Exhibit 10.4
Executive Employment Agreement
This EXECUTIVE EMPLOYMENT AGREEMENT
(“ Agreement ”) is made as of March 26, 2004, by
and between Opta Systems, LLC dba Go Video, a Delaware limited
liability company (the “ Company ”), and Steven
Davis (the “ Executive ”).
R E C I T A L S
WHEREAS, the Executive is employed
by the Company and currently serves as its Chief Financial Officer;
and
WHEREAS, the Company and the
Executive wish to continue with their employment relationship on
more specific terms and have determined that it is in the best
interests of both to enter into this Agreement for that
purpose.
NOW, THEREFORE, in consideration of
the foregoing recitals, the mutual covenants and conditions herein,
and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereby agree as
follows:
A G R E E M E N T
1.
Employment; Acceptance . Effective as of March 21,
2004, the Company hereby employs the Executive and the Executive
hereby accepts continuing employment by the Company on the terms
and conditions hereinafter set forth.
2.
Duties and Powers . Executive shall serve as the
Company’s Chief Financial Officer. The Executive shall
be responsible for all financial matters relating to the Company,
subject to the direction and control of the President and the
Managers of the Company (the “Managers”) and/or the
Operating Agreement of the Company, this Agreement, and applicable
law. The Executive agrees to devote his best efforts,
diligence, and abilities and his full attention to the business and
affairs of the Company and to the performance of his duties as the
Company’s Chief Financial Officer, to the exclusion of any
other occupation or endeavor other than community, charitable,
political, and personal pursuits that do not interfere with his
performance under this Agreement; provided, however, that the
President or Managers may authorize other exceptions in their sole
discretion upon the request of the Executive.
3.
Term of Employment . The term of employment under this
Agreement shall commence on March 26, 2004 (the
“Effective Date”) and shall continue for a period of
two years, unless earlier terminated as set forth in Section 7
below. Thereafter, the Agreement shall be automatically
renewed for successive one year terms unless either the Company or
the Executive notifies the other party of non-renewal at least 90
days prior to the renewal date or unless employment is terminated
pursuant to Section 7 prior to the commencement of what would be
the next term. Regardless of whether the operative term is the
initial two year term or a later one year term, if any, the
employment relationship may be terminated at any time pursuant to
Section 7.
4.
Compensation .
4.1
Salary . The Company hereby agrees to pay to the
Executive during his employment hereunder a base salary (starting
at the equivalent of $84,000 per year) payable in equal
installments on the Company’s regular paydays. If the
Executive’s employment is terminated on any date other than a
regular payday, the final salary payable pursuant to this Section
4.1 shall be paid to the Executive on a prorated basis.
4.2
Options . The Executive is entitled to participate in
the Equity Incentive Plan of Lotus Pacific, Inc. (“
Lotus ”), the parent company of the
Company.
4.3
Incentive Compensation . During his employment
hereunder, the Executive shall be entitled to participate in any
incentive compensation program approved by the Managers for which
he is eligible, with such terms and conditions as determined by the
Managers.
5.
Other Benefits . During his employment by the Company,
the Executive shall be entitled to participate in any benefits
provided by or through the Company for executive level employees at
the Executive’s level, subject to any terms, conditions, or
restrictions applicable to such benefits. The Company
reserves the right to change these benefits from time to time.
Such benefits would include:
5.1
Health, Medical and Life Insurance . While the
Executive is employed hereunder, the Company shall pay for and
provide the Executive and his dependents with the same amount and
type of health, medical and life insurance, if any, as is provided
from time to time to employees of the Executive’s level
during the term of this Agreement.
5.2
Vacation . The Executive shall be entitled to vacation
with pay in accordance with the Company’s vacation policy as
in effect at the time in question. In addition, the Executive
shall be entitled to such holidays as the Company may approve for
its employees of the Executive’s level.
5.3
Reimbursement for Business Expenses . Without limiting
the foregoing, the Company will reimburse the Executive for
reasonable travel, entertainment and other business expenses
incurred in connection with the performance of his duties
hereunder, in accordance with the policy of the Company with
respect thereto.
6.
