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Exhibit 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 26, 1997, between
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXXXX (the "Executive").
WHEREAS, the Company wishes to employ the Executive; and
WHEREAS, the Executive wishes to be employed by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company employs the
Executive, for itself and its affiliates, to render exclusive and full time
services in such capacities as the Company's Board of Directors may assign, as
the President of the Company and, in connection therewith, to comply with the
stated policies of the Company and perform such duties consistent with such
position as the Executive shall reasonably be directed to perform by the
Company's Board of Directors. The Executive shall, together with the Chief
Executive Officer be responsible for the implementation of the overall
direction, strategy and operations and administration of the business of the
Company with such powers and duties as are typically provided or reserved to the
senior executive officers of the Company under its by-laws and the General
Corporation law of the State of Delaware. Notwithstanding the Executive's
obligation to render exclusive and full time services to the Company, the
Executive may (i) hold and make passive investments, and (ii) continue to serve
as a non-employee director or advisor for those companies for which the
Executive currently serves as a director or advisor or engage in such
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other charitable, educational or business activities as may be otherwise
permitted by the Board of Directors of the Company; provided, that such
activities are not otherwise prohibited under Section 5.1.1.
1.2 Acceptance of Employment by the Executive. The Executive
accepts such employment and shall render the services described above. Subject
to election by the Company's Board of Directors as such, the Executive shall
also serve during all or any part of the Term (as defined below) as an officer
of the Company and of any of its subsidiaries, without any compensation therefor
other than as specified in this Employment Agreement. The Executive shall be
nominated to the Board of Directors of the Company and, subject to election by
the stockholders of the Company, shall serve as a director of the Company during
the Term, and at the discretion of the Company, shall serve as a director of any
one or more of the Company's subsidiaries, without any compensation therefor
other than as specified in this Agreement; provided, however, that if the
Executive is no longer employed by the Company as the President or otherwise
servicing the Company as a full-time consultant, the Executive shall, upon
request of the Company, promptly resign from the Board of Directors of the
Company.
1.3 Place of Employment. The Executive's place of employment
shall be Ramsey, New Jersey, or such other location as may be agreed upon by the
Executive and the Company, subject to such reasonable travel as the rendering of
the services hereunder may require.
2. Term of Employment. The term of the Executive's employment
under this Employment Agreement (the "Term") shall commence on the date hereof
and shall end on the third anniversary of the date hereof, unless sooner
terminated as herein provided.
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3. Compensation.
3.1 Base Salary. As compensation for all services to be
rendered pursuant to this Employment Agreement, the Company shall pay the
Executive, during each year of the Term, a salary of not less than $200,000 per
annum (the "Annual Salary"), payable in accordance with the executive payroll
policies of the Company as from time to time in effect, less such deductions as
shall be required to be withheld by applicable law and regulations. Each year
the members of the Board of Directors of the Company (with the exception of the
Executive and Xxxxxxxx Xxxx) shall review the Annual Salary payable to the
Executive and may, but shall not be required to, increase the Annual Salary or
determine, in the discretion of the members of the Board of Directors (with the
exception of the Executive and Xxxxxxxx Xxxx), the cash bonus or other
compensation that may be payable to the Executive.
The Company agrees that beginning with the 1998 calendar year,
the Executive shall be entitled to participate in the Company's 401(k) plan
and/or a non-qualified deferred compensation plan or arrangement to be
established by the Company (the "Deferred Plan") and that contributions shall be
made to the 401(k) plan and the Deferred Plan, in such combination as the
Company may direct, in an aggregate amount of $30,000 annually; provided,
however, that if the Executive is eligible for, and the Company for any year
makes, matching contributions to its 401(k) plan (collectively, the "Matched
Amount"), the amount of the Executive's compensation to be paid for such year
into the Deferred Plan shall be reduced by the Matched Amount, divided by the
Executive's individual combined city, state and federal tax rate.
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3.2 Stock Options. The Executive shall receive, within 30 days
of the execution of this Agreement, non-qualified options to purchase 162,943
shares of Common Stock, par value $.001 per share (the "Shares"), of the Company
(the "Options"). The form of the Options shall be substantially in the form
issued to other employees of the Company, except as otherwise provided herein.
The per Share exercise price of the Options shall be $5.00.
