EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of this 1st
day of October, 1996 by and between NETSPEAK CORPORATION, a Florida corporation
with its principal office at 000 Xxxxx Xxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000
(the "Company") and Xxxxxx X. Xxxxxxx, whose residence address is 000 Xxxxx
Xxxxx Xxxxxxxxx, Xxxx 000, Xxxx Xxxxx, XX 00000 (the "Executive").
RECITALS
1. The Executive is currently the President and Chief Operating
Officer of the Company.
2. The Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel.
3. The Board of Directors (the "Board") of the Company recognizes
that the Executive's contribution, as President and Chief
Operating Officer of the Company, to the growth and success of
the Company has been and will be substantial and desires to
assure the Company of the Executive's present and continued
employment in an executive capacity and to compensate him
therefore.
4. The Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and
dedication to the Company.
5. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereby agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT AND TERM. The Company shall continue to
employ the Executive and the Executive shall continue
to serve the Company, on the terms and conditions set
forth herein, for the period (the "Term") effective
as of October 1, 1996 (the "Commencement Date") and
expiring on the second anniversary of the
Commencement Date, unless sooner terminated as
hereinafter set forth; provided, however, that the
Term of this Agreement shall automatically be
extended so that at all times, the balance of the
Term shall not be less than two (2) years.
1.2 DUTIES OF EXECUTIVE. The Executive shall serve as
President and Chief Operating Officer of the Company
and shall perform the duties of an executive
commensurate with such position, shall diligently
perform all services as may be reasonably designated
by the Board and shall exercise such power and
authority as is necessary and customary to the
performance of such duties and services. The
Executive shall devote such time as he deems
necessary to the business and
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affairs of the Company.
1.3 PLACE OF PERFORMANCE. In connection with his
employment by the Company, the Executive shall be
based at the Company's principal executive offices in
Boca Raton, Florida except for required travel on the
Company's business to an extent substantially
consistent with his present travel obligations.
2. COMPENSATION.
2.1 BASE SALARY. During the Term, the Executive shall
receive a base salary at the annual rate of
$150,000.00. The Base Salary shall be payable in
substantially equal installments consistent with the
Company's normal payroll schedule, subject to
applicable withholding and other taxes.
2.2 ADDITIONAL CASH COMPENSATION. Executive shall also be
entitled to receive such increments in base salary
and performance or merit bonuses (collectively
"Bonus") as shall be determined from time to time
during the Term by the Board.
3. EXPENSE REIMBURSEMENT AND OTHER BENEFITS
3.1 EXPENSE REIMBURSEMENT. During the Term, the Company,
upon the submission of supporting documentation by
the Executive, and in accordance with Company
policies for its executives, shall reimburse the
Executive for all expenses actually paid or incurred
by the Executive in the course of and pursuant to the
business of the Company, including expenses for
travel and entertainment.
3.2 OTHER BENEFITS. The Company shall obtain and shall
continue in force comprehensive major medical and
hospitalization insurance coverages, including dental
coverages, either group or individual, for the
Executive and his dependents, and shall obtain or
shall continue in force disability and life insurance
for the Executive (collectively, the "Policies"),
which Policies the Company shall keep in effect at
its sole expense throughout the Term. The Policies to
be provided by the Company shall be on terms as
determined by the Board. Within 30 days following
termination of this Agreement, at the Executive's
option, the Company shall assign to the executive all
insurance policies on the life of the Executive then
owned by the Company in consideration of the payment
by the Executive of the cash surrender value, if any,
and the Executive's agreement to assume the Company
liability to pay any premiums accruing thereon after
the date of such termination.
3.3 WORKING FACILITIES. The Company shall furnish the
Executive with an office, a secretary and such other
facilities and services suitable to his position and
adequate for the performance of his duties hereunder.
3.4 AUTOMOBILE ALLOWANCE. Throughout the Term of this
Agreement, the Company will pay Executive an
automobile allowance in the amount of $600.00 per
month. Such automobile allowance shall be for no more
than one automobile and shall include all expenses
related thereto, including, without limitation, lease
expenses, maintenance and insurance.
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3.5 VACATION. Executive shall be entitled to reasonable
vacations during each year of the Term, the time and
duration thereof to be determined by mutual agreement
between the Executive and the Company.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE. Notwithstanding anything
contained in this Agreement to the contrary, this
Agreement may be terminated by the Company for Cause.
