Exhibit 99
NETRIX CORPORATION
00000 XXXXXX XXXXXXXXXX XXXXX
XXXXXXX, XXXXXXXX 00000
August 1, 1996
Dear :
Netrix Corporation (the "Company") and its Board of Directors considers it
essential to the best interests of its stockholders and employees to xxxxxx the
continuous employment of key management personnel. In order to induce you to
remain in its employ, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in the event your
employment with the Company is terminated under the circumstances described
below subsequent to a "Change in Control" of the Company (as defined in Section
2).
1. Term of the Agreement.
(a) The term of this Agreement (the "Term") shall commence on August 1,
1996 and shall continue in effect through December 31, 1999 unless
extended as hereinafter provided. The Term shall be automatically
extended for additional one-year periods thereafter, unless at least
six months prior to the beginning of any calendar year, the Board of
Directors of the Company (the "Board") shall have taken affirmative
action so that the Term will not be further extended; provided that, if
a Change in Control of the Company (as defined in Section 2) shall have
occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of not less than 12
months beyond the month in which such Change in Control occurred.
2. Change in Control.
(a) No benefits shall be payable under Section 4 of this Agreement
unless there has been a Change in Control of the Company from and after
the date of this Agreement and prior to expiration of the Term.
(b) For purposes of this Agreement, a "Change in Control of the
Company" shall occur or be deemed to have occurred only if
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned directly or indirectly
by the stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities;
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(ii) during any period of two consecutive years ending during
the Term (not including any period prior to the Term), the
following individuals (the "Disinterested Directors") shall
cease for any reason to constitute a majority of the Board:
(a) individuals who at the beginning of such period
constituted the Board, and
(b) any new director (other than a director
designated by a person who has entered into an
agreement with the Company to effect any transaction
described in clause (i), (iii) or (iv) of this
Section 2(b)) whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the
directors then still in office who were either
directors at the beginning of the period or whose
election or whose nomination for election was
previously so approved;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than
(A) a merger or consolidation which would result in
the voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than 50% of the combined voting power of
the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove
defined) acquires more than 50% of the combined
voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets which, in either case, has not
previously been approved by a majority of Disinterested
Directors.
3. Employment Status; Termination Following Change in Control.
(a) This Agreement does not prevent you from terminating your
employment at any time. This Agreement does not constitute a contract
of employment or impose on the Company any obligation to retain you as
an employee. If your employment is terminated for any reason and
subsequently a Change in Control shall have occurred, you shall not be
entitled to any benefits hereunder. Any termination by the Company or
by you following a Change in Control of the Company during the Term
shall be communicated by written notice of termination ("Notice of
Termination") to the other party hereto in accordance with Section 6.
The "Date of Termination" shall mean the effective date of such
termination as specified in the Notice of Termination.
(b) Notwithstanding anything to the contrary herein, you shall be
entitled to the benefits provided in Section 4 only if any of the
events constituting a Change in Control of the Company shall have
occurred during the Term and your employment with the Company is
terminated within 12 months after such a Change in Control of the
Company and such termination is not (A) because of your death, (B) by
the Company for Disability (as defined in Section 3(b)(i)) or Cause (as
defined in Section 3(b)(ii)), or (C) by you without Good Reason (as
defined in Section 3(b)(iii)).
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(i) Disability. "Disability" shall mean if, as a result of
incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with
the Company for six (6) consecutive months and, within thirty
(30) days after written notice of termination is given to you,
you shall not have returned to the full-time performance of
your duties. Notwithstanding any other provision of this
Agreement, you shall not be considered a terminated employee
within the meaning of the Company's long term disability plan
and your rights thereunder shall not be affected by this
Agreement.
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) your willful and
continued failure to substantially perform your duties with
the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice
of Termination by you for Good Reason as defined in Section
3(b)(iii)), after a written demand for substantial performance
is delivered to you by the Company, which demand specifically
identifies the manner in which the Company believes that you
have not substantially performed your duties, or (B)(x) you
shall have been guilty of any act or acts of dishonesty
constituting a felony, or (y) you shall have violated any
provision of any confidentiality, nondisclosure, assignment of
invention, non-competition or similar agreement entered into
by you in connection with your employment by the Company. For
purposes of this subsection, no act or failure to act on your
part shall be deemed "willful" unless done or omitted to be
done by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the
Company.
