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Exhibit 10.4
ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT
This Addendum is to that certain Executive Employment Agreement between
N2H2, Inc. ("N2H2") and Xxxxx X. Xxxxxxxxx ("Executive") dated May 10, 1999
("Agreement"). Unless separately defined in this Addendum, or unless the context
clearly indicates a different meaning, terms herein shall have the meanings
specified in the Agreement. Except as expressly amended herein, all of the terms
and conditions of the Agreement are incorporated herein by reference and remain
in full force and effect.
2. Employment Period. Unless earlier terminated in accordance with
Section 5, the term of employment hereunder shall end on October 1, 2002 (the
"Employment Period").
4. Compensation and Other Terms of Employment.
(a) Compensation. In consideration of the performance of
Executive's duties under the Agreement, during the Employment Period, the
Company agrees to pay Executive during the term of his employment at a base
salary of Two Hundred Forty-Eight No/100 Dollars ($248,000.00) per annum (the
"Base Compensation"). All amounts payable to Executive under this Section 4(a)
shall be paid in accordance with the Company's regular payroll practices (e.g.,
timing of payments and standard employee deductions, such as income tax, Social
Security and Medicare withholdings). Base Compensation shall increase by up to
five percent (5%) during each twelve (12) month period beginning October 1,
2001, in each case determined and subject to approval by the Board based on its
review of Executive's performance hereunder.
(b) Bonus. In addition to the Base Compensation described in
Section 4(a) of the Agreement and any additional bonuses approved by the Board,
Executive shall receive a monthly bonus in the amount equal to 1% of the sum of
a.) the Company's revenues generated during each such month and b.) the change
in the Company's deferred revenue during each such month. The dollar amount of
the aggregate monthly bonus under this Section 4(b) shall not exceed $225,000
through April 30, 2002 and, shall be payable on the 15th day of the following
month, and shall be subject to standard employee deductions. Bonus after April
30, 2002 will be determined by the board and will be based upon predetermined
management objectives.
(d) Vacation. During the Employment Period, Executive shall be
entitled to six (6) weeks paid annual vacation. Executive's vacation will be
scheduled at those times most convenient to the Company's business. Upon the
execution of this Addendum, the Company will pay $20,000 to Executive to
compensate him for unused vacation time accrued in 2000.
5. Termination of Employment.
(a) Executive's Permanent Disability. In the event, in the
Company's judgment, that Executive is unable to perform the essential functions
of his position with a reasonable accommodation, which accommodation does not
cause an undue hardship on the Company, for a period of ninety (90) consecutive
days because of an illness, injury or other physical or mental
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condition, the Executive will be deemed to have a "Permanent Disability." The
parties acknowledge Executive occupies an important position within the Company
that cannot be reasonably accommodated through the use of temporary employees.
If Executive's employment is terminated because of Executive's Permanent
Disability, the Company shall continue to pay all Base Compensation and pro rata
bonus amounts accrued pursuant to Sections 4(a) and (b) for a period of twelve
(12) months after the date of termination.
(d) Termination By The Company Without Cause or Voluntary
Termination By Executive With Good Reason. If Executive's employment with the
Company is terminated by the Company without Cause, or is Voluntarily Terminated
(as defined in Section 6(b) below) by Executive with Good Reason (as defined in
Section 6(c) below), the Company shall pay to Executive all Base Compensation
and pro rata bonus amounts, if any, accrued pursuant to Sections 4(a) and 4(b)
above through the date of such termination and shall continue to pay Executive's
Base Compensation and bonus for a period of twelve (12) months thereafter (the
"Severance Period"). Those unvested stock options which are scheduled to vest
between the date of termination and the end of the Severance Period shall be
deemed to vest immediately. Executive and his dependents, if any, shall also be
entitled to any continuation health insurance coverage rights available under
applicable law.
(f) Voluntary Termination By Executive Following Change in
Control. If Executive's employment with the company is Voluntarily Terminated by
Executive within 30 days of a Change in Control (as defined in Section 6(d)
below), the Company shall pay to Executive all Base Compensation and pro rata
bonus amounts, if any, accrued pursuant to Sections 4(a) and 4(b) through a
period equal to the Severance Period. All unvested stock options shall be deemed
to vest immediately. Executive and his dependents, if any, shall also be
entitled to any continuation of health insurance coverage rights available under
the applicable law.
(g) Termination Obligations.
(ii) Upon termination of the Employment Period, Executive
shall be deemed to have resigned from all offices and similar positions
then held with the Company or any affiliates, excluding in all cases
Executive's membership in the Company's or its affiliate's Board of
Directors.
