in the same after-tax (taking into account all
federal, state, local and other taxes) financial position that the
Executive would have been in if he had not incurred any tax
liability under Section 4999 of the Code or otherwise relating to
the Excise Tax. In no case will the Executive file a tax return
which takes a position that any Excise Tax is payable unless the
Executive receives a written opinion from his tax advisor(s) that it
is more likely than not that the Excise Tax is due and payable.
Upon receipt of such written opinion, the Executive shall deliver a
copy of such written opinion to the Company, using reasonable
efforts whenever practicable to do so not less than thirty (30) days
prior to filing the tax return to which the opinion refers. After
receiving the written opinion and prior to the due date for the
filing of such tax return, the Company shall pay to the Executive
the full amount of the Gross-up Payment as described above. In all
cases, the Company shall pay or reimburse the Executive, upon the
presentation of appropriate vouchers or receipts, for the reasonable
costs incurred by the Executive in obtaining any such opinion
(regardless of the conclusion of such opinion) or in seeking any
advice relating to the matters to be addressed in any such opinion.
(b) Subsequent Assessments. In the event the Internal
Revenue Service subsequently may assess or seek to assess from the
Executive an amount of the Excise Tax in excess of that determined
in accordance with the foregoing, the Company shall pay to the
Executive an additional Gross-up Payment, calculated as described
above in respect of such excess Excise Tax, including a Gross up
Payment in respect of any interest or penalties imposed by the
Internal Revenue Service with respect to such excess Excise Tax.
(c) Notice of Claims. Each party will notify the other in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of any Gross-up
Payment. Such notification shall be given as soon as practicable
but no later than ten (10) business days after such party is
informed in writing of such a claim and such party shall apprise the
other party of the nature of such claim and the date on which such
claim is requested to be paid. The Company shall bear and pay
directly all costs and expenses (including legal and accounting fees
and additional interest and penalties) incurred in connection with
any such claim or proceeding, to the extent related to the Excise
Tax, and shall indemnify and hold harmless the Executive, on an
after-tax basis as provided in Section 7(a) hereof, from and against
any income, excise or other tax (including any interest, penalties
or additions to tax with respect thereto) imposed as a result of
such representation and the payment of such costs and expenses.
(d) Interpretation. For purposes of this Agreement, (i) any
reference to a particular section of the Code shall be deemed to
include any and all successor provisions of federal law, any and all
similar or analogous provisions of state, local or other law, and
any and all applicable rules and regulations relating to the
foregoing, and (ii) any reference to the Internal Revenue Service
shall be deemed to include any and all applicable state, local and
other tax authorities.
8. Limitation on Gross-up Payments.
(a) General Rule. Notwithstanding Sections 5, 6 and 7
hereof, if any of the payments, benefits or property transfers
provided for in this Agreement, together with any other payments,
benefits or property transfers which the Executive has the right to
receive from the Company, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), then the payments,
benefits or property transfers pursuant to this Agreement shall be
reduced so that the present value of the total amount received by
the Executive that would constitute a "parachute payment" will be
$1.00 less than three (3) times the Executive's "base amount" (as
defined in Section 280G of the Code) and so that no portion of the
payments, benefits or property transfers received by the Executive
would be subject to the excise tax imposed by Section 4999 of the
Code. If the amount of the aggregate payments, benefits or property
transfers to the Executive must be reduced pursuant to the preceding
sentence, the Executive shall direct in which order the payments,
benefits or transfers are to be reduced. All calculations required
by this Section 8 shall be by such nationally recognized accounting
firm as may be designated by the Executive (the "Accounting Firm"),
based on information supplied by the Company and the Executive, and
shall be binding on the Company and the Executive. All fees and
expenses of the Accounting Firm shall be paid by the Company.
(b) Underpayments and Overpayments. As a result of
uncertainty in the application of Sections 280G and 4999 of the Code
at the time of an initial determination by the Accounting Firm
hereunder, it is possible that a payment will have been made by the
Company that should not have been made (an "Overpayment") or that an
additional payment that will not have been made by the Company could
have been made (an "Underpayment"). In the event that the
Accounting Firm, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Executive that
the Accounting Firm believes has a high probability of success,
determines that an Overpayment has been made, such Overpayment shall
be treated for all purposes as a loan to the Executive that the
Executive shall repay to the Company, together with interest thereon
at the applicable federal rate specified in Section 7872(f)(2) of
the Code; provided, however, that no amount shall be payable by the
Executive to the Company if and to the extent that such payment
would not reduce the amount that is nondeductible under Section 280G
of the Code or is subject to an excise tax under Section 4999 of the
Code. In the event that the Accounting Firm determines that an
Underpayment has been made, such Underpayment shall promptly be paid
or transferred by the Company to, or for the benefit of, the
Executive, together with interest thereon at the applicable federal
rate specified in Section 7872(f)(2) of the Code.