(iii) Good Reason. You may terminate your employment upon 15
days prior written notice to the Company for any reason and
with or without cause, but you shall be entitled to the
benefits provided in Section 4(a) only if you do so for Good
Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your consent, the occurrence after a Change in
Control of the Company of any of the following circumstances
unless such circumstances are fully corrected prior to the
Date of Termination (as defined in Section 3(a)) specified in
the Notice of Termination (as defined in Section 3(a)) given
in respect thereof:
(A) any reduction in your annual compensation
(including salary and bonuses and commissions based
on agreed upon targets then in effect) as in effect
on the date hereof or as the same may be increased
during the Term; or
(B) any requirement by the Company or of any person
in control of the Company that the location at which
you perform your principal duties for the Company be
outside a radius of 50 miles from the location at
which you performed such duties immediately prior to
a Change in Control of the Company;
4. Compensation Upon Termination.
(a) If (1) any of the events constituting a Change in Control of the
Company shall have occurred during the Term and (2) your employment
with the Company is terminated within 12 months after such Change in
Control of the Company, you shall be entitled to the benefits set forth
in this Section 4(a):
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to
physical or mental illness, you shall continue to receive base
salary and all other earned or accrued compensation at the
rate in effect at the
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commencement of any such period (offset by all compensation
payable to you under the Company's disability plan or program
or other similar plan during such period) until your
employment is terminated pursuant to Section 3(b)(i) hereof.
Thereafter, or in the event your employment is terminated by
reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and
other compensation programs then in effect in accordance with
the terms of such programs.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, the Company shall
pay you your full base salary and all other earned or accrued
compensation through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, plus
all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are
due, and the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company should be terminated
by the Company other than for Cause or Disability or if you
should terminate your employment for Good Reason, then you
shall be entitled to the benefits below:
(A) the Company shall pay you your full base salary
and all other earned or accrued compensation through
the Date of Termination at the rate in effect at the
time the Notice of Termination is given, plus all
other amounts to which you are entitled under any
compensation plan of the Company at the time such
payments are due and, in lieu of further salary
payments for periods subsequent to the Date of
Termination, the Company will pay you a lump sum cash
payment as severance pay (the "Severance Payment") in
an amount equal to your total cash compensation
(including salary, bonus and commissions) for the 12
month period immediately prior to the Date of
Termination.
(B) The payments provided for in subsection (A) above
shall be made not later than the tenth day following
the Date of Termination; provided, however, that, if
the amounts of such payments cannot be finally
determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in
good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such
payments (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Internal Revenue Code
of 1986, as amended (the "Code")) as soon as the
amount thereof can be determined but in no event
later than the thirtieth day after the Date of
Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently
determined to have been due, such excess shall
constitute a loan by the Company to you, payable on
the fifth day after demand by the Company (together
with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(C) For a 12-month period after the Date of
Termination, the Company shall arrange to provide you
with life, disability, accident and health insurance
benefits substantially similar to those which you
received immediately prior to the Date of Termination
and at the same cost to you (if any) as in effect
immediately prior to the Date of Termination.
Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you
pursuant to this Section 4(a)(iii)(C) if an
equivalent benefit is actually received by you from
another employer during the 12-month period after the
Date of Termination and any such benefit actually
received by you shall be reported to the Company.
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(D) You shall not be required to mitigate the amount
of any payment provided for in this Section 4(a) by
seeking other employment or otherwise, nor, except as
provided in the second sentence of Section
4(a)(iii)(C) hereof, shall the amount of any
payment or benefit provided for in this Section 4(a)
be reduced by any compensation earned by you as a
result of employment by another employer, by
retirement benefits or by offset against any amount
claimed to be owed by you to the Company or
otherwise.
