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EXHIBIT 4.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this 29th
day of October, 1997, by and between DSC Marketing Services, Inc. (the
"Company"), a Delaware corporation and a wholly owned subsidiary of DSC
Communications Corporation, a Delaware corporation ("DSC"), and Xxxxx X. Xxxxx
("Employee").
RECITALS
WHEREAS, the Company desires to employ Employee and Employee desires to accept
such employment, on the terms and conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE 1
EMPLOYMENT, TERM, AND DUTIES
1.1 Employment. Subject to the terms of this Agreement, the Company
hereby employs Employee and Employee hereby accepts employment.
1.2 Term. The employment term (the "Employment Term") shall commence on
the Closing Date, as that term is defined in the Agreement and Plan of Merger
among DSC, CI Acquisition Company, a Delaware corporation and a wholly owned
subsidiary of DSC, and CELCORE, Inc., a Delaware corporation ("CELCORE"), dated
as of the date hereof (the "Acquisition Agreement"), and shall be for a term of
two (2) years following the last day of the month in which the Closing Date
occurs, unless terminated earlier as provided in Section 3.1 hereof or unless
mutually extended in writing by both parties within ninety (90) days prior to
the expiration of such term.
1.3 Duties. Employee is employed in a managerial capacity by the Company
with the title and position of Vice President-Sales and shall have such duties,
power, and responsibilities as (i) are customary for an individual with such
title and position within the DSC organization and in accordance with DSC
policies, practices and procedures; and (ii) may reasonably be assigned to him
by the DSC Board of Directors consistent with his position.
1.4 Employee Covenants. Employee agrees to work diligently and with his
best efforts to promote the business of the Company. Employee agrees to devote
all of his business time, skill and attention to the performance of Employee's
duties hereunder and to the business interests of the Company.
ARTICLE 2
COMPENSATION
2.1 Compensation. For all services which Employee will render in any
capacity pursuant to this Agreement during the Employment Term, the Company
agrees to pay Employee (or cause to be paid to Employee), in equal bi-weekly
installments, a bi-weekly salary in the amount of five thousand eight hundred
sixteen and 35/100 Dollars ($5,816.35).
2.2 Cash Bonus. Subject to Article 3 hereof, during the Employment Term,
a cash bonus award payable to the Employee in the amount of $150,000 is payable
in two installments as follows: $50,000 on the Closing Date and $100,000 on
the second anniversary of the Closing Date (the second such installment is
referred to herein as the "Final Retention Award Payment").
2.3 The Celcore Option. Reference is made to (i) those certain Stock
Option Agreements under 1995 Stock Option Plan (the "1995 Plan"), dated as of
February 26, 1996, May 31, 1996 and June 6, 1996 by and between CELCORE and the
Employee, as amended by that certain Amendment to Stock Option Agreement under
1995 Stock Option Plan dated January 30, 1997, and as was amended by that
certain Amendment to Stock Option Agreement under 1995 Stock Option
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Plan dated as of the date hereof (collectively referred to herein as the "1995
Option Agreement") and (ii) that certain Stock Incentive Agreement under 1996
Stock Incentive Plan, dated as of July 31, 1997 by and between CELCORE and the
Employee (the "1996 Option Agreement," and collectively with the 1995 Option
Agreement, the "Option Agreement"). Capitalized terms used in this Section 2.3
and not otherwise defined in this Agreement shall have the same meaning as used
in the Option Agreement.
Except as provided in Section 2.7 hereof, Employee agrees that portion of the
options subject to the Option Agreement that has not yet vested under the terms
of the Option Agreement immediately prior to the Effective Time (as defined in
the Acquisition Agreement) is hereby forfeited, terminated and canceled (the
"Canceled Option"). For purposes of determining the Canceled Option, Employee
agrees that the options subject to the Option Agreement shall be deemed
forfeited, terminated and canceled in the inverse order from date of grant of
such options. In consideration thereof, on the date of the Effective Time, DSC
shall execute and deliver to Employee a promissory note (the "Note") in the
form attached hereto as Exhibit A. The principal balance of the Note shall be
determined by (1) in respect of each Canceled Option, calculating the product
of (i) the difference of (A) the Average Trading Price (as defined in the
Acquisition Agreement), minus (B) the quotient of the exercise price of such
Canceled Option, divided by the Exchange Ratio (as defined in the Acquisition
Agreement), times (ii) the number of shares covered by such Canceled Option,
times (iii) the Exchange Ratio, and (2) aggregating the total of all amounts
computed for each Canceled Option in clause (1) above. The principal balance
of the Note shall be payable in two equal installments on the first and second
anniversary of the Effective Time, each of which shall be an amount equal to
one-half of the aggregate original principal balance of the Note. Payment of
any principal installment due under the Note shall otherwise be on such
conditions and at such times as provided in the Note.
