EXHIBIT 10.6
Employment Agreement
Agreement dated as of the first day of January 1997 between Dialogic
Corporation, a New Jersey corporation having its principal place of business in
Parsippany, New Jersey, (the "Company") and Xxxxxx X. Xxxx currently residing at
00 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxx, XX 00000 (the "Employee")
WITNESSETH:
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, as of the date of this Agreement Employee is the President
and Chief Executive Officer of the Company and has developed an intimate and
thorough knowledge of the Company's business methods and operations; and
WHEREAS, the retention of Employee's services, for and on behalf of
the Company, is materially important to the preservation and enhancement of the
value of the Company's business; and
WHEREAS, the Company is desirous of extending Employee's employment
upon the terms and conditions contained herein; and Employee is desirous of
continuing to be employed by the Company in accordance with such terms and
conditions.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee, and
Employee agrees to be employed by the Company in accordance with and pursuant to
the terms and conditions set forth below.
2. Term of Employment. This Agreement shall be for an initial term of
three (3) years. Upon the third anniversary hereof, (and upon each successive
anniversary thereafter) this Agreement shall be automatically renewed for a one
(1) year term, commencing on the date of each such renewal, unless either party
hereto notifies the other in writing of its intent not to renew this Agreement
upon not less than six (6) months notice prior to the renewal date hereof. In
the event either party gives the other proper notice of non_renewal, this
Agreement shall only continue for the balance of the then existing term.
Notwithstanding anything contained herein to the contrary, any term of
employment may be earlier terminated as provided in Section 8 hereof.
3. Position and Responsibilities.
(a) Employee will occupy the position of President and Chief Executive
Officer of the Company. During such period he occupies said position, the
Company shall apply its best efforts to effectuate the nomination of Employee to
the Company's Board of Directors subject to the terms of the Company's By-laws
and Articles of Organization, as amended from time to time.
(b) Employee will report directly to the Board of Directors and shall
have such duties and responsibilities as are set forth in the By-laws of the
Company, which duties and responsibilities shall include, but not be limited to,
overall management responsibilities for the operation and administration of the
Company as well as such other duties and responsibilities, consistent with
Employee's position as President and Chief Executive Officer, as shall be
defined by the Board of Directors.
(c) Employee will be expected to be in the full-time employment of the
Company, to devote substantially all of his business time and attention, and
exert his best efforts to the performance of his duties hereunder, and to serve
the Company diligently and to the best of his ability; provided, however,
nothing set forth herein shall prohibit Employee from engaging in other
activities to the extent that such activities do not impair the ability of
Employee to perform his duties and obligations under this Agreement.
4. Compensation. The Company shall pay to Employee a salary (the "base
salary") at an annual rate of $275,000, subject to deductions for social
security, payroll withholding and all other legally required or authorized
deductions and withholdings. Employee's salary shall be payable at the same time
and on the same basis as the Company pays its executive employees in general.
The Board of Directors shall review Employee's base salary no less frequently
than annually. Unless Employee consents, in no event shall his base salary be
decreased during his period of employment.
5. Quarterly Incentive Payments. In addition to the base salary
referenced in Section 4, Employee shall be entitled to quarterly bonuses if the
Company achieves its quarterly performance goals and Employee satisfies agreed
upon discreet goals/objectives to be established by the Board of Directors at
its sole and absolute discretion in consultation with Employee. The amount of
such bonuses, if any, shall be determined by the Board of Directors. Unless
Employee consents, in no event shall his target bonus opportunity be decreased
during his period of employment.
6. Stock Options and Other Long Term Incentive Programs. Employee
shall continue to be entitled to receive stock options pursuant to the Company's
1988 Incentive Compensation Plan and the 1997 Incentive Benefit Plan, including
any amendments thereto. The number of shares covered by any such option grants,
the exercise price per share and other terms and conditions governing such
options shall be determined by the Compensation Committee, subject however to
the terms of such Plans, and to the extent applicable, the provisions of this
Agreement. In addition, Employee shall also be eligible to participate in any
other long term incentive program covering executive employees. For purposes of
this Section 6, "cause" as used in the Company's Incentive Benefit Plans shall
be determined with reference to Section 8(b) of this Agreement.
7. Benefits; Expenses; Vacations.
(a) Employee shall be entitled to receive the same standard employee
benefits, perquisites and services as other executive employees of the Company
receive. Employee shall also be entitled to fully participate in all of the
Company's future employee benefit programs, perquisites and services in
accordance with their then existing terms.
(b) Employee shall be entitled to reimbursement for all approved and
reasonable travel and other business expenses incurred by him in connection with
his services to the Company pursuant to the terms of this Agreement. All
business expenses for which Employee seeks reimbursement from the Company shall
be adequately documented by Employee in accordance with the Company's procedures
covering expense reimbursement, and in compliance with regulations of the U.S.