As used in the Agreement, "Cause" shall only mean (i)
subject to the following sentences, any action or
omission of the Executive which constitutes a willful
and material breach of this Agreement which is not
cured or as to which diligent attempts to cure have
not commenced within 30 business days after receipt
by Executive of notice of same, (ii) fraud,
embezzlement or misappropriation as against the
Company, or (iii) the conviction (from which no
appeal can be taken) of Executive for any criminal
act which is a felony. Upon any determination by the
Company's Board of Directors that Cause exists under
clause (i) of the preceding sentence, the Company
shall cause a special meeting of the Board to be
called and held at a time mutually convenient to the
Board and the Executive, but in no event later than
10 business days after Executive's receipt of the
notice contemplated by clause (i). Executive shall
have the right to appear before such special meeting
of the Board with legal counsel of his choosing to
refute any determination of Cause specified in such
notice, and termination of Executive's employment by
reason of such Cause specified in such notice, and
any termination of Executive's employment by reason
of such Cause determination shall not be effective
until Executive is afforded such opportunity to
appear. Any termination for Cause pursuant to clause
(ii) or (iii) of this Paragraph 4.1 shall be made in
writing to Executive, which notice shall set forth in
detail all acts or omissions upon which the Company
is relying for such termination. Upon any termination
pursuant to this Paragraph 4.1, the Company shall pay
to the Executive any unpaid Base Salary accrued
through the effective date of termination specified
in such notice. In addition, the Company shall pay
any benefits, if any, owed to Executive under any
plan provided for Executive under Paragraph 3 hereof
in accordance with the terms of such plan as in
effect on the date of termination of employment under
this paragraph 4.1. Except as provided above, the
Company shall have no further liability hereunder
(other than for reimbursement for reasonable business
expenses incurred prior to the date of termination,
subject, however, to the provisions of Paragraph 3.1
hereof).
4.2 DISABILITY. Notwithstanding anything to the contrary
contained in this Agreement if, during the Term
hereof the Executive suffers a disability (as defined
below) the Company shall, subject to the provisions
of Paragraph 4.3 hereof continue to pay Executive the
compensation provided in Paragraphs 2.1 and 2.2
hereof during the period of his disability, provided,
however, that, in the event Executive is disabled for
a period of more than 180 days in any 12 month period
(The "Disability Period"), the Company may, at its
election, by a vote of 75% of the members of the
Boards of Directors within 90 days from the end of
the Disability Period, terminate this Agreement. In
the event of such termination, (a) payment of the
Executive's Base Salary at the rate prevailing on the
date of termination of the Executive and fringe
benefits (to the extent permissible by applicable
law) shall be continued for a period of 12 months
after
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such termination and (b) Executive shall receive a
bonus, equal to the amount of bonus paid to the
Executive during the 12 months preceding the date of
termination of the Executive. As used in this
Agreement, the term "disability" shall mean the
complete inability of Executive to perform his duties
under this Agreement as determined by an independent
physician selected with the approval of the Company
and the Executive. Except as provided above, the
Company shall have no further liability hereunder
(other than for reimbursement for reasonable business
expenses incurred prior to the date of termination
subject, however, to the provisions of Paragraph 3.1
hereof).
4.3 DEATH. In the event of the death of Executive during
the Term of this Agreement, the Company shall pay to
Executive's legal representative, any unpaid Base
Salary accrued through the date of his death plus a
bonus in an amount equal to the amount of bonus paid
in the 12 months preceding the date of death of the
Executive. Except as provided above, the Company
shall have no further liability hereunder (other than
for reimbursement for reasonable business expenses
incurred prior to the date of the Executive's death,
subject, however to the provisions of Paragraph 3.1
hereof).