Employee agrees that the terms of the Acquisition Agreement and this Agreement
shall not give rise to an event of Constructive Discharge for purposes of the
Option Agreement (without regard to the amendment of such Option Agreement
dated the date hereof). Except as otherwise provided in this Agreement and the
amendment to the Option Agreement dated the date hereof, options subject to the
Option Agreement shall continue to be governed by the terms thereof.
2.4 Benefits. Commencing January 1, 1998, during the Employment Term, the
Employee shall be entitled to participate in employee benefit plans or
arrangements made generally available by DSC or its affiliates to its
executives at a similar level within the DSC organization subject to and on a
basis consistent with the terms, conditions and overall administration of such
plan or arrangement as from time to time in effect. Prior to January 1, 1998,
the Employee shall be entitled to participate in employee benefit plans or
arrangements of CELCORE in existence on the Closing Date.
2.5 Increases in Compensation. Nothing in this Agreement shall prevent
the Company, at its option, from increasing prospectively or retroactively any
compensation or other benefits payable to Employee. Any such increase which is
approved by the Company shall be effective without necessity of any additional
written instrument.
2.6 Bonus. During the Employment Term and beginning with January 1, 1998,
Employee will be entitled to participate in either the 1997 Compensation
Program for DSC Communications Corporation and Subsidiaries, Sales
Representatives of DSC or the 1997 Sales Commission Compensation Program of
CELCORE, as deemed appropriate by the Company. The annual incentive award
target shall be determined in accordance with the terms of the plan in which
the Employee participates. Qualification for and receipt of such annual
incentive award is subject to the terms and conditions of the plan. In respect
of periods prior to January 1, 1998, Employee will be entitled to continue to
participate in the CELCORE's existing cash bonus plan on the same terms and
conditions of such plan as it exists on the date hereof.
2.7 Stock Options. (a) During the Employment Term, Employee is entitled
to participate in the DSC Communications Corporation 1993 Employee Stock Option
and Securities Award Plan (the "DSC Plan") and any awards will be governed by
the provisions of the DSC Plan. Employee will be awarded a non-qualified stock
option to purchase 20,000 shares of the common stock of DSC, the vesting of
which option will be 50% per year at the end of the second and third years from
the award date. The award date, subject to the terms and conditions of the DSC
Plan, will be the date of the next meeting of the Compensation Committee of the
DSC Board of Directors. The price of said option will be determined by the
NASDAQ closing market price as published by the Southwest Edition of the Wall
Street Journal on the award date.
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(b) Employee shall be deemed to have been granted at the Effective Time an
option (the "Retainage Option") pursuant to the 1995 Plan to purchase that
number of shares of common stock of DSC equal to the product of the number of
shares of common stock of CELCORE covered by the Canceled Option multiplied by
the Exchange Ratio. The Retainage Option shall be evidenced by an option
agreement, which option agreement shall comply with and be subject to the terms
of the 1995 Plan and, except as provided in this paragraph below, shall be
under the same terms and conditions of the 1995 Option Agreement. The
Retainage Option shall be granted at an exercise price equal to the closing
sale price of DSC common stock on the NASDAQ National Market on the date of
grant. On each of the first and second anniversary date of the date of grant
of the Retainage Option, one-half of the shares of common stock of DSC covered
by the Retainage Option shall be exercisable. All other provisions of the
Retainage Option shall be subject to the terms and conditions of the 1995 Plan.