23,000 Options shall vest on each March 1, June 1, September
1, and December 1, commencing on June 1, 1999 and ending on September 1, 2000,
and the remainder of the Options shall vest upon the conclusion of the Term of
this Agreement; provided, however, that in the event of a Change of Control all
unvested options shall immediately vest; provided further, that in the event
that the Executive is terminated by the Company pursuant to Section 4.4 hereof,
the remaining unvested Options, but in no event more than 47,990 Options, shall
vest on the date of termination and all unvested options shall be cancelled. If
this Agreement shall be terminated for any other reason, all Options, other than
those Options which have vested as of or prior to the date of termination, shall
be cancelled. Options vested hereunder shall not expire sooner than the later of
ten (10) years from the date of grant, or one hundred and twenty (120) days
after the Executive ceases to render full-time services to the Company, either
as an employee or as a consultant.
For purposes of this Section 3.2, the term "Change of Control"
shall mean (i) any "person" (as such term is defined in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than any person who acquired shares of the Company's Series A Preferred Stock on
the date hereof or any affiliate thereof) becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
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of securities of the Company representing fifty percent (50%) or more of the
total voting power represented by the Company's then outstanding voting
securities (ii) any transaction as a result of which the stockholders of the
Company immediately before such transaction or any affiliates of such
stockholders cease to own at least fifty percent (50%) of the voting stock of
(x) the Company or (y) any entity that results from the participation of the
Company in a reorganization, liquidation or any other form of corporate
transaction; (iii) a merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive; or (iv) a sale, lease,
exchange or other disposition of all or substantially all the property and
assets of the Company.
3.3 Limitations Imposed by Law. The provisions of this
Employment Agreement relating to the compensation to be paid to the Executive
shall be subject to any limitations provided by law or regulation which may from
time to time limit the compensation payable to the Executive.
3.4 Participation in Employee Benefits. Subject to the
acceptance of the Executive and his dependents by any applicable insurance
company or applicable benefit provider, the Executive shall be permitted during
the Term, if and to the extent eligible, to participate in any group life,
hospitalization or disability insurance plan, health program, loan program,
pension plan or similar benefit plan of the Company, and shall be entitled to
such vacation, personal time, car allowance and the like, which may be available
to other executives of the Company and generally on the same terms as such other
executives. In addition to the benefit programs set forth above, the Company
shall use reasonable efforts, consistent with the Company's overall business
interests, to assist the Executive in accomplishing the effective
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exercise of any vested options, whether by cashless exercise, loans or
otherwise, at the Company's discretion.
3.5 Expenses. Subject to such policies as may from time to
time be established by the Company's Board of Directors, the Company shall pay
or reimburse the Executive for all reasonable expenses actually incurred or paid
by the Executive during the Term in the performance of the Executive's services
under this Employment Agreement upon presentation of expense statements or
vouchers or such other supporting information as it may require.
3.6 Relocation Expenses and Living Expenses. The Company shall
pay the Executive $20,000 as a relocation payment upon the Executive's
relocation to the Ramsey, New Jersey area.
4. Termination.
4.1 Termination upon Death. If the Executive dies during the
Term, this Employment Agreement shall terminate, except that the Executive's
legal representatives shall be entitled to receive all compensation and benefits
provided for under this Agreement accrued, earned or vested as of the period
ending on the last day of the month in which the Executive's death occurs;
provided, however, that nothing herein shall be construed as providing for the
vesting of options other than as set forth in Section 3.2 hereof.
4.2 Termination upon Disability. If, during the Term, the
Executive becomes physically or mentally disabled, whether totally or partially,
so that the Executive is unable substantially to perform his services hereunder
for (i) a period of three consecutive months, or (ii) for shorter periods
aggregating three months during any six month period, the Company (as directed
by a vote of the Board of Directors, excluding the Executive and Xxxxxxxx Xxxx)
may
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at any time after the last day of the three consecutive months of disability or
the day on which the shorter periods of disability equal an aggregate of three
months, by ten (10) days' written notice to the Executive, terminate the Term of
the Executive's employment hereunder. Nothing in this Section 4.2 shall be
deemed to extend the Term. The Executive shall be entitled to all compensation
and benefits provided for under this Agreement accrued, earned or vested through
the date of termination; provided, however, that nothing herein shall be
construed as providing for the vesting of options other than as set forth in
Section 3.2 hereof.
