Exhibit 10.85
EMPLOYMENT AGREEMENT
("Agreement")
FOCUS Enhancements, Inc., a Delaware Corporation (hereinafter referred to as
"Employer") and Xxxxxxx D'Addio (hereinafter referred to as "Employee"), in
consideration of the mutual promises made herein, agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Specified Period
Section 1.1
Employer hereby employs Employee, and Employee hereby accepts
employment with Employer for the period beginning on the effective date of the
merger between Videonics, Inc., a California corporation, and Focus
Enhancements, Inc. (through Employer's wholly owned subsidiary), the "effective
date," and terminating on December 31, 2003 ("Initial Term").
Succeeding Term
Section 1.2
After December 31, 2003, this employment relationship shall
become an employment at will terminable by either party for any reason (the
"Succeeding Term").
"Employment Term" Defined
Section 1.3
As used herein, the phrase "employment term" refers to the
entire period of employment of Employee by Employer hereunder, whether for the
periods provided above, or whether terminated earlier as hereinafter provided or
extended automatically or by mutual agreement between Employer and Employee.
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
General Duties
Section 2.1
Employee shall serve as Employer's President & Chief Executive
Officer. In such capacity, Employee shall do and perform all services, acts or
things in accordance with the policies set by Employer's Board of Directors.
Employee shall perform such services primarily in Campbell, California, which
location shall serve as the location of Employer's new principal executive
offices location, except that the parties understand that temporary travel on
Employer's business to other sites shall be required. The parties may designate
another location for Employee to primarily perform his services; provided,
however, that Employee's permanent place of employment shall not be more than
twenty-five miles from Campbell, California absent Employee's written consent.
Devotion to Employer's Business
Section 2.2
(a) Employee shall devote substantially all his productive
time, ability and attention to the business of Employer during the term of this
Agreement.
(b) Employee shall not engage in any other business duties or
pursuits whatsoever, or directly or
indirectly render any services of a business, commercial or professional nature
to any other person or organization, whether for compensation or otherwise,
without the prior written consent of the Board of Directors except for (1)
boards of directors of private companies on which Employee currently serves and
(2) other boards of directors to which Employee shall not devote more than 16
hours of service per month (measured on an annual basis). However, the
expenditure of reasonable amounts of time for education, charitable or
professional activities shall not be deemed a breach of this Agreement if those
activities do not materially interfere with the services required under this
Agreement.
(c) In addition to Employee's providing occasional service as
a member of the Board(s) of Directors as provided above, this Agreement shall
not be interpreted to prohibit Employee from making passive personal investments
or conducting private business affairs if those activities do not materially
interfere with the services required under this Agreement.
Confidential Information; Tangible Property; Competitive Activities
Section 2.3
(a) Employee shall hold in confidence and not use or disclose
to any person or entity without the express written authorization of Employer,
either during the term of employment or any time thereafter, secret or
confidential information of Employer. Information and materials received in
confidence from third parties by Employee with respect to the performance of his
duties for Employer is included within the meaning of this section. If any
confidential information described below is sought by legal process, Employee
will promptly notify Employer and will cooperate with Employer in preserving its
confidentiality in connection with any legal proceeding.
The parties hereto hereby stipulate that, to the extent it is
not known publicly, the following information is important, material and has
independent economic value (actual or potential) from not being generally known
to others who could obtain economic value from its disclosure or use
("Confidential Information"), and that any breach of any terms of this Section
2.3 is a material breach of this Agreement:
(i) The names, buying habits and practices of Employer's
customers or prospective customers;
(ii) Employer's marketing methods and related data;
(iii) The names of Employer's vendors and suppliers;
(iv) Cost of materials / services;
(v) The prices Employer obtains or has obtained or for
which it sells or has sold its products or services;
(vi) Production costs;
(vii) Compensation paid to employees or other terms of
employment;
(viii) Employer's past and projected sales volumes;
(ix) Proposed new products / services;
(x) Enhancements of existing products / services; and
(xi) Any additional information deemed by Employer to be
confidential by marking or stamping "Confidential" or
similar words on the cover of such information, by
advising Employee orally or in writing that certain
information is confidential.
