Document:

Exhibit 10.37

 

SEVERANCE PROTECTION AGREEMENT

 

                             THIS
AGREEMENT made as of the 1st day of October 2007, by and between NMS
Communications Corporation (the “Company”) and Todd Donahue (the “Executive”).

 

                             WHEREAS,
the Board of Directors of the Company (the “Board”) recognizes that the
possibility of a Change in Control (as hereinafter defined) exists and that the
threat or the occurrence of a Change in Control may result in significant
distraction of the Company’s key management personnel because of the uncertainties
inherent in such a situation;

 

                             WHEREAS,
the Compensation Committee of the Board has determined that it is essential and
in the best interest of the Company and its stockholders for the Company to
retain the services of the Executive in the event of a threat or occurrence of
a Change in Control and to ensure the Executive’s continued dedication and
efforts in such event without undue concern for the Executive’s personal
financial and employment security; and

 

                             WHEREAS,
in order to induce the Executive to remain in the employ of the Company,
particularly in the event of a threat or the occurrence of a Change in Control,
the Company desires to enter into this Agreement with the Executive to provide
the Executive with certain benefits in the event the Executive’s employment is
terminated as a result of, or in connection with, a Change in Control (as
hereinafter defined).

 

                             NOW,
THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:

 

                             1.             Term of Agreement.  This Agreement shall commence as of the date
first written above, and shall continue in effect until December 31, 2007
(the “Term”); provided, however,
that on December 31, 2007, and on each December 31 thereafter, the
Term shall automatically be extended for one (1) year unless either the
Executive or the Company shall have given written notice to the other at least
sixty (60) days prior thereto that the Term shall not be so extended; provided, further, however, that following the occurrence of
a Change in Control, the Term shall not expire prior to the expiration of
eighteen (18) months after such occurrence.

 

                             2.             Termination of Employment.  If, during the Term, the Executive’s
employment with the Company and with any Affiliates shall be terminated within
eighteen (18) months following a Change in Control, the Executive shall be
entitled to the following compensation and benefits:

 

                                                (a)           If the Executive’s employment with
the Company shall be terminated (1) by the Company for Cause or Disability,
(2) by reason of the Executive’s death, or (3) by the Executive other
than for Good Reason, the Company shall pay to the Executive his Accrued
Compensation. The Executive’s entitlement to any other compensation or benefits
shall be determined in accordance with the Company’s employee benefits plans
and other applicable programs and practices then in effect.

 

 

                                                (b)           If the Executive’s employment with
the Company shall be terminated for any reason other than as specified in Section 2(a),
the Executive shall be entitled to the following:

 

                                                                (1)           the Company shall pay the Executive
all Accrued Compensation;

 

                                                                (2)           the Company shall pay the Executive
as severance pay and in lieu of any further compensation for periods subsequent
to the Termination Date, an amount equal to the sum of (i) the Executive’s
Base Amount and (ii) the Executive’s Bonus Amount.

 

                                                                (3)           for twelve (12) months after the
Termination Date, the Company shall at its expense continue on behalf of the
Executive and his dependents and beneficiaries the life insurance, disability,
medical, dental and hospitalization coverages and benefits provided to the
Executive immediately prior to the Change in Control or, if greater, the
coverages and benefits provided at any time thereafter.  The coverages and benefits (including
deductibles and costs) provided in this Section 2(b)(3) during the
Continuation Period shall be no less favorable to the Executive and his
dependents and beneficiaries, than the most favorable of such coverages and
benefits referred to above.  The
Company’s obligation hereunder with respect to the foregoing coverages and
benefits shall be reduced to the extent that the Executive obtains any such
coverages and benefits pursuant to a subsequent employer’s benefit plans, in
which case the Company may reduce any of the coverages or benefits it is
required to provide the Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less favorable to the
Executive than the coverages and benefits required to be provided
hereunder.  This Section 2(b)(3) shall
not be interpreted so as to limit any benefits to which the Executive, his
dependents or beneficiaries may be entitled under any of the Company’s employee
benefit plans, programs or practices following the Executive’s termination of
employment, including without limitation, retiree medical and life insurance
benefits;

 

                                                (c)           If the Executive’s employment is