6. Definitions.
(a) "Cause" shall mean a termination of Executive's employment by
the Company due to (i) conduct intended to or likely to injure the Employer's
business or reputation; (ii) a material breach by the Executive of this
Agreement or significant failure by the Executive to satisfactorily perform his
duties of employment; or (iii) any other misconduct or performance shortcomings
which constitute "cause" for discharge under Washington law.
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8. Records and Confidential Information.
(c) Immediately upon Executive's termination hereunder, as soon
as possible after the Company's written request, Executive will return to the
Company all written Confidential Information and Trade Secrets of the Company
will have been provided to Executive, and Executive will destroy all copies
(whether stored on magnetic tape, hard copy, as computer data, or otherwise) of
any analyses, compilations, studies or other documents (whether stored on
magnetic tape, hard copy, as computer data, or otherwise) prepared by Executive
or for Executive's use containing or reflecting any Confidential Information or
Trade Secrets of the Company. Within five business days of Executive's
termination hereunder Executive will deliver to the Company a notarized document
certifying that such written Confidential Information and Trade Secrets of the
Company have been returned or destroyed in accordance with this Section.
10. Covenants Not to Compete.
(a) Non-Interference with Customer Accounts. Executive covenants
and agrees that, during the Employment Period, and for a period of eighteen (18)
months after the date of termination of Executive's employment with the Company,
Executive shall not, directly or indirectly, personally or on behalf of any
other person, business, corporation, or entity, contact or do business with any
customer of the Company with respect to any Internet filtering product or
service which is competitive with any product or service which was sold,
provided, or under development by the Company at any time during the
twelve-month period prior to the date of termination of Executive's employment
with the Company. This covenant applies to those customers and the related
entities of those customers to which the Company sold its Internet filtering
products or services at any time during the twelve-month period prior to the
date of termination of Executive's employment with the Company, and those
prospective customers with which the Company actively pursued sales or the
provision of services at any time during the twelve-month period prior to the
date of termination of Executive's employment with the Company.
(b) Noncompetition. Executive covenants and agrees that, during
the Employment Period, and for a period of eighteen (18) months after the date
of termination of Executive's employment with the Company, Executive shall not,
directly or indirectly, own an interest in, operate, join, control, advise, work
for, serve as a director of, have a financial interest which provides any
control of, or participate in any corporation, partnership, proprietorship,
firm, association, person, or other entity (collectively, "Businesses")
producing, designing, providing, soliciting orders for, selling, distributing,
or marketing any Internet filtering products, goods, equipment, or services
which are similar to any Internet filtering products, goods, equipment or
services produced, sold or provided by the Company at any time during the
twelve-month period prior to the date of termination of Executive's employment
with the Company. THE PARTIES ACKNOWLEDGE THAT THE COMPANY PROVIDES SERVICES ON
A WORLD WIDE BASIS AND, ACCORDINGLY THAT IT IS NOT FAIR OR APPROPRIATE TO
RESTRICT THE FOREGOING COVENANT GEOGRAPHICALLY.
(d) Non-Diversion. During the Employment Period, and for a period
of eighteen (18) months after the date of termination of Executive's employment
with the Company,
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Executive shall not divert or attempt to divert or take advantage of or attempt
to take advantage of any actual or potential business or opportunities of the
Company or its subsidiaries or affiliates which Executive became aware of as the
result of his employment with the Company.
(e) Non-Recruitment. Executive agrees that the Company has
invested substantial time and effort in assembling its present workforce.
Accordingly, Executive agrees that during the Employment Period and for a period
of eighteen (18) months after the date of termination of Executive's employment
with the Company, Executive shall not (i) hire away any individuals who were
employed by the Company or its subsidiaries or affiliates during the
twelve-month period prior to the date of termination of Executive's employment
with the Company or (ii) directly or indirectly entice, solicit or seek to
induce or influence any such employees to leave their employment with the
Company or its subsidiaries or affiliates.
(f) Non-Disparagement. Executive and the Company mutually
covenant and agree that, during the Employment Period and for a period of
eighteen (18) months after the date of termination of Executive's employment
with the Company, neither shall, directly or indirectly disparage the other.
IN WITNESS HERETO, the parties hereto have executed this Addendum to be
effective as of October 1, 2000.
N2H2, INC.: EMPLOYEE:
Signed: /s/ XXXX XXXXXX Signed: /s/ XXXXX X. XXXXXXXXX
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By: Xxxx Xxxxxx, Director Print Name: Xxxxx X. Xxxxxxxxx
Date: March 21, 2001 Date: March 22, 2001
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