All software code, methodologies, models, samples, tools,
machinery, equipment, notes, books, correspondence, drawings and other written,
graphical or electromagnetic records relating to any of the products of Employer
or relating to any of the Confidential Information of Employer which Employee
shall prepare, use, construct, observe, possess, or control shall be and shall
remain the sole property of Employer and shall be returned by Employee upon
termination of employment.
(b) During the term of this Agreement, Employee shall not,
directly or indirectly, either as an employee, consultant, agent, principal,
partner, stockholder (except in a publicly held company), corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever with
the then business of Employer.
(c) During his employment hereunder, Employee agrees that
Employee will not undertake planning for or organization of any business
activity competitive with Employer's business, or combine or conspire with other
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employees or representatives of Employer's business for the purpose of
organizing any competitive business activity.
(d) During his employment hereunder and for two (2) years
thereafter, Employee agrees that he will not directly or indirectly, or by
action in concert with others, induce or influence (or seek to induce or
influence) any person who is then engaged (as an employee, agent, independent
contractor, or otherwise) by Employer to terminate his employment or engagement
for the purpose of employing such person in any enterprise in which Employee is
a member of Management or has a material interest.
(e) Covenants of this Section 2.3 shall be construed as
separate covenants covering their subject matter in each of the separate
counties and states in the United States in which Employer transacts its
business. To the extent that any covenant shall be judicially unenforceable in
any one or more of said counties or states, said covenants shall not be affected
with respect to each other county and state; each covenant with respect to each
other county and state being construed as severable and independent.
(f) Employee represents and warrants that Employee is free to
enter into this Agreement and to perform each of its terms and covenants, and
that doing so will not violate the terms or conditions of any other agreement
between Employee and any third party.
Inventions and Original Works
Section 2.4
(a) Employee agrees that he will promptly make full written
disclosure to Employer, will hold in trust for the sole right and benefit of
Employer, and hereby assigns to Employer all of his right, title and interest in
and to any and all inventions (and patent rights with respect thereto), original
works of authorship relating to the business of FOCUS Enhancements (including
all copyrights with respect thereto), developments, improvements or trade
secrets which Employee may solely or jointly conceive or develop or reduce to
practice, or cause to be conceived or developed or reduced to practice, during
the course of performing his duties under this Agreement.
(b) Employee acknowledges that all original works of
authorship relating to the business of FOCUS Enhancements which are made by him
(solely or jointly with others) within the scope of his duties under this
Agreement and which are protectable by copyrights are "works made for hire" as
that term is defined in the United States Copyright Act (17 U.S.C.A., Section
101), and that Employee is an employee as defined under that Act. Employee
further agrees from time to time to execute written transfers to Employer of
ownership or specific original works or authorship (and all copyrights therein)
made by Employee (solely or jointly with others) which may, despite the
preceding sentence, be deemed by a court of law not to be "works made for hire"
in such form as is acceptable to Employer in its reasonable discretion.
Maintenance of Records
Section 2.5
Employee agrees to keep and maintain adequate and
current written records of all inventions, original works of authorship, trade
secrets developed or made by him (solely or jointly with others) during the term
of this Agreement. The records will be in the form of notes, sketches, drawings
and other formats that may be specified by Employer. The records will be
available to and remain the sole property of Employer at all times.
Obtaining Letters Patent and Copyright Registration
Section 2.6
Employee agrees to assist Employer to obtain United States or
foreign letters patent, and copyright registrations (as well as any transfers of
ownership thereof) covering inventions and original works of authorship assigned
hereunder to Employer. Such obligation shall continue beyond the termination of
this Agreement, but after such termination Employer shall compensate Employee at
a reasonable rate for time actually spent by Employee at Employer's request on
such assistance.