2.8 Expense Reimbursement. During the Employment Term, Employee is
authorized to incur reasonable business expenses in promoting the legitimate
business of the Company, including expenditures for entertainment and travel,
provided that such expenses are incurred in accordance with DSC's Corporate
Travel and Entertainment Policy. The Company shall reimburse Employee from
time to time for all such reasonable expenses incurred during the Employment
Term by Employee in accordance with such policy.
2.9 Deduction and Withholding. All compensation and other benefits
payable to or on behalf of the Employee pursuant to this Agreement shall be
subject to such deductions and withholding as may be agreed to by the Employee
or required by applicable law.
2.10 Limitation on Certain Payments. Notwithstanding any other provision
of this Agreement:
(a) In the event the Company (or its successor) determines, based
upon the advice of the independent public accountants for the Company, that
part or all of the consideration, compensation or benefits to be paid to
Employee under this Agreement constitute "parachute payments" under Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Parachute
Amount"), then, the amounts constituting "parachute payments" which would
otherwise be payable to or for the benefit of Employee shall be reduced to the
extent necessary so that the Parachute Amount is equal to 2.99 times the
Employee's "base amount," as defined in Section 280G(b)(3) of the Code (the
"Reduced Amount"), provided that such amounts shall not be so reduced if the
Employee determines, based upon the advice of an independent nationally
recognized public accounting firm (which may, but need not be the independent
public accountants of the Company), that without such reduction Employee would
be entitled to receive and retain, on a net after tax basis (including, without
limitation, any excise taxes payable under Section 4999 of the Code), an amount
which is greater than the amount, on a net after tax basis, that the Employee
would be entitled to retain upon his receipt of the Reduced Amount.
(b) If the determination made pursuant to Section 2.10(a) results
in a reduction of the payments that would otherwise be paid to Employee except
for the application of Section 2.10(a), Employee may then elect, in his sole
discretion, which and how much of any particular entitlement shall be
eliminated or reduced and shall advise the Company in writing of his election
within ten days of the determination of the reduction in payments. If no such
election is made by Employee within such ten-day period, the Company may elect
which and how much of any entitlement shall be eliminated or reduced and shall
notify Employee promptly of such election. Within ten days following such
determination and the elections hereunder, the Company shall pay to or
distribute to or for the benefit of Employee such amounts as are then due to
Employee under this Agreement and shall promptly pay to or distribute to or for
the benefit of Employee in the future such amounts as become due to Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of a determination hereunder, it is possible that
payments will be made by the Company which should not have been made under
Section 2.10(a) ("Overpayment") or that additional payments which are not made
by the Company pursuant to Section 2.10(a) should have been made
("Underpayment"). In the event that there is a final determination by the
Internal Revenue Service, or a final determination by a court of competent
jurisdiction, that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to Employee which Employee shall repay to
the Company together with interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code. In the event that there is a final
determination by the Internal Revenue Service, a final determination by a court
of competent jurisdiction or a change in the provisions of the Code or
regulations pursuant to which an Underpayment arises under this Agreement,
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any such Underpayment shall be promptly paid by the Company to or for the
benefit of Employee, together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code.
ARTICLE 3
TERMINATION AND SEVERANCE
3.1 Termination. The Company or the Employee may terminate the Employee's
employment hereunder at anytime (a) upon thirty days written notice, (b) if
Employee suffers any disability or incapacity if such so impairs Employee's
mental or physical health that it prevents him from performing the essential
functions of his job with or without a reasonable accommodation for a period of
six consecutive months, or (c) if the Employee dies. A termination of this
Agreement under clauses (b) or (c) shall be referred to as a termination from
"Death or Disability."
3.2 Termination Without "Cause," for "Good Reason" or for "Death or
Disability".
(a) Except as provided in Section 3.2(c), in the event the Employee's
employment is terminated by the Company without "Cause" or by the Employee for
"Good Reason," (i) the Company shall continue to pay to the Employee base
salary for a period of 6 months; and (ii) the Employee shall be entitled to 6
months of continued coverage under the health and welfare benefit plans in
which Employee was eligible to participate immediately prior to the date of
termination on the same basis as such benefits were made available immediately
prior to the date of termination.
(b) Except as provided in Section 3.2(c), in the event the Employee's
employment is terminated by the Company without "Cause" or by the Employee for
"Good Reason," on or before the beginning of the pay cycle immediately
following the termination of employment, the Company shall pay a lump sum
amount in cash in an amount equal to the Pro-rata Retention Award.