(c) Exception to General Rule. Notwithstanding any other
provision of this Agreement (including Sections 8(a) and 8(b)
hereof), if and to the maximum extent that the EBITDA of the Company
shall, as of any calculation date specified in Section 5(a)(i)(D)
hereof, equal or exceed the amount of any Gross-up Payment that
would be required to be paid to the Executive under Section 7(a)
hereof (determined without regard to Sections 8(a) and 8(b) hereof),
then from that date forward, the limitations imposed by Sections
8(a) and 8(b) on the Executive's right to receive payments, benefits
or property transfers shall no longer apply.
9. Confidential Information.
During the Employment Period and at all times thereafter, the
Executive shall not, without the prior written consent of the Board,
disclose or use for any purposes (except in the course of his
employment under this Agreement and in furtherance of the business
of the Company) any confidential information, proprietary data and
customer lists of the Company, except as required by applicable law
or legal process; provided, however, that "confidential information,
proprietary data and customer lists" shall not be deemed to include
any information known generally to the public or ascertainable from
public or published information (other than as a result of
unauthorized disclosure by the Executive) or any information of a
type not otherwise considered confidential by persons engaged in the
same business or a business similar to that conducted by the
Company. The Executive agrees to deliver to the Company, as soon as
practicable following the termination of the Executive's employment
hereunder, all memoranda, notes, plans, records, lists, reports and
other documents (including all copies thereof) that contain any
confidential information, proprietary data or customer lists of the
Company which the Executive may then have in his possession or under
his control.
10. Indemnification.
The Company shall indemnify and hold harmless the Executive and
his legal representatives, to the fullest extent permitted by
applicable law, from and against all judgments, fines, penalties,
excise taxes, amounts paid in settlement, liabilities, losses, costs
and expenses (including reasonable attorneys' fees and legal costs)
if the Executive is made, is threatened to be made or in good faith
expects to be made a party or a material witness to any threatened
or pending or completed action, suit, proceeding or investigation,
whether civil, criminal, administrative or otherwise, including an
action by or in the right of the Company or any of its affiliated
companies to procure a judgment in its favor, by reason of the
Executive being or having been a director, officer or employee of
the Company or by reason of the Executive serving or having served
in any capacity whatsoever (including as a director, officer or
employee) any other corporation, partnership, joint venture, limited
liability company, trust, employee benefit plan or other enterprise
at the request of the Company. The Executive's right to
indemnification provided in this Section 10 shall not be deemed
exclusive of any other rights to which the Executive may now or
hereafter be entitled under any law or the charter or bylaws of the
Company or any of its affiliated companies or otherwise, both as to
action in the Executive's official capacity and as to action in
another capacity while holding such position, and such right shall
continue after the Executive has ceased to be a director or officer
and shall inure to the benefit of the Executive's heirs, executors
and administrators. Any reimbursement obligation arising hereunder
shall be satisfied on an as-incurred basis. In addition, the
Company agrees to secure (if it has not already done so) and
maintain in effect customary and appropriate directors and officers
liability insurance throughout the Employment Period and for a
period of not less than six (6) years commencing immediately
thereafter, it being understood and agreed that the Executive shall
be added as a named insured to any and all such insurance policies
and shall be entitled to the protection of any and all such
insurance policies on no less favorable a basis than is now or
hereafter provided to any other officer or director of the Company
or any of its affiliated companies.
11. Successors.
(a) Company's Successors. The Company shall require any
corporation or other entity that directly or indirectly acquires all
or substantially all of the Company's business or assets (whether by
purchase, lease, merger, consolidation, liquidation or otherwise)
and each corporation or other entity that directly or indirectly
becomes a parent or otherwise acquires control of the Company (each
such event being sometimes referred to herein as a "succession"), by
an agreement in substance and form satisfactory to the Executive, to
assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company
would be required to perform it in the absence of any such
succession. The Company's failure to obtain such an assumption
agreement or to deliver it to the Executive prior to the
effectiveness of any such succession shall be a material breach of
this Agreement. For all purposes under this Agreement, the term
"Company" shall be deemed to include each corporation or other
entity that directly or indirectly acquires all or substantially all
of the Company's business or assets and each corporation or other
entity that directly or indirectly becomes a parent or otherwise
acquires control of the Company.