If Employer is unable for any reason whatsoever, including
Employee's mental or physical incapacity to secure Employee's signature to apply
for or to pursue any application for any United States or foreign letters,
patent or copyright registrations (or any document transferring ownership
thereof) covering inventions or original works or authorship assigned to
Employer under this Agreement, Employee hereby irrevocably designates and
appoints Employer and its duly authorized officers and agents as Employee's
agent and attorney-in-fact to act for and in his behalf and stead to
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execute and file any such applications and documents and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent or copyright registrations or transfers thereof with the same legal force
and effect as if executed by Employee. This appointment is coupled with an
interest in and to the inventions and works of authorship and shall survive
Employee's death or disability. Employee hereby waives and quitclaims to
Employer any and all claims of any nature whatsoever which Employee now or may
hereafter have for infringement of any patents or copyrights resulting from or
relating to any such application for letters, patent or copyright registrations
assigned hereunder to Employer.
Article 3
OBLIGATIONS OF EMPLOYER
General Description
Section 3.1
Employer shall provide Employee with the compensation,
incentives and benefits specified in Section 4 of this Agreement.
Office and Staff
Section 3.2
Employer shall provide Employee with a private office, office
and technical equipment, supplies and other facilities, equipment and services
suitable to Employee's position and adequate for the performance of his duties.
Article 4
COMPENSATION OF EMPLOYEE
Annual Salary
Section 4.1
As compensation for his services hereunder, Employee shall be
paid a base salary at the rate of $190,000 per year starting the effective date.
Salary shall be paid in equal installments not less frequently than once per
month.
Bonus Compensation
Section 4.2
In addition to his regular base salary, Employee shall be
entitled to participate in an incentive bonus plan to earn an additional
$110,000 per year. The bonus shall be earned and paid in four equal quarterly
(every 3 months) installments of $27,500. The Board of Directors Compensation
Committee will determine the targets and objectives of the incentive bonus plan,
which shall be attached hereto. If the bonus plan is not agreed in writing by
the effective date, it shall be agreed within thirty (30) days thereafter.
Tax Withholding
Section 4.3
Employer shall have the right to deduct or withhold from the
compensation due to Employee hereunder any and all sums required for federal
income and social security taxes and all state or local taxes now applicable or
that may be enacted and become applicable in the future, for which withholding
is required by law.
Incentive Stock Options
Section 4.4
Employee shall be granted Incentive Stock Options (to the
extent permitted under the Employer's 2000 Stock Option Plan) to purchase
500,000 shares of Employer's Common Stock under Employer's 2000 Stock Option
Plan, said grant to be made at the effective date by the Employer's Board of
Directors. Said Options shall be exercisable at the fair market value on the
effective date, shall vest in equal installments at the rate of
one-thirty-sixth(1/36) per month thereafter over three (3) years, and shall
expire five (5) years from the date of grant.
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Article 5
EMPLOYEE BENEFITS
Annual Vacation
Section 5.1
Employee shall be entitled to 20 business days of
paid vacation during each year of this Agreement.
Employee may be absent from his employment for vacation only at such times the
Employee notifies at a minimum of 10 (ten) days in advance the Employer's Board
of Directors Compensation Committee of the planned vacation. Unused vacation
will carry over from one year to the next but the maximum amount of vacation
which can be accrued (unused) at any one time shall not exceed 20 business days.
Unused vacation will not be paid in the form of cash, except upon termination of
employment.
Benefits
Section 5.2
Employee shall be eligible to participate in any and all
benefit plans provided by Employer, on the same basis as same are made available
to other employees, including health, disability and life insurance coverage
should Employee elect to participate in any such plans.
Business Expenses
Section 5.3
Employer shall reimburse Employee for all appropriate expenses
for travel and entertainment by Employee for legitimate business purposes,
provided that they are approved in writing by the Chief Financial Officer of the
Employer and provided that Employee furnishes to Employer adequate records and
documentary evidence for the substantiation of each such expenditure, as
required by the Internal Revenue Code of 1986, as amended.