(c) In the event the Employee's employment is terminated by the Company
as a result of Death or Disability, the Employee or his estate shall be (i)
eligible for such benefits as may be provided under benefit plans in which
Employee is participating at the time of his Death or Disability and such
other benefits as DSC may generally provide to other employees at the same
level within DSC's organizational structure under DSC's then current practices,
policies and procedures and (ii) paid the Pro-rata Retention Award.
3.3 Termination for Cause; without Good Reason. In the event the
Employee's employment is terminated by the Company for Cause or by the Employee
without Good Reason, the Employee shall be entitled to receive any earned, but
unpaid, salary under Section 2.1, any bonuses under Section 2.6 earned in prior
years but not paid prior to the termination and any bonus under Section 2.2
earned in prior years but not paid prior to termination (it being understood
and agreed that the Employee shall not be entitled to receive the Final
Retention Award Payment unless the Employee is employed by the Company on the
second anniversary of the Closing Date).
3.4 Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Cause" shall mean the (i) willful and continued failure of the Employee to
substantially perform any of his material duties hereunder or a breach by the
Employee of the Noncompetition Agreement, which is not cured within 30 days
following written notice thereof; (ii) if Employee commits any fraud,
misappropriation, embezzlement, or similar act, whether or not a punishable
criminal offense, or willfully engages in any conduct that is materially
injurious to the Company; (iii) if Employee is convicted of or enters a plea of
nolo contendere to a charge of any felony; (iv) if Employee breaches any
material provision of this Agreement, the Employee Patent, Copyright and
Proprietary Information Agreement, or any similar agreement with the Company to
which Employee is a party; (v) Employee fails to comply with any oral or
written direction of the DSC Board of Directors; or (vi) Employee breaches any
of the Company's Standards of Business Ethics or any of the Company's other
policies, practices and procedures; provided, upon the occurrence of an event
described in clauses (v) or (vi), the Company shall provide the Employee with
written notice of such event and the Employee will have thirty (30) days to
cure such failure or breach unless such failure or breach is not capable of
being cured during such thirty day period or such failure or breach is
materially injurious to the Company.
(b) "Good Reason" shall mean (i) a material modification to any of the
Employee's responsibilities, position or the scope of those responsibilities
that are inconsistent with the responsibilities normally assigned to someone
having a similar title; (ii) a change of the office to which the Employee is
assigned as of the date hereof if the new office is located outside of
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a 50-mile radius from the existing office; provided, however, that no
resignation shall be considered a resignation due to Good Reason if the
condition is cured within thirty (30) days by the Company after the date that
the Employee provides the Board of Directors of the Company with written notice
describing in sufficient detail the Employee's belief that such an event has
occurred and defers resigning until the expiration of the cure period; or (iii)
a material breach of the terms of this Agreement by the Company and such breach
is not cured by the Company within thirty (30) days after the Employee provides
written notice to the Board of Directors of the Company of such breach.
(c) "Pro-rata Retention Award" shall mean the amount determined by
multiplying the Employee's Final Retention Award Payment by a fraction, the
numerator of which is the number of days elapsed from the Closing Date to the
date of termination and the denominator of which is 730.
3.5 Accrued Benefits. Notwithstanding anything contained in this Article
3 to the contrary, upon termination of the Employee's employment with the
Company, the Employee shall be entitled to receive all benefits due to the
Employee in accordance with the terms and conditions of the plans and programs
of DSC and its affiliates (excluding any other provision relating to
severance).
ARTICLE 4
NONCOMPETITION AGREEMENT
4.1 Noncompetition Agreement. In order to protect the goodwill and
business interests of the Company, Employee shall sign and be bound by the
terms of the Company's Employee Patent, Copyright & Proprietary Information
Agreement attached hereto as Exhibit B (the "Noncompetition Agreement").
ARTICLE 5
MISCELLANEOUS
5.1 Notice. Any notice to be given hereunder by either party to the other
shall be in writing and may be effected by personal delivery in writing or
certified mail, return receipt requested. Notice to Employee shall be
sufficient if made or addressed to Employee's personal residence address as
reflected in the records of the Company, and notice to the Company shall be
sufficient if made or addressed to the Company's principal office in Plano,
Texas. Each party may change the address to which notices shall be sent by
giving notice of such change in accordance with the provisions of this section.