Key Person Insurance . The Company shall have the
right, at its sole expense, to procure life or disability insurance
on the Executive for its own benefit in such amount or amounts it
shall deem appropriate (such determination to be at the sole
discretion of the Managers), and the Executive hereby agrees to
cooperate, upon reasonable request, in obtaining or renewing such
insurance from time to time, including without limitation,
submission to physical examination and execution of normal and
customary documents pertaining to such insurance. The Company
shall have no right to terminate this Agreement based upon the
results of a physical or other examination to which the Executive
submits pursuant to this paragraph or by reason of failure of the
Executive to qualify for any such insurance.
7.
Termination .
7.1
For Cause by the Company . The Company may terminate
the Executive’s employment for cause, effective immediately
on the day it sends notice of such termination to the
Executive. “Cause” for this purpose shall mean
any one or more of the following acts of the Executive: (a)
continuing material neglect of duties; (b) fraud, embezzlement or
the commission of any act relating to the business or affairs of
the Company involving moral turpitude; (c) gross carelessness or
gross misconduct (i.e., conduct contrary to the Company’s
policies); (d) willful failure to obey the lawful direction of the
Company’s Managers or management; or (e) a material violation
of any provision of this Agreement. On such termination for
cause, the Executive shall be entitled to any unpaid salary earned
to the date of such termination, payment at his final salary rate
for any accrued but unused vacation, and reimbursement for any
expenses reimbursable under the substantive and procedural rules of
the Company’s business expense reimbursement policy.
Stock options and incentive compensation issues – including
such issues as whether incentive compensation has accrued and/or is
payable as of the time of termination – shall be governed by
the agreements, plans, and polices then in effect.
7.2
Without Cause by the Company . The Company may
terminate the Executive’s employment without cause on thirty
(30) days’ prior written notice (any attempt by the Company
to terminate the Executive’s employment without such notice
shall not be a breach but shall not be effective until 30 days from
the date on which written notice is provided). On termination
without cause by the Company, the Executive shall be entitled to
any unpaid salary earned to the date of such termination, payment
at his final salary rate for any accrued but unused vacation, any
severance under other Company policies and reimbursement for any
expenses reimbursable under the substantive and procedural rules of
the Company’s business expense reimbursement policy.
Stock options and incentive compensation issues – including
such issues as whether incentive compensation has accrued and/or is
payable as of the time of termination – shall be governed by
the agreements, plans, and polices then in effect. In addition, the
Company shall provide the following severance benefits upon
termination by the Company without cause: (a) a payment that is
equal to the value of nine months of the Executive’s then
base salary subject to regular payroll withholdings, and (b)
reimbursement during the same period for any premium payments made
by the Executive to continue his participation and that of his
eligible dependants in the Company’s group health plans under
COBRA, provided that the Executive is entitled to continue such
participation under applicable law and plan terms.
7.3
Disability . If the Executive becomes unable to
perform his duties hereunder because of any physical, mental or
legal disability (including sickness or an injunction or similar
order or decree of a court of competent jurisdiction preventing the
performance of his duties hereunder), he shall be entitled to his
compensation as provided herein until the total period of
disability (whether or not continuous and whether or not the same
disability) exceeds an aggregate of one hundred eighty (180) days
in any calendar year. If the total period of disability
exceeds an aggregate of one hundred eighty (180) days in any
calendar year, the Company may terminate his employment upon notice
to the Executive, and such termination otherwise shall be treated
as a termination for cause by the Company pursuant to Section
7.1.
7.4
Death . In the event of the death of the Executive,
his employment shall be terminated immediately without any notice
procedure. In the event of such a termination, the
Executive’s legal representative shall be entitled to any
unpaid salary earned to the date of such termination, payment at
the Executive’s final salary rate for any accrued but unused
vacation, and reimbursement for any expenses reimbursable under the
substantive and procedural rules of the Company’s business
expense reimbursement policy. Stock options and incentive
compensation issues – including such issues as whether
incentive compensation has accrued and/or is payable as of the time
of termination – shall be governed by the agreements, plans,
and polices then in effect.
7.5
Merger; Sale of Assets . In the event of any voluntary
or involuntary dissolution, reorganization, merger, consolidation
or transfer of substantially all assets of the Company, or in the
event of any other act or event of or suffered by the Company, this
Agreement shall not be terminated if a surviving or resulting
corporation or other entity or person continues the business of the
Company and assumes the contractual obligations of the Company
vis-à-vis the Executive without interruption. In any
such event, if the business of the Company is not so continued or
the surviving or resulting corporation or other entity or person
does not assume the contractual obligations of the Company
vis-à-vis the Executive, such event shall be deemed to
constitute termination without cause by the Company as provided in
Section 7.2.