(iv) The Severance Payment under this Section 4(a) shall be
made without regard to whether the deductibility of such
payments (or any other "parachute payments," as that term is
defined in Section 280G of the Code, to or for your benefit)
would be limited or precluded by Section 280G and without
regard to whether such payments (or any other "parachute
payments" as so defined) would subject you to the federal
excise tax levied on certain "excess parachute payments" under
Section 4999 of the Code; provided that if the total of all
"parachute payments" to or for your benefit, after reduction
for all federal taxes (including the tax described in
Section 4999 of the Code, if applicable) with respect to such
payments (the "Total After-Tax Payments"), would be increased
by the limitation or elimination of any payment under this
Section 4(a) or the limitation or elimination of any other
"parachute payments", amounts payable under this Section 4(a)
or the amounts of any other "parachute payments" shall be
reduced to the extent, and only to the extent, necessary to
maximize the Total After-Tax Payments. The determination as to
whether and to what extent payments under this Section 4 or
the amounts of any other "parachute payments" are required to
be reduced in accordance with the preceding sentence shall be
made at the Company's expense by Xxxxxx Xxxxxxxx & Co. or by
such other certified public accounting firm as the Board may
designate prior to a Change in Control of the Company. In the
event of any underpayment or overpayment under this Section
4(a) or any underpayment or overpayment of any other
"parachute payment" as determined by Xxxxxx Xxxxxxxx & Co.(or
such other firm as may have been designated in accordance with
the preceding sentence), the amount of such underpayment or
overpayment shall forthwith be paid to you or refunded to the
Company, as the case may be, with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code.
(b) If any of the events constituting a change of control of the
Company shall have occurred during the Term
(i) the options granted to you on September 7, 1995 and
evidenced by the Non-statutory Stock Option Agreement, dated
as of September 7, 1995, shall fully vest and
(ii) 50% of the unvested portion of the options granted to you
on March 20, 1996 and evidenced by the Incentive Stock Option
Agreement, dated as of March 20, 1996, shall fully vest.
5. Non-Compete.
(a) For a period of one year after the termination of your employment
with the Company, you will not directly or indirectly:
(i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender,
or in any other capacity whatsoever (other than as the holder
of not more than one percent (1%) of the total outstanding
stock of a publicly held company), engage in the business of
developing, producing, marketing or selling products of the
kind or type developed or being developed, produced, marketed
or sold
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by the Company while you are employed by the Company for any
enterprise listed on Exhibit A hereto; or
(ii) recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their
employment with, or otherwise cease their relationship with,
the Company; or
(iii) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or
accounts, of the Company which were contacted, solicited or
served by you while employed by the Company.
(b) If any restriction set forth in this Section 5 is found by any
court of competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend
only over the maximum period of time, range of activities or geographic
area as to which it may be enforceable.
(c) The restrictions contained in this Section 5 are necessary for the
protection of the business and goodwill of the Company and are
considered by you to be reasonable for such purpose. You agree that any
breach of this Section 5 will cause the Company substantial and
irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company
shall have the right to seek specific performance and injunctive
relief.
6. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to
assume and agree to perform this Agreement to the same extent that the
Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain an assumption of this Agreement
prior to the effectiveness of any succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled hereunder if
you had terminated your employment for Good Reason immediately after a
Change in Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination As used in
this Agreement, "Company" shall mean the Company as defined above and
any successor to its business or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
President of the Company and to you at the respective address shown above or
below or to such other address as either the Company or you may have furnished
to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
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8. Miscellaneous.
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of
Virginia.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be
deemed a waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written,
by any officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
NETRIX CORPORATION
By:______________________________
Xxxxxxx X. Xxxxx
President
Agreed to as of the 1st day of August, 1996
______________________________
(Signature of Employee)
______________________________
(print name)
Address:______________________
______________________________
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EXHIBIT A
ACT Networks Inc.
Network Equipment Technology
Ascom Timplex
Newbridge Networks Corp.
Ascend Communications
U.S. Robotics
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The following list of Netrix Corporation officers have signed the above
agreement:
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxx
J. Xxxxxx Xxxxxx
G. Xxxxx Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
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