5. MITIGATION. In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement.
6. CHANGE IN CONTROL.
(a) For the purposes of this Agreement, a "Change of
Control" shall be deemed to have taken place if : (i)
any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended, becomes the owner or beneficial owner of
Company securities, after the date of this Agreement,
having 20% or more of the combined voting power of
the then outstanding securities of the Company that
may be cast for the election of directors of the
Company (other than as a result of an issuance of
securities initiated by the Company, or open market
purchases approved by the Board, as long as the
majority of the Board approving the purchases is the
majority at the time the purchases are made), or (ii)
the persons who were directors of the Company before
such transactions shall cease to constitute a
majority of the Board of the Company, or any
successor to the Company, as the direct or indirect
result of or in connection with, any cash tender or
exchange offer, merger or other business combination,
sale of assets or contested election, or any
combination of the foregoing transaction. For Change
of Control purposes, if the company is a private
entity, then the trigger on change of control would
be the ownership, beneficially or otherwise, of 50%
of the voting securities.
(b) The Company and Executive hereby agree that, if
Executive is affiliated with the Company on the date
on which a Change of control occurs, (the "Change of
Control Date"), the Company (or, if Executive is
affiliated with a subsidiary, the subsidiary) will
continue to retain Executive and Executive will
remain affiliated
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with the Company (or subsidiary) for the period
commencing on the Change of Control Date and ending
on the second anniversary of such date, to exercise
such authority and perform such executive duties as
are commensurate with the authority being exercised
and duties being performed by the Executive
immediately prior to the Change of Control Date. If
after the Change of Control Executive is requested,
and, in his sole and absolute discretion, consents to
change his principal business location, the Company
will reimburse the Executive for his reasonable
relocation expenses, including, without limitation,
moving expenses, temporary living and travel expenses
for a reasonable time while arranging to move his
residence to the changed location, closing costs, if
any, associated with the sale of his existing
residence and the purchase of a replacement residence
at the changed location, plus an additional amount
representing a gross-up of any state or federal taxes
payable by Executive as a result of any such
reimbursement. If the Executive shall not consent to
change his business location, the Executive may
continue to provide the services required of him
hereunder from his then residence and/or business
address, and the Company shall continue to maintain
an office for Executive at that location commensurate
with the Company's office prior to the Change of
Control Date.
(c) During the remaining term hereof after the Change of
Control Date, the Company (or subsidiary) will (i)
continue to pay Executive a salary at not less than
the level applicable to Executive on the Change of
Control Date, (ii) pay Executive bonuses in amounts
not less in amount than those paid during the twelve
month period preceding the Change of Control Date,
and (iii) continue employee benefit programs as to
Executive at levels in effect on the Change of
Control Date (but subject to such reductions as may
be required to maintain such plans in compliance with
applicable federal law regulating employee benefit
programs).
(d) If during the remaining term hereof after the Change
of Control Date (i) Executive's employment is
terminated by the Company (or subsidiary), or (ii)
there shall have occurred a material reduction in
Executive's compensation or employment related
benefits, or a material change in Executive's status,
working conditions, management responsibilities or
titles, and Executive voluntarily terminates his
relationship with the Company within 60 days of any
such occurrence, or the last in a series of
occurrences, then Executive shall be entitled to
receive, subject to the provisions of subparagraphs
(e) and (f) below, a lump sum payment equal to 200%
of Executive's "base period income" as determined
under (e) below. Such amount will be paid to
Executive within 15 business days after his
termination of affiliation with the Company.
(e) The Executive's "base period income" shall be his
base salary and annual incentive bonuses paid or
payable to him during or with respect to the twelve
month period preceding the date of his termination of
affiliation. If Executive has not been affiliated for
twelve months at the time of his termination of
affiliation, his "base period income" shall be his
annualized base salary at the rate then in effect and
any annual incentive bonus paid to Executive prior to
the
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date of his termination of affiliation or payable to
Executive with respect to his period of affiliation.
(f) In the event of a proposed Change in Control, the
Company will allow Executive to participate in all
meetings and negotiations related thereto.
7. RESTRICTIVE COVENANT
7.1 NON-COMPETITION. During the Term and for a period of
two (2) years following the termination (other than
without Cause, as defined in Paragraph 4.1) of the
Executive's employment by the Company, Executive
shall not, directly or indirectly engage in or have
any interest in, directly or indirectly, any sole
proprietorship, partnership, corporation, business or
any other person or entity (whether as an employee,
officer, director, partner, agent, security holder,
creditor, consultant, or otherwise) that, directly or
indirectly, engages primarily in the development,
manufacturing, distribution or supply of products and
services competitive with the Company's and/or any
subsidiary's products and services in any and all
states in which the Company and/or any subsidiary
conducts its business during the Term or at the time
Executives's employment with the Company is
terminated (the "Territory"); provided, however, that
Executive may hold Company securities and/or acquire,
solely as an investment, shares of capital stock or
other equity securities of any such company, so long
as Executive does not acquire a controlling interest
in or become a member of a group which exercises
direct or indirect control of, more than five percent
of any class of capital stock of such corporation.