5.2 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to the rules of
conflicts of law thereof.
5.3 Construction. Except where the context requires otherwise, words in
the singular shall include the plural. The failure to capitalize or the
erroneous capitalization in any provision of this Agreement of any word or term
shall not affect the definition of such word.
5.4 Headings. The captions used herein have been inserted for
administrative convenience only and are not to be construed in interpreting
this Agreement.
5.5 Severability. If any provision of this Agreement shall be declared
illegal, unenforceable, ineffective or void, the remainder of the Agreement
shall not be affected thereby and shall remain in full force and effect.
5.6 Waiver. No term or condition of this Agreement shall be deemed to
have been waived nor shall there be any estoppel to enforce any of the terms or
provisions of this Agreement except by written instrument of the party charged
with such waiver or estoppel. Further, it is agreed that no waiver at any time
of any of the terms or provisions of this Agreement shall be construed as a
waiver of any of the other terms or provisions of this Agreement and a waiver
at any time of any of the terms or provisions of this Agreement shall not be
construed as a waiver of the same terms or provisions at any subsequent time.
No amendment or modification of this Agreement shall be deemed effective unless
and until executed in writing by all of the parties hereto.
5.7 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the Employee, if he is the
prevailing party, shall be entitled to reimbursement by the Company of
reasonable attorneys'
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fees, costs and necessary disbursements incurred in connection with such action
in addition to any other relief to which such party may be entitled.
5.8 Assignment. This Agreement may be assigned by the Company without the
consent of Employee. Employee's rights hereunder shall be nonassignable and
his duties hereunder shall be non-delegable.
5.9 Advances. Should this Agreement or Employee's employment hereunder
terminate with Employee having been advanced moneys or property by the Company,
whether by draw or otherwise, such advances shall immediately become due and
payable at the time of termination, and the Company shall be entitled to offset
any moneys due and owing to Employee against such advances or indebtedness.
5.10 Entire Agreement. This Agreement, together with the Option Agreement
described in Section 2.3 above, the Noncompetition Agreement described in
Section 4.1 above and DSC's Special Celcore Incentive Plan, contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior written or oral agreement with respect to such subject
matter. This Agreement may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
5.11 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need contain the signature of only one party but
all of which together shall constitute one and the same instrument.
5.12 Survival. The rights and obligations of the parties shall survive the
Employment Term to the extent that any performance is required under this
Agreement after the expiration or termination of such term.
5.13 No Mitigation; Offset on Severance. The Employee shall have no
obligation to mitigate the amount of any severance or other payments due under
the terms of this Agreement in the event of his termination of employment with
the Company. However, in the event the Employee becomes entitled to the
severance benefits and payments provided under the terms of Section 3.2(a)
hereof and commences new employment within six months of his termination of
employment with the Company, the Company shall be relieved of its obligation to
pay or provide the remainder of severance payments and benefits due under
Section 3.2(a) hereof as of the date the Employee commences such new
employment. No other amounts due under the terms of this Agreement or any
other plan, program, or arrangement with the Company shall be subject to the
offset right provided in the immediately preceding sentence.
5.14 Parachute Shareholder Approval. The effectiveness of this Agreement
is contingent upon, and this Agreement shall only become effective following,
the written approval of the terms of this Agreement by the holders of record of
stock of CELCORE representing more than seventy-five percent (75%) of the
voting power of all outstanding stock of CELCORE as of immediately prior to the
Effective Time (determined without regard to any stock actually or
constructively owned by the Employee, by persons related to the Employee, and
by any other employees and independent contractors of CELCORE who will be
deemed to have received compensation in connection with the merger contemplated
by the Acquisition Agreement which, absent satisfying certain stockholder
approval requirements, would constitute "parachute payments" for purposes of
Section 280G of the Internal Revenue Code of 1986).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
DSC MARKETING SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
XXXXXX X. XXXXX
Vice President
By: /s/ Xxxxx X. Xxxxx
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XXXXX X. XXXXX, Employee
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