4.3 Termination for Cause. The Company (as directed by a vote
of the Board of Directors, excluding the Executive and Xxxxxxxx Xxxx, but for
which vote they are given at least one (1) day's written notice) may at any time
by written notice to the Executive terminate the Term of the Executive's
employment hereunder for "cause" (as defined herein) and the Executive shall
have no right to receive any compensation or benefit hereunder on and after the
effective date of such notice, other than compensation accrued, earned or vested
through the date of termination; provided, however, that nothing herein shall be
construed as providing for the vesting of options other than as set forth in
Section 3.2 hereof. For purposes hereof, "cause" shall mean
(i) an act or acts of personal dishonesty taken by the
Executive at the expense of or against the interests of the Company;
(ii) violation by the Executive of his obligations under
this Agreement, including, without limitation, any failure or refusal to comply
with the oral or written policies or directives of the Company's Board of
Directors; provided, however, that if such violation may be substantially cured,
the Executive may not be terminated for cause unless the Executive
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fails to cure such violation within a reasonable period of time after receipt of
notice from the Company of such violation;
(iii) any direct or indirect disclosure of any
confidential information or other special knowledge of the finances, business or
other affairs of the Company contrary to his obligations under Section 5.1.2;
(iv) the conviction of the Executive of a felony; or
(v) the conviction of the Executive of a serious
misdemeanor involving illegal use, possession or sale of drugs, larceny, crimes
of violence or sex offenses.
4.4 Involuntary Termination. Notwithstanding anything herein
to the contrary, the Company (as directed by a vote of the Board of Directors,
excluding the Executive and Xxxxxxxx Xxxx) shall have the right, at any time
upon 90 days' prior notice to the Executive, to terminate the Term of the
Executive's employment hereunder. If during the Term, the Company terminates the
Executive's employment other than for the reasons set forth in Sections 4.1, 4.2
and 4.3 hereof, it shall be deemed to be an involuntary termination and the
Company shall pay to the Executive (in addition to any accrued compensation or
expense reimbursements otherwise due) within ten business days following the
date of termination the following amounts as a full and final severance payment:
(i) four months salary, if such termination occurs
during the first year of the Term;
(ii) six months salary, if such termination occurs
during the second year of the Term; and
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(iii) the balance of the base salary payable pursuant to
this Agreement, but in no event more than eight
months salary, if such termination occurs during
the third year of the Term.
4.5 Voluntary Termination. The Executive agrees to provide the
Company with 90 days notice prior to voluntarily terminating the Term of the
Executive's employment hereunder. At the end of such 90-day period, this
Agreement shall terminate automatically and the Company shall have no further
obligations to the Executive under this Agreement, other than those obligations
accrued, earned or vested by the Executive as of the date of the termination.
4.6 Notice of Termination. Any notice of termination by the
Company for any reason or by the Executive for any reason shall be communicated
by a written notice which indicates (i) the specific termination provision in
this Agreement relied upon, (ii) the facts and circumstances claimed to provide
a basis for such termination, and (iii) the date or proposed date of
termination.
5. Certain Covenants of the Executive.
5.1 Covenants Against Competition. The Executive acknowledges
that (i) the principal business of the Company and its subsidiaries is the
development, assembly and distribution of sound processing equipment and
telecommunication peripherals (together with other related businesses which the
Company and its subsidiaries are in currently and which the Company and its
subsidiaries may become involved with during the Term, the "Company Business");
(ii) the Company Business is international in scope; (iii) his work for the
Company will bring him, into close contact with many confidential affairs not
readily available to the public; and (iv) the Company would not enter into this
Agreement but for the agreements and
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covenants of the Executive contained herein. In order to induce the Company to
enter into this Employment Agreement, the Executive covenants and agrees that:
5.1.1 Non-Compete. During the Term and for a period of two
years following the termination (whether for cause or otherwise) of the
Executive's employment with the Company or any of its affiliates, (the
"Restricted Period"), the Executive shall not, in the United States of America
or in any foreign country, directly or indirectly, (i) engage in the Company
Business for his own account; (ii) enter the employ of, or render any services
to, any person engaged in such activities; and (iii) become interested in any
person engaged in the Company Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that the Executive may own, directly or indirectly, solely as an investment,
securities of any person which are traded on any national securities exchange or
the NASDAQ National Market System if the Executive (a) is not a controlling
person of, or a member of a group which controls, such person or (b) does not,
directly or indirectly, own 1% or more of any class of securities of such
person.
5.1.2 Confidential Information. During and after the
Restricted Period, the Executive shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others except in
connection with the business and affairs of the Company, all confidential
matters of the Company and its affiliates. Such confidential matters, include,
without limitation, trade "know-how," secrets, customer lists, details of
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans,
new personnel acquisition plans, methods of manufacture,
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technical processes, designs and design projects, inventions and research
projects and other business affairs of the Company and its affiliates
(collectively, "Confidential Information"), learned by the Executive heretofore
or hereafter, and shall not disclose them to anyone outside of the Company and
its affiliates, either during or after employment by the Company or any of its
affiliates, except as required in the course of performing duties hereunder or
with the Company's express written consent.