(b) Executive's Successors. This Agreement and all rights of
the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.
12. Notices.
Each notice pursuant to this Agreement shall be in writing and
shall be given to the other party by delivering the same in person
or by courier, or by transmitting the same by telegraph, telex or
telecopier, or by sending the same by express, registered or
certified mail, postage prepaid, addressed as follows (or at such
other address as the other party may from time to time designate by
notice in accordance with this Section 12):
If to the Executive:
Xx. Xxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Telecopier: _____________
With a copy to:
Xxxxx Xxxxxxxxxx
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Company:
InnovaCom, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Secretary
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx Eng Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
Any properly addressed notice shall be deemed duly given to the other
party on the date of delivery if delivered in person, one (1) business
day after the date of deposit if deposited with a same day or overnight
courier service with all charges prepaid, one (1) business day after
being telegraphed, telexed or telecopied if appropriate confirmation is
received, or three (3) business days after the date of deposit if
deposited in the U.S. mail as specified above.
13. Representations and Warranties.
The Company hereby represents and warrants to the Executive as
follows: (a) the Company has received all authorizations necessary
for the execution of this Agreement on the terms and conditions set
forth herein and for the grant of the Options as set forth in
Section 3(d) hereof and has taken all actions necessary to make such
grant; (b) there are no regulatory or other governmental consents or
approvals that are necessary for the execution and performance of
this Agreement by the Company; (c) the Company's entering this
Agreement and the performance of its obligations hereunder will not
violate any agreement between the Company and any other person, firm
or organization or any law or governmental regulation; (d) to the
best of the Company's knowledge, all written materials, information
and data regarding the Company's business, assets and financial
position (including the draft audited financial statements for the
fiscal years ending December 31, 1996 and December 31, 1997 and the
notes thereto) which have been provided to the Executive by the
Company through its officers, directors, attorneys and agents are
true and complete and not misleading in any material respect; and
(e) the Company has no knowledge of any facts or circumstances not
already disclosed to the Executive which would or might adversely
affect the ability of the Company to perform its obligations under
this Agreement.
14. Security for Company's Performance.
The Company's obligations under this Agreement shall be secured
for a period of not less than two (2) years from the Commencement
Date by one or more letters of credit issued by a bank acceptable to
the Executive in favor of the Executive in an aggregate principal
amount of not less than $1,000,000. The form and substance of such
letters of credit, as well as the transactions used to fund such
letters of credit, shall be subject to the Executive's reasonable
prior approval. Except as the parties shall otherwise agree in
writing, the Company will provide all of the letters of credit
specified above to the Executive on or before June 1, 1998, it being
understood and agreed that letters of credit in an aggregate
principal amount of at least $500,000 shall be provided to the
Executive on or before May 1, 1998. For the avoidance of doubt, any
failure on the part of the Company to comply in a timely manner with
the provisions of this Section 14 shall be deemed a material breach
of this Agreement by the Company.
15. Arbitration and Legal Fees.
(a) Arbitration of Disputes. In the event of any controversy
or claim between the Company or any of its affiliates and the
Executive arising out of or relating to this Agreement or any other
agreement between the Executive and the Company or any of its
affiliates, including any controversy or claim relating to the
breach or alleged breach thereof, the Executive may retain counsel
of his choice at the expense of the Company. If either party
delivers to the other party a written demand for arbitration of a
controversy or claim then such demand shall be submitted to binding
arbitration. The binding arbitration shall be administered by the
American Arbitration Association under its Commercial Arbitration
Rules. The arbitration shall take place in San Francisco,
California. Each of the Company and the Executive shall appoint one
person to act as an arbitrator, and a third arbitrator shall be
chosen by the first two arbitrators (such three arbitrators being
referred to herein as the "Panel"). The Panel shall have no
authority to award punitive damages against the Company or the
Executive. The Panel shall have no authority to add to, alter,
amend or refuse to enforce any portion of this Agreement or any
other relevant agreement. The Company (on behalf of itself and its
affiliates) and the Executive hereby waive any right to a jury trial
in any action or proceeding of any kind arising out of or relating
to this Agreement.
