October 21, 1998
Xx. Xxxxxx X. Xxxxxxxxxx
Chief Operating Officer
Dictaphone Corporation
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
Reference is made to the employment letter agreement (the "1995
Agreement") dated July 21, 1995 and the employment letter agreement dated July
9, 1997 (the "1997 Agreement") both by and between Dictaphone Corporation
("Dictaphone" or the "Company") and you.
This letter will set forth our agreement with respect to certain aspects
of your employment relationship with Dictaphone and your new duties as Chief
Operating Officer.
For good and valuable consideration, including but not limited to the
agreements set forth herein, receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. POSITION AND DUTIES. You are appointed to serve Chief Operating
Officer of the Company, reporting to the Chairman and Chief
Executive Officer, with operating responsibility for the CRS,
IHS/IVS, Service and Information Systems, together with such
additions and/or changes as may be determined by the CEO and
Board of Directors of the Company. You understand and agree that
the Company presently intends to hire a new Chief Financial
Officer (with responsibility for the Company's financial affairs
and investor relations) and a new Chief Technical Officer (with
responsibility for product development and engineering), both of
which shall report to the CEO. Until the CFO and CTO positions
are filled by the Company, you shall continue to manage the
finance and engineering functions in your organization under the
terms provided herein.
Xx. Xxxxxx X. Xxxxxxxxxx
October 21, 1998
Page 2
2. SALARY. Your annual base salary is increased to Three Hundred Thirty
Five Thousand Dollars ($335,000) per year, effective immediately;
such salary, as may be increased from time to time, shall not be
decreased.
3. BONUS ARRANGEMENTS; STOCK OPTIONS.
3.1 BONUSES. With respect to calendar year 1998, you shall be paid
a minimum guaranteed bonus equal to fifty percent (50%) of
your base salary (pro-rated for the change in base salary
provided above), payable in the first quarter of 1999.
Subsequent to 1998, you shall be eligible to participate in
the standard senior executive bonus plan, which provides for a
potential bonus of up to 100% of base salary, but which does
not provide for a minimum guaranteed bonus.
3.2 ADDITIONAL STOCK OPTIONS. You shall be granted an additional
Twenty Thousand (20,000) stock options pursuant to the
Company's 1995 Stock Option Plan, as amended.
4. PRIOR AGREEMENTS TERMINATED. The 1995 Agreement and the 1997
Agreement are hereby terminated and are of no further force and
effect. In consideration of your agreement to terminate such
agreements, Dictaphone shall pay to you the sum of Two Hundred and
Fifty Thousand ($250,000), promptly following the execution of this
Agreement.
5. SEVERANCE ARRANGEMENTS. As an "at will" employee, you or the Company
have the right to terminate your employment at will at any time. In
the event that your employment with Dictaphone is terminated by
Dictaphone without "cause" ( as defined on Exhibit A hereto), you
shall be offered an "Executive Severance Arrangement" by the
Company.
Under the terms of the aforementioned "Executive Severance
Arrangement," you will be offered your salary at the time of
separation for a period of twenty-four (24) months payable on
regular pay days such. Severance pay will be payable to you in full
regardless of your employment status with any other company. In
addition, you will be eligible for outplacement services at a
nationally recognized outplacement firm of the Company's choosing
for the severance period or, in lieu of such services, cash payment
consistent with past Company practice. Medical, dental and life
insurances will be extended to you at the rate that you would have
paid as an active employee under the terms and conditions of those
plans for up to twelve (12) months or until you have secured
employment elsewhere. You will be eligible for COBRA continuation of
applicable benefits for an additional six (6) months for a total
coverage period of eighteen (18) months.
Xx. Xxxxxx X. Xxxxxxxxxx
October 21, 1998
Page 3
In any event, the "Executive Severance Arrangement" will require you
to sign, as a condition of receiving severance hereunder, a
severance agreement including a release of the Company from all
liability for any acts or violations relative to any administrative
procedures and/or federal, state or local law(s) covering the
employment relationship. The release and severance agreement will
also include a non-compete, non-solicitation of key employees,
non-disclosure of confidential information and an agreement to
cooperate with the Company on any legal and otherwise reasonable
business issues requiring your involvement for resolution.
6. MISCELLANEOUS. This Agreement contains the entire agreement between
the parties hereto with respect to those matters addressed herein.
The provisions of this Agreement shall be governed by the laws of
the State of Connecticut and shall be binding upon Dictaphone's
successors and assigns.
Please indicate your acceptance of this Agreement by signing in the space
provided below.
Sincerely,
Dictaphone Corporation
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
cc: Executive Compensation Committee
of the Board of Directors of Dictaphone
Agreed to and Accepted:
By: /s/ XXXXXX X. XXXXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxxxx
Dated:___________________________________
ANNEX A
DEFINITIONS
1. "Cause" is defined as
(i) a severe breach of business ethics;
(ii) a violation of stated company policy which has been previously
characterized as a terminable offense;
(iii) any act by you which could cause harm or embarrassment to the
Company were it to be made public; or
(iv) any, willful or negligent material dereliction or substantial
under-performance of your job duties and responsibilities which
dereliction or under-performance is either (a) not capable of cure
or (b) if capable or cure are not so cured within 10 days after
written notice from the Chief Executive Officer of the Company.
