1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into by and
among Intel Corporation (the "Company"), Dialogic Corporation, a New Jersey
Corporation ("Dialogic") Xx. Xxxxxx X. Xxxx ("Executive") as of May 31, 1999
(the "Effective Date").
WHEREAS, Executive is currently the President and Chief Executive Officer
of Dialogic and has developed an intimate and thorough knowledge of Dialogic's
business methods and operations; and
WHEREAS, Dialogic and Company have entered into an Agreement and Plan of
Merger as of May 31, 1999 ("Merger") pursuant to which Dialogic will become a
wholly owned subsidiary of Company ("Sub"); and
WHEREAS, the Company considers the establishment and maintenance of a sound
and vital management of Sub to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the retention of Executive's services, for and on behalf of the
Sub, is materially important to the preservation and enhancement of the value of
the Sub and Executive is desirous of continuing to be employed by the Sub under
the terms and conditions of the Agreement; and
WHEREAS, the parties agree that this Agreement will replace Executive's
current employment agreement dated January 1, 1997 ("Employment Agreement") with
Dialogic.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
and for other good and valuable considerations, the receipt and adequacy of
which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Employment: The Sub hereby agrees to employ Executive, and Executive
agrees to be employed by the Sub in accordance with and pursuant to the terms
and conditions set forth below.
2. Position and Duties: Executive's employment with Sub shall continue
following the consummation of the Merger as President of Dialogic, a wholly
owned subsidiary of Company reporting to Xxxx Xxxxx or a successor later
designated by the Company. In addition, Executive shall be an appointed vice
president of the Company. As an employee of Sub or the Company, Executive will
be expected to be in the full-time employment of the Sub or the Company, as the
case may be, to devote substantially all of his business time and attention, and
exert his best efforts in the performance of his duties hereunder, and to serve
the Sub or Company diligently and to the best of his ability.
3. Term of Agreement:
(a) This Agreement shall be for an initial term of one (1) year from
the closing of the Merger ("Closing") and shall automatically be renewed
for a period of 1 additional year unless Sub or Company notifies Executive
or Executive notifies Sub or Company in writing of its intent not to renew
this Agreement upon not less than three (3) months notice prior to the
"renewal date" hereof. "Renewal Date" means the date that falls on the
first anniversary of the Closing. At the end of the second year from
Closing, Executive will become subject to the usual terms and conditions of
employment of the Company or Sub.
(b) Notwithstanding anything to the contrary in subparagraph (a)
above, nothing herein shall preclude the Company or Sub from terminating
Executive's employment for "Cause". Cause shall include, without limitation
the following: (i) the conviction of Executive of any felony, (ii) theft,
(iii) embezzlement, or (iv) the willful failure to follow the Company's
Corporate Business Principles, provided, that in the event of any for Cause
termination exclusively under subparagraph (iv), written notice describing
the failure to follow such principles (to the extent curable) is delivered
to Executive and not cured within 10 days. If during the term of this
Agreement, Executive's employment is terminated by him voluntarily or by
Company or Sub for cause, Executive shall be entitled only to compensation
pursuant to the terms of this Agreement up to the time his employment is
terminated and the benefits payable under sections 9a, 9b and 9c, and he
shall remain subject to paragraph 13 (Non-Solicitation of
2
Customers) and 14 (Non-Solicitation of Employees) and shall not be eligible
for payments under 13b. If Executive's employment is terminated by Company
or Sub for reasons other than Cause, Executive shall be entitled only to
compensation pursuant to the terms of this Agreement up to the time his
employment is terminated and to the benefits payable hereunder including
Paragraphs 9a, 9b, 9c and 13b. Executive shall remain subject to Paragraph
13 (Non-Solicitation of Customers) and 14 (Non-Solicitation of Employees).
Notwithstanding anything in this paragraph 3 to the contrary, paragraph 11
below shall remain in full force and effect beyond any termination of
employment.