5.1.3 Property of the Company. All documents and other
materials including, without limitation, memoranda, notes, lists, records and
other documents made or compiled by or made available to the Executive prior to
the commencement of employment hereunder or during the Term by the Company and
any copies thereof, whether or not containing Confidential Information, are and
shall be the property of the Company and shall, at the request of the Company,
be delivered to the Company promptly upon the termination of the Executive's
employment with the Company or any of its affiliates or at any other time on
request. Except as required in connection with the services to be performed
hereunder, the Executive agrees not to remove from the Company's premises,
without permission, any and all papers or drawings belonging to the Company,
including those prepared or worked on by him. All ideas, reports, and other
creative works conceived by the Executive during the Term and relating to
Company Business, shall be disclosed to the Company and shall be the sole
property of the Company.
5.1.4 Employees of the Company. During the Restricted Period,
the Executive shall not, directly or indirectly hire, solicit or encourage to
leave the employment of the Company or any of its affiliates, any employee of
the Company or its affiliates or hire any such employee who has left the
employment of the Company or any of its affiliates within one
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year of the termination of such employee's employment with the Company or any of
its affiliates.
5.1.5 Consultants and Independent Contractors of the Company.
During the Restricted Period, the Executive shall not, directly or indirectly,
hire, solicit or encourage to cease to work with the Company or any of its
affiliates, any consultant, sales representative and other person then under
contract with the Company or any of its affiliates; provided, however, that the
Executive may hire or solicit consultants who in the ordinary course of such
consultant's business provide services to a broad client base.
5.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions of Section
5.1 (the "Restrictive Covenants"), the Company shall have the right and remedy
to have the Restrictive Covenants specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
affiliates and that money damages will not provide an adequate remedy to the
Company; provided, however, that such right and remedy shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company under
law or in equity.
5.3 Enforceability in Jurisdictions. The parties intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts
of any jurisdiction within the geographical scope of such Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties that such determination not bar or
in any way affect the Company's right to the relief provided above in the courts
of any other
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jurisdiction within the geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other respective jurisdictions,
such Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
6. Executive's Representations. The Executive represents and warrants
to the Company that, except as specifically provided in Section 1 hereof, there
are no agreements or arrangements, whether written or oral, in effect which
would prevent the Executive from rendering exclusive services to the Company
during the Term. The Executive further represents, warrants and agrees with the
Company that as of the date hereof he has not made and will not make during the
Term any commitment to do any act in conflict with this Agreement, or take any
action that might divert from the Company any opportunity which would be in the
scope of any present or future business of the Company or any affiliate thereof.
7. Indemnification. The Company shall indemnify and hold harmless the
Executive from all claims, losses, liabilities, damages and causes of action
relating to or arising out of the Executive's performance, duties and
responsibilities to, for, or on behalf of the Company to the extent provided by
the Company's certificate of incorporation and by-laws, as amended from time to
time.
8. Other Provisions.
8.1 Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telecopied, or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally,
telecopied, or if mailed, two days after the date of mailing, as follows:
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(i) if to the Company:
Bogen Communications International, Inc.
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(ii) if to the Executive, to:
Xx. Xxxxxxx X. Xxxxxxxxx
c/o Xxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Xxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
8.2 Entire Agreement. This Employment Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.
8.3 Waivers and Amendments. This Employment Agreement may be
amended, modified, superseded, cancelled, renewed or extended, and the terms and
conditions
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hereof may be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
8.4 Governing Law. This Employment Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such State.
8.5 Assignment. Except as otherwise agreed to by the Company,
this Employment Agreement, and the Executive's rights and obligations hereunder,
may not be assigned by the Executive. The Company may assign this Employment
Agreement and its rights, together with its obligations hereunder, in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.
8.6 Counterparts. This Employment Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
8.7 Headings. The headings in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.
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8.8 Severability. If any term, provision, covenant or
restriction contained in this Agreement, or any part thereof, is held by a court
of competent jurisdiction or any foreign, federal, state, county or local
government or any other governmental regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and in no way shall be
affected, impaired or invalidated. If any court construes any of the terms,
provisions, covenants or restrictions contained in this Agreement, including,
without limitation, the Restrictive Covenants, or any part thereof, to be
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and
shall be enforced.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By /s/ Xxxx X. Xxxxx
--------------------------------------
Name:
Title:
/s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
XXXXXXX X. XXXXXXXXX
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