Internal Revenue Service. In the event any such reimbursements shall be
includable in Employee's income, the Company shall pay Employee such additional
amounts as are necessary so that after taking into account any taxes payable on
such reimbursements, the Employee is in the same after-tax position he would
have been had such reimbursement not been so includable.
(c) Employee shall be entitled to vacation days in accordance with the
Company's employment policies and practices applicable to executive employees of
the Company, as such policies and practices are from time to time in effect.
8. Employment Termination. The employment of Employee pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
(a) Expiration of the employment period set forth in Section 2, unless
the employment of Employee is continued pursuant to this Agreement, or
otherwise;
(b) For cause upon written notice by the Company to the Employee. For
the purposes of this Section 8(b), cause for termination shall be fraud,
embezzlement, or other acts in intentional disregard of the Company's interests.
(c) Death or thirty (30) days after the disability of Employee. For
purposes of this Agreement, the term "disability" shall mean the inability of
Employee due to a physical or mental disability, for a period of ninety
(90) days (whether or not consecutive) during any three hundred sixty five
(365) day period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both
Employee and the Company; provided, however, if Employee and the Company do not
agree on a physician, Employee and the Company shall each select a physician and
these two together shall select a third physician, and such third physician's
determination as to disability shall be binding on all parties.
(d) At the election of either party without cause, upon not less than
six (6) months prior written notice of termination.
(e) At the election of Employee if there is a material breach of this
Agreement by the Company.
9. Effect of Termination.
(a) Termination for Cause or at Election of Employee. In the event
Employee's employment is terminated for cause pursuant to Section 8(b), or at
the election of the Employee pursuant to Section 8(a) or Section 8(d), the
Company shall pay Employee within thirty (30) days of his termination a lump-sum
equal to his base salary (less applicable deductions), incentive payments and
benefits, perquisites and services otherwise payable to him through the last day
of his actual employment by the Company, or such other period as may be required
by law.
All previously granted but unexercised vested stock options which are
outstanding on Employee's date of termination shall remain fully vested and
exercisable in accordance with their terms and all non-vested stock options
shall be canceled. In addition, any other vested amounts or awards to which
Employee may be entitled under any other long term incentive program referenced
in Section 6 shall be paid to Employee within thirty (30) days of his
termination and all non-vested amounts or awards shall be canceled.
(b) Termination at the Election of the Company or at the Election of
Employee for Sufficient Reason or Upon a Change of Control. In the event that
Employee's employment is terminated at the election of the Company pursuant to
Section 8 (a) or Section 8(d), or at the election of the Employee for sufficient
reason pursuant to Section 8(e), or upon a Change of Control pursuant to Section
10, the Company shall pay Employee within thirty (30) days of his termination a
lump-sum equal to his then base salary (less applicable deductions), incentive
payments and benefits, perquisites and services otherwise payable to him through
the later of: (i) the last day of the term of this Agreement pursuant to Section
2 or (ii) the period ending twelve (12) months after his termination. Additional
base salary (less applicable deductions) shall be payable on a monthly basis,
commencing on the later of the two (2) dates referenced in the preceding
sentence and ending on the date of Employee's employment with an employer othe r
than the Company, or the date of his self-employment; provided, however, in no
event shall the total period of base salary payments under this Section 9(b),
exceed twenty-four (24) months, unless the last day of the term of this
Agreement is more than twenty-four (24) months after Employee's termination.
The incentive payments referred to in the preceding paragraph shall be
determined on a calendar quarter basis as follows:
For the last full calendar quarter in which Employee was employed for
the entire quarter, the incentive payment shall be equal to the amount otherwise
payable to the Employee in accordance with Section 5 of this Agreement.
For each other full calendar quarter with respect to which Employee is
entitled to incentive payments under the first paragraph of this Section 9 (b),
the incentive payment shall be equal to the greater of: (i) Employee's target
incentive award for the quarter in which Employee has a termination from
employment or (ii) twenty_five percent (25%) of his actual incentive payment for
the immediately preceding calendar year.
If the period with respect to which Employee is entitled to incentive
payments under the first paragraph of this Section 9 (b) ends on a day other
than the last day of a calendar quarter, the incentive payment with respect to
such partial calendar quarter shall be an amount equal to the amount determined
immediately above with respect to full calendar quarters, multiplied by a
fraction the numerator of which is the number of days in such calendar quarter,
with respect to which Employee is entitled to payment and the denominator of
which is the total number of days in such calendar quarter.
All previously granted, but unexercised stock options which are
outstanding on Employee's date of termination shall be fully vested and
exercisable as of such date, and shall be exercisable in accordance with their
terms, or for a period of twelve (12) months after such termination, whichever
period is longer. In addition, any amounts or awards to which Employee may be
entitled under any other long term incentive program referenced in Section 6
(whether or not vested) shall be paid to Employee in a lump_sum within thirty
(30) days of his termination.