(b) Legal Fees. The Executive is not required to pay for
expenditures associated with obtaining, enforcing or defending any
rights or benefits under this Agreement or any other agreement
between the Executive and the Company or any of its affiliates
(including any plan, program or arrangement maintained by the
Company or any of its affiliates under which the Executive is or may
be entitled to receive compensation or benefits). Consequently, the
Company shall indemnify and hold harmless the Executive for all such
expenditures and pay them as they become due. The Company shall
also pay all reasonable legal fees and expenses incurred by the
Executive in connection with any arbitration or other proceeding
(whether or not instituted by the Company or the Executive) relating
to the interpretation or enforcement of any provision of this
Agreement or any other agreement between the Executive and the
Company or any of its affiliates (including any action seeking to
obtain or enforce any right or benefit provided by the foregoing) or
in connection with any tax audit or proceeding relating to the
application of Section 4999 of the Code to any payment or benefit
provided by the Company.
16. Miscellaneous Provisions.
(a) Publicity. The parties shall mutually approve the timing
and content of any public announcements or news stories issued or
authorized by the Company which relate directly or indirectly to the
Executive, the Executive's employment by the Company, the subject
matter of this Agreement or the transactions contemplated hereunder.
(b) Entire Agreement. This Agreement constitutes the entire
agreement by the Company and the Executive with respect to the
subject matter hereof and except as specifically provided herein,
supersedes any and all prior agreements or understandings between
the Executive and the Company with respect to the subject matter
hereof, whether written or oral. This Agreement may be amended or
modified only by a written instrument executed by the Executive and
the Company.
(c) No Waiver. No waiver by either party of any breach of
any provision of this Agreement shall be deemed a waiver of any
preceding, succeeding or continuing breach of the same or any other
provision hereof.
(d) Severability. If for any reason any provision of this
Agreement is adjudged or held by a court or arbitrator to be invalid
or unenforceable, such adjudication or holding shall in no way
affect any other provision of this Agreement or the validity or
enforceability of the remainder of this Agreement, and the affected
provision shall be modified or curtailed only to the extent
necessary to bring it into compliance with applicable law.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
applicable to agreements made and wholly to be performed therein.
(f) No Setoff or Counterclaim. Except as specifically
provided in the last sentence of Section 5(a)(iii) hereof and in the
last sentence of Section 5(b)(iii) hereof, the Company's obligation
to pay and provide to the Executive the compensation and other
benefits specified herein shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including any
setoff, counterclaim, recoupment, defense or other right which the
Company may now or hereafter have against the Executive. All
amounts payable by the Company hereunder shall be paid without
notice or demand.
(g) Withholding Taxes. All payments required to be made by
the Company to the Executive hereunder shall be subject to the
deduction and withholding of such income, employment and other taxes
as the Company may from time to time be required to deduct and
withhold pursuant to applicable law or regulation.
(h) Interpretation. For purposes of this agreement, any form
of the word "include" shall be deemed to be followed by the words
"without limitation," the term "person" shall include a corporation,
partnership, limited liability company, business trust, association
or other organization as well as a natural person, and terms such as
"herein," "hereof," "hereby" and "hereunder" shall refer to this
agreement as a whole and not to any particular provision of this
agreement, unless the context clearly indicates otherwise. Terms
used in one gender shall be inclusive of the other genders. The
headings and captions contained herein are for convenience only and
shall not control or affect the meaning or construction of any
provision hereof.
(i) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same
instrument. Signatures may be exchanged by facsimile, and each
party hereto agrees to be bound by its own facsimile signature and
to accept the facsimile signature of the other party.
(j) Successors and Assigns. This agreement, and all rights
and obligations hereunder, shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns.
17. Conditions Precedent.
The obligations of the Executive hereunder are expressly
conditioned upon the absence of any material adverse change in the
business, affairs and financial prospects of the Company and its
affiliates between the date of this Agreement and the Commencement
Date. For purposes of the foregoing, the failure of the Company to
secure financing in an amount at least equal to $5,000,000 prior to
April 15, 1998 shall be deemed a material adverse change in the
business, affairs and financial prospects of the Company. If any
material adverse change shall occur on or before the Commencement
Date, the Executive shall have the right in his sole discretion to
terminate this Agreement upon written notice thereof to the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
INNOVACOM, INC.
By:______________________________
Name:
Title:
_________________________________
Xxxxxx X. Xxxxx