4. Compensation: For the period beginning on the Closing and ending on
December 31, 1999 ("Transition Period"), Executive shall be paid a salary (the
"base salary") of three hundred fifteen thousand ($315,000) dollars, subject to
deductions for social security, payroll and all other legally required or
authorized deductions and withholdings ("Withholding"). Beginning on January 1,
2000, the Sub or Company shall pay to Executive a base salary at an annual rate
of two hundred thousand ($200,000) dollars, subject to Withholding. Such base
salary shall be reviewed no less frequently than annually. Base salary shall be
paid at the same time and on the same basis as base salary is paid to other
Dialogic executives.
5. Dialogic Bonus Programs, Benefits, Expenses; Vacations: (a) During the
Transition Period, Executive shall continue to be eligible for those Dialogic
benefits that are in effect as of the date of the Closing and shall continue to
be eligible for all bonuses with respect to bonus programs in which he is
participating as of the Closing ("Bonuses"); provided, however that the Company
may make reasonable adjustments to any metrics with respect to the Bonuses after
consultation with Executive. All Bonuses relating to periods prior to the
Transition Period which have been accrued shall be paid in accordance with the
terms of the Bonuses. (b) With respect to reimbursement of expenses and
vacations, during the Transition Period the provisions in Executive's Employment
Agreement shall continue to apply so long as Executive is employed by Sub or
Company.
6. Perquisites: Except as provided below, for the period beginning on the
Closing and ending on June 30, 2000, Executive's executive perquisites, as set
forth on Schedule A, attached hereto and made a part hereof, shall be continued
and shall thereafter cease. Executive shall keep his Dialogic provided leased
automobile until December 31, 1999, at which point he may assume the lease.
7. Employee Bonus ("EB" ) and Employee Cash Bonus Plan ("ECBP"): Following
the Transition Period, Executive shall be eligible for an Employee Bonus (EB)
and Employee Cash Bonus (ECB), paid pursuant to the terms and conditions of the
Company's EB and ECBP. For purposes of calculating Executive's EB, Executive's
target EB shall be one hundred twelve thousand five hundred dollars ($112,500).
8. Stock Options: As soon as practicable following the Closing, Executive
will be recommended to receive a grant of 55,000 Company stock options which
shall vest on the first, second, third, fourth and fifth anniversary of the date
of grant as follows below and shall be subject to the terms and conditions of
the Intel stock option plans:
First Anniversary 5,000
Second Anniversary 5,000
Third Anniversary 10,000
Fourth Anniversary 15,000
Fifth Anniversary 20,000
9. Other Payments and Benefits: In addition to the foregoing, Executive
shall be entitled to the following:
a. Acceleration of vesting of all outstanding unvested Restricted
Stock Awards and Dialogic stock options as of the Closing as set forth in
Dialogic's current business records;
b. A lump sum cash payment equal to three hundred fifteen thousand
($315,000) dollars plus one year's Dialogic bonus calculated as set forth
in Executive's Employment Agreement. Such lump sum cash payment will be
made to Executive within 30 days following Closing.
2
3
c. A lump sum cash payment equal to $40,481 payable within 30 days
following Closing, for fringe benefits which would have been payable under
Executive's Employment Agreement.
d. A performance bonus (the "Performance Bonus") in a maximum amount
of three hundred fifty thousand ($350,000) dollars for each of the
Company's 2000 and 2001 fiscal years, payable no later than March 15 of the
year following the year to which the Performance Bonus relates and
contingent on Executive's continued employment with the Sub or Company on
December 31 of the year to which the Performance Bonus relates. The metrics
upon which the Performance Bonus shall be based are set forth on Schedule
B.
10. Disability Benefits: If Executive becomes disabled during the
Transition Period, the Sub or Company will provide Executive with a monthly
disability benefit equal to the after-tax equivalent of one-twelfth of
Executive's base salary at Closing for a period of up to a maximum of twenty
four months. Following the Transition Period, Executive agrees to enroll in the
Company's voluntary short-term disability plan and long-term disability plan. In
the event of Executive's disability, following the Transition Period, the Sub or
Company will make up any difference (for a period not to exceed twenty four
months following Closing) on an after-tax basis, between the Executive's then
monthly base salary and the actual benefit under the Company's disability plans.