(c) Termination for Death or Disability. In the event Employee's
employment is terminated by death or disability pursuant to Section 8(c), the
Company shall pay to the estate of Employee, or to Employee, as the case may be
, within thirty (30) days of Employee's death, or disability a lump-sum equal to
his then base salary and benefits, perquisites and services otherwise payable to
him through the last day of the term of this Agreement pursuant to Section 2, or
such other period as may be required by law; provided, however, any amounts
payable hereunder as a result of Employee's disability shall be reduced by any
Company provided long term disability payments received by him. The Company
shall also pay to the estate of Employee, or to Employee as the case may be,
within such thirty (30) day period, an incentive payment pursuant to Section 5
determined as if Employee were neither dead, nor disabled on the last day of the
calendar quarter, prorated for the quarter in which the Employee's death or
disability occurs, or such longer period as may be required by law.
All vested stock options shall remain exercisable in accordance with
their terms and all non-vested stock options shall be canceled. In addition, any
amounts or awards to which Employee may be entitled under any other long term
incentive program referenced in Section 6 as a result of Employee's death or
disability, shall be paid to the estate of Employee, or to Employee, as the case
may be, in a lump-sum within thirty (30) days of Employee's death or sixty (60)
days after he terminates for disability.
10. Change of Control. If a Change of Control Event (as defined in
Section 14 of the 1997 Incentive Benefit Plan of Dialogic Corporation) occurs,
and as a result thereof Employee terminates his employment within twelve (12)
months of the change, because: (a) there is a significant diminution, without
mutual agreement of the parties, in the nature and scope of Employee's
authority, power, functions or duties, or (b) the Company assigns to Employee,
without mutual agreement of the parties substantial additional duties or
responsibilities which are inconsistent with the duties of the Employee under
this Agreement, or (c) the Company transfers Employee without mutual agreement
of the parties to an office more than twenty_five (25) miles from the principal
office of the Company; or Employee is terminated for reasons other than for
cause within such twelve (12) month period, Employee shall be entitled to
payment pursuant to Section 9(b) hereof. In addition, any expenses incurred by
Employee in connection with a sserting his rights under this Agreement upon a
Change of Control shall be paid by the Company as and when Employee receives a
judgment in his favor from a court of competent jurisdiction.
11. Gross-up Provision. If any portion of any payments received by
Employee from the Company (whether payable pursuant to the terms of this
Agreement or any other plan, agreement or arrangement with the Company, its
successors or any person whose actions result in a change of control of the
Company) shall be subject to tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended or any successor statutory provision, the Company shall
pay to Employee such additional amounts as are necessary so that, after taking
into account any tax imposed by Section 4999 (or any successor statutory
provision), and any federal and state income taxes payable on any such tax, the
Employee is in the same after-tax position that he would have been if such
Section 4999 or any successor statutory provision did not apply and no payments
were made pursuant to this Section 11.
12. Confidentiality. The parties acknowledge that Employee has
previously entered into an Amended Employment Agreement as of January 1, 1993
(the January 1993 Agreement) in connection with Employee's employment by the
Company, and that such Agreement at paragraphs 9 through 16 imposes restraints
necessary for the reasonable and proper protection for the Company and that each
and every one of said restraints is reasonable in respect to subject matter,
length of time, and area. Accordingly, such paragraphs are incorporated herein
and made a part hereof as if set forth herein, in their entirety and shall
continue for a period of (i) three (3) years from and after the date hereof, or
(ii) three (3) years after the end of any employment relationship between
Employee and the Company (including any affiliate of the Company), whichever
period is longer.
13. Waivers. This Agreement may be modified, and the rights and
remedies of any provision hereof may be waived, only in writing, signed by both
the Company and Employee. No waiver by either party of any breach by the other
or any provision hereof shall be deemed to be a waiver of any later or other
breach hereof, or as a waiver of any other provision of this Agreement.
14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New Jersey.
15. Severability. In case any one or more of the provisions contained
in this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
16. Termination of All Prior Agreements; Entire Agreement. Upon
execution of this Agreement, all prior employment agreements shall be terminated
and of no further force or effect, except for paragraphs 9 through 16 of the
January 1993 Agreement, which are incorporated herein by reference. This
Agreement constitutes the entire agreement and understanding between the Company
and Employee with respect to the subject matter hereof and supersede any other
prior agreements or understandings, whether oral or written.
17. Expenses. The Company shall reimburse Employee for any reasonable
expenses incurred by Employee in connection with the negotiation of this
Agreement.
18. Notices. Any notice required or permitted to be given pursuant to
this Agreement shall be in writing, and sent to the party for whom (or which) it
is intended at the address of such parties set forth below by registered or
certified mail, return receipt requested, or at such other address either party
shall designate by notice to the other in the manner provided herein for giving
notice.
If to the Company Dialogic Corporation
0000 Xxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Chairman of Compensation Committee
If to the Employee Xxxxxx X. Xxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement as of the date and year first above written.
DIALOGIC CORPORATION
/s/
XXXXXX X. XXXX
/s/