Article 6
TERMINATION OF EMPLOYMENT
Termination
Section 6.1
For the Initial Term, Employer shall not terminate the
Employee's employment except for "Cause" as described in Section 6.3 of this
Agreement. Employee's employment hereunder may be terminated by Employee for any
reason, without further obligation or liability, except as expressly provided
herein.
Resignation, Retirement, Death or Disability
Section 6.2
Employee's employment hereunder shall be terminated at any
time by Employee's resignation, or by Employee's retirement at or after
attainment of age sixty (60) at Employee's option ("Retirement"), death, or his
inability to perform his duties under this Agreement on a full-time basis for a
continuous period of ninety (90) days or more because of a physical or mental
illness ("Disability"). Employer shall not be liable for payment of bonus
compensation during any period of Disability, though salary and benefits shall
continue to be paid during such period.
Termination for Cause
Section 6.3
"Cause" shall mean personal dishonesty, conflict of interest
or breach of fiduciary duty involving material personal or family profit,
willfully engaging in conduct with the purpose and effect of materially injuring
Employer, the willful and continued failure by the Employee to substantially
perform his duties hereunder in a reasonably competent manner expected of
similarly situated executives for comparable public companies in the high
technology electronics industry, Employee's failure to carry out the lawful
direction of the Board of Directors. For purposes of this Section 6.3, no act,
or failure to act, on the Employee's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the Employer.
Notwithstanding the foregoing, the Employee shall not be terminated for Cause
without (i) reasonable notice to the Employee setting forth the reasons for the
Employer's intention to terminate for Cause and a reasonable period of time to
cure such "Cause" if same is capable of being cured within such period; (ii) if
not capable of being so cured within a reasonable period, an opportunity for the
Employee, together with his counsel, to be heard before the Board of Directors;
and (iii) if clause (i) shall be inapplicable, then, after the opportunity to be
heard as set forth in clause (ii), delivery to the Employee of a Notice of
Termination as defined in Section 6.6 hereof from the Board finding that in the
good faith opinion
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of the majority of the Board of Directors, the Employee has engaged in conduct
set forth above, and specifying the particulars thereof in detail.
Termination Without Cause
Section 6.4
(a) For the Initial Term, the Employer shall be unable to
terminate the Employee without Cause; thereafter, the Employee's employment
hereunder may be terminated without Cause upon ten (10) business days' notice
for any reason.
(b) Employee may terminate this Agreement with or without
Cause for any reason at any time upon thirty (30) days prior notice. Upon such
termination by Employee, Employee shall receive all salary, benefits and options
vested through such termination date.
Expiration
Section 6.5
Employee's employment hereunder may be terminated upon
expiration of the Employment Term as provided in Section(s) 1.1 and 1.2.
Notice for Termination
Section 6.6
Any termination of the Employee's employment (other than
termination by reason of death), shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall include the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination.
Date of Termination
Section 6.7
The "Date of Termination" shall be:
(a) if the Employee's employment is terminated by his death,
the date of his death;
(b) if the Employee's employment is terminated by reason of
Employee's Disability, thirty (30) days after Notice of Termination is given
(provided that the Employee shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day period);
(c) if the Employee's employment is terminated for Cause,
subject to Section 6.3 above, the date of the Notice of Termination is given or
after if so specified in such Notice of Termination;
(d) if the Employee's employment is terminated by either party
for any other reason than those set forth in clauses (a)-(c) above, the date on
which the Notice of Termination specifies.
Article 7
PAYMENTS TO EMPLOYEE UPON TERMINATION
Death, Disability or Retirement
Section 7.1
Upon Employee's Retirement, Death or Disability, all benefits
generally available to Employer's employees as of the date of such an event
shall be payable to Employee or Employee's estate without reduction, in
accordance with the terms of any plan, contract, understanding or arrangement
forming the basis for such payment. Employee shall be entitled to such other
payments as might arise from any other plan, contract, understanding or
arrangement between Employee and Employer at the time of any such event.