7.2 NONDISCLOSURE. During the Term and following
termination of the Executive's employment with the
Company Executive shall not divulge, communicate, use
to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way,
any Confidential Information (as hereinafter defined)
pertaining to the business of the Company. Any
Confidential Information or data now or hereafter
acquired by the Executive with respect to the
business of the Company (which shall include, but not
be limited to, information concerning the Company's
financial condition, prospects, technology,
customers, suppliers, methods of doing business and
marketing and promotion of the Company's services)
shall be deemed a valuable, special and unique asset
of the Company that is received by the Executive in
confidence and as a fiduciary. For purposes of this
Agreement, "Confidential Information" means
information disclosed to the Executive or known by
the Executive as a consequence of or through his
employment by the Company (including information
conceived, originated, discovered or developed by the
Executive) prior to or after the date hereof and not
generally known or in the public domain, about the
Company or its business. Notwithstanding the
foregoing, nothing herein shall be deemed to restrict
the Executive from disclosing Confidential
Information to the extent required by law.
7.3 NONSOLICITATION OF EMPLOYEES. During the Term and
for a period of two years
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following termination of the Executive's employment
with the Company, Executive shall not directly or
indirectly, for himself or for any other person,
firm, corporation, partnership, association or other
entity, attempt to employ or enter into any
contractual arrangement with any employee or former
employee of the Company for a period in excess of six
months.
7.4 BOOKS AND RECORDS. All books, records, accounts and
similar repositories of Confidential Information of
the Company, whether prepared by the Executive or
otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and
shall be returned immediately to the Company on
termination of this Agreement or on the Board's
request at any time.
8. INJUNCTION. It is recognized and hereby acknowledged by the
parties hereto that a breach by the Executive of any of the
covenants contained in Paragraph 7 of this Agreement will
cause irreparable harm and damage to the Company, the monetary
amount of which may be virtually impossible to ascertain. As a
result, the Executive recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court
of competent jurisdiction enjoining and restraining any
violation of any or all of the covenants contained in
Paragraph 7 of this Agreement by the Executive or any of his
affiliates, associates, partners or agents, either directly or
indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other remedies the
Company may possess.
9. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this
Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all
of its assets to, another corporation which assumes this
Agreement, and all obligations of the Company hereunder, in
writing. Upon such consolidation, merger, or transfer of
assets and assumption, the term "the Company" as used herein,
shall mean such other corporation and this Agreement shall
continue in full force and effect, subject to the provisions
of Paragraph 6 hereof.
10. BINDING EFFECT. Except as herein otherwise provided, this
Agreement shall inure to the benefit of and shall be binding
upon the parties hereto, their personal representatives,
successors, heirs and assigns.
11. SEVERABILITY. Invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability
of any other provisions.
12. TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine or the feminine or neuter
gender, shall include all other genders; the singular shall
include the plural and vice versa. Titles of Paragraphs are
for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
13. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida.
14. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties
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and may not be changed or modified except by an Agreement in
writing signed by all parties.
15. NOTICE. Any notice required or permitted to be delivered
hereunder shall be deemed to be delivered when deposited in
the United States mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to the
parties at the addresses first stated herein, or to such other
address as either party hereto shall from time to time
designate to the other party by notice in writing as provided
herein.
16. OTHER INSTRUMENTS. The parties hereby covenant and agree
that they will execute such other and further instructions and
documents as are or may become necessary or convenient to
effectuate and carry out the terms of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each such counterpart shall for all
purposes be deemed an original.
18. ASSIGNABILITY. This Agreement shall not be assigned by either
party, except with the written consent of the other and except
as provided in Paragraph 9 hereof.
IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first above written.
NETSPEAK CORPORATION
By: /s/ [Illegible]
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Name: [Illegible]
Title: [Illegible]
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
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