7.6
Termination Due to Diminution of Duties . If the
Executive’s duties, as described in Section 2 of this
Agreement and by the Company’s and Executive’s pattern
and practice, are changed so as to significantly diminish the
essential authorities, powers, functions, duties or
responsibilities attached to the Executive’s position which
is not remedied within thirty (30) days after receipt by the
Company of written notice from the Executive, the parties agree
that the Executive may resign and that such termination of his
employment shall be treated as a termination without cause by the
Company pursuant to Section 7.2.
7.7
Resignation of Other Positions . Upon termination of
employment for any reason whatsoever, the Executive shall be deemed
to have resigned from any office(s) then held by him with the
Company.
7.8
Nonrenewal . The Company may decide not to renew this
employment contract for additional one year terms by notifying the
Executive at least 90 days prior to the renewal date of the
Agreement. Upon such nonrenewal, the Agreement will terminate
and the Executive will become eligible to receive any severance
payment he would be eligible under any other Company policies
except this Agreement as though he had been terminated without
cause.
8.
Proprietary Information.
8.1
Proprietary Information . The Executive shall be
required, as a condition of his employment under this agreement, to
sign the Company’s standard Employee Proprietary Information
and Inventions Agreement, which is attached hereto as Exhibit
A and incorporated herein by reference.
8.2
Competition During Employment . The Executive
acknowledges and agrees that he will not at any time during his
employment by the Company directly or indirectly own an interest in
(other than a less than two percent (2%) ownership interest in
publicly traded companies), join,
operate, control or participate in, or be
connected as an officer, employee, agent, independent contractor,
consultant, partner, shareholder or principal with, any
corporation, partnership, proprietorship, association, or other
entity or person engaged in developing, producing, designing,
providing, soliciting orders for, selling, distributing or
marketing products or services or a business that directly or
indirectly competes with the Company’s products, services or
business; provided, however, that the Managers may authorize
exceptions to this prohibition in its sole discretion upon the
request of the Executive.
8.3
Solicitation . The Executive acknowledges and agrees
that he will not at any time during his employment by the Company,
or immediately following his termination for a period equal to the
number of months of severance pay he receives from the Company
following his termination (but no less than a three month period),
hire any employees of the Company or either directly or indirectly,
solicit, induce, recruit or encourage any of the Company’s
employees to leave their employment, or take away such employees,
or attempt to solicit, induce, recruit, encourage or take away
employees either for himself or for any other person or
entity. The Executive further acknowledges and agrees that
all customers of the Company, and all prospective customers from
whom he has solicited business while employed with the Company,
shall be solely the customers of the Company, and that he will not
at any time during his employment by the Company, or immediately
following his termination for a period equal to the number of
months of severance pay he receives from the Company following his
termination (but no less than a three month period), either
directly or indirectly, solicit business, as to products or
services competitive with those of the Company, from any of the
Company’s customers with whom he has had contact during and
as a result of his employment by the Company.
8.4
Corporate Opportunities . If the Executive, during his
employment, shall become aware of any business opportunity related
to the business of the Company, the Executive shall not appropriate
for himself or for any other person other than the Company or any
affiliate of the Company any such opportunity unless, as to any
particular opportunity, the President or Managers of the Company,
in their sole discretion, waive the Company’s rights to such
opportunity. The Executive’s duty to refrain from
appropriating all such opportunities shall neither be limited by
nor shall such duty limit the application of the law of Arizona
relating to the fiduciary duties of an agent or
employee.
8.5
Interference . The Executive also acknowledges and
agrees that he will not at any time during his employment by the
Company either directly or indirectly interfere with the
Company’s contracts and relationships, or prospective
contracts and relationships, including, but not limited to, the
Company’s customer or client contracts and
relationships.
8.6
Post-Termination Competition.
(a)
The Executive acknowledges and agrees that following the
termination of his employment with the Company for any or no
reason, for a period equal to the number of months of severance pay
he receives from the Company (but no less than a three month
period), he will not directly or indirectly own an interest in
(other than a less than two percent (2%) ownership interest in
publicly traded companies), join, operate, control or participate
in, or be connected as an officer, employee, agent, independent
contractor, consultant, partner, shareholder or principal with, any
corporation, partnership, proprietorship, association, or other
entity or person which
operates or intends (as of the date