Termination for Cause or Resignation
Section 7.2
If Employer terminates Employee for Cause or Employee
voluntarily resigns for reasons other than constructive discharge, neither
Employer nor any affiliate shall have any further obligation to Employee under
this Agreement or otherwise, except to the extent provided in any other plan,
contract, understanding or arrangement, or as may be expressly required by law.
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Termination Without Cause
Section 7.3
Subject to other provisions in this Article 7 to the contrary
and during the Initial Term only, upon Employee's termination by Employer
without Cause (which, for these purposes, shall include Employee's "constructive
discharge"):
(a) Employer shall pay to Employee, or in the event of
Employee's subsequent death, to Employee's surviving spouse, or if none, to
Employee's estate, as severance pay or liquidated damages, or both, (1) all
accrued and unpaid wages including vacation earned as of such date of
Termination and (2) during each calendar month for a period extending over the
number of months during which this Agreement would have remained in effect,
without renewal, but for such Termination, or for six calendar months, whichever
is a longer period, a sum equal to the Employee's monthly Salary and all
benefits (excluding vacation pay which shall cease to accrue on the effective
date of such Termination) which would have been during such period payable under
this Agreement pursuant to Section 4.1 immediately prior to such Termination.
(b) Any unvested stock options issued to Employee which have
not lapsed and which are not otherwise exercisable shall vest, accelerate, and
become immediately exercisable by Employee.
Article 8
GENERAL PROVISIONS
Notices
Section 8.1
Any notices to be given hereunder by either party to the other
shall be in writing and may be transmitted by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at:
"Employee"
Xxxxxxx D'Addio
00000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
"Employer"
FOCUS Enhancement, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX
Attention: Xxxxxx X. Xxxxxx
Chairman of the Board
Each party may change that address or addressee by written notice in accordance
with this section. All notices delivered shall be deemed communicated as of the
date of actual receipt.
Arbitration
Section 8.2
(a) Any controversy between Employer and Employee involving
the construction or application of any of the terms, provisions or conditions of
this Agreement or the breach thereof shall be settled by binding arbitration
before a single arbitrator selected by the American Arbitration Association, in
accordance with its then current commercial rules. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
Arbitration shall comply with and be governed by the provisions of the American
Arbitration Association, Commercial Division. No discovery shall be permitted in
such arbitration other than an exchange of documents, and the parties hereby
agree to limit the number of hearing days in arbitration to two (2) days. The
arbitrator shall issue a written decision listing findings of fact, reasons for
the decision, and conclusions of law in any arbitration. The arbitration award
shall be specifically enforceable.
(b) The cost of arbitration (including the prevailing party's
reasonable attorneys' fees) shall be borne by the non-prevailing party as
determined by the arbitrator or in such proportions as the arbitrator decides.
(c) Such arbitration and any litigation shall take place
solely in Santa Xxxxx County, California.
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Attorneys' Fees and Costs
Section 8.3
If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
obtain from the non-prevailing party, reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which that party may
be entitled. This provision shall be construed as applicable to this entire
Agreement.
Entire Agreement
Section 8.4
This Agreement supersedes, merges and voids any and all other
agreements, either oral or in writing, between the parties hereto with respect
to its subject matter and no other covenants and agreements between the parties
exist with respect thereto. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise not contained
in this Agreement shall be valid or binding on either party.
Modifications
Section 8.5
Any modification of this Agreement will be effective only if
it is in writing and signed by the Employee and properly authorized by
Employer's Board of Directors and signed by a representative thereof (who may,
but need not be, Chairman).
Effect of Waiver
Section 8.6
The failure of either party to insist on strict compliance
with any of the terms, covenants or conditions of this Agreement by the other
party shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or any
other times. No waiver shall be effective unless in a writing and signed by the
person charged with making such waiver
Partial Invalidity
Section 8.7
If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
IN WITNESS WHEREOF, the parties have executed this Agreement on January 16, 2001
at Wilmington, MA.
"Employer" "Employee"
FOCUS Enhancements, Inc.
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx D'Addio
-------------------- -------------------
Xxxxxx X. Xxxxxx Xxxxxxx D'Addio
Chairman of the Board
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