11. Gross-Up Provision: If any portion of any payments received by
Executive from the Sub or Company (whether payable pursuant to the terms of this
Agreement or any other plan, agreement or arrangement with Dialogic or any other
person whose actions result in a change of control of Dialogic) shall be subject
to tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
or any successor statutory provision, the Sub or Company shall pay to Executive
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, Executive is in the same
after tax position that he would have been if such Section 4999 or any successor
statutory provision did not apply to payments made hereunder. The provisions of
this paragraph shall survive the term of this Agreement and Executive's
employment with Sub or the Company.
12. Confidential Information and Inventions Agreement: Executive agrees to
enter into the Company's standard employee confidentiality agreement and abide
by the terms and conditions thereof.
13. Non-Solicitation of Customers:
(a) In the event that Executive's employment with the Sub or Company
is terminated for any reason, then for a period not to exceed 2 years from
Closing, Executive, without express prior written approval of Company, will
not (i) solicit any customers of the Sub for or on behalf of any competing
businesses of the Sub or (ii) persuade or attempt to persuade any customer,
supplier, contractor or any other person or party to cease doing business
with the Sub or to reduce the amount of business it does with the Sub.
(b) If Executive's employment is terminated by the Sub or Company for
reasons other than Cause, Company and Sub shall negotiate in good faith
with Executive on a subsequent agreement whereby Executive is released from
the restriction set forth herein. For the period that such restriction
continues (not to exceed two years from Closing) Executive shall be paid a
monthly amount equal to $42,083. In no event shall such payments continue
beyond the date that is two years following Closing.
(c) If Executive's employment is terminated by him voluntarily or by
Company or Sub for Cause, neither Sub nor Company shall be obligated to
make any payments under this paragraph.
14. Non-Solicitation of Employees: In the event that Executive's
employment with the Sub or Company is terminated for any reason, then for a
period of one (1) year after such termination, Executive will not knowingly
solicit or induce any person who is an employee of the Company or Sub to
terminate any relationship such person may have with the Company or Sub, nor
shall Executive during such period directly or indirectly offer employment to
such employee.
3
4
15. Arbitration: Any disagreement, dispute, controversy or claim arising
out of the terms of this Agreement shall be arbitrated in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
16. Modification: This Agreement may only be modified or amended by a
supplemental written agreement signed by Executive, Sub and the Company.
17. Integration: This instrument constitutes the entire agreement of the
parties hereto respecting the subject matter hereof. Any prior agreements,
promises, negotiations or representations concerning its subject matter which
are not expressly set forth in this Agreement are of no force or effect. Except
insofar as necessary to effect the intent of Paragraph 5 above, Executive's
Employment Agreement shall be deemed null and void so long as the Closing
occurs.
18. Notices: Any and all notices or other communications by or between the
parties required or permitted by this Agreement shall be in writing and may be
personally served or sent by United States registered or certified mail with
first-class postage prepaid, and properly addressed. For purposes hereof, mail
will be deemed properly addressed to the parties identified below and sent to
the addresses set forth on the signature page hereof:
If to Executive:
Xxxxxx Xxxx
If to Company
Attention: General Counsel, Intel Corporation
If to Sub
Attention: Xxxx Xxxxx, Intel Corporation
Any party may change its address for this purpose by giving a written notice
thereof as herein provided.
19. Severability: Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. However should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
20. Interpretation: Executive and the Company agree that this Agreement
shall be interpreted in accordance with the laws of the State of New Jersey.
21. Contingent Agreement: This Agreement is contingent on the consummation
of the Merger.
4
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
INTEL CORPORATION
Date: May 31, 1999 By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------- --------------------------------------------------------
Its: Treasurer
Address: 0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX
DIALOGIC CORPORATION,
a New Jersey Corporation
Date: May 31, 1999 By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------------- --------------------------------------------------------
Its: Vice President
Address: 0000 Xxxxx Xxx
Xxxxxxxxxx, XX 00000
EXECUTIVE:
Date: May 31, 1999 /s/ Xxxxxx Xxxx
-------------------------------------------- --------------------------------------------------------
Xx. Xxxxxx X. Xxxx
Address: 00 Xxxxxxxx Xx.
Xxxxxxxx Xxxxx, XX 00000
5
6
SCHEDULE A
Executive's Perquisites
- Company provided leased auto
A-1
7
SCHEDULE B
Metrics to be mutually agreed upon by the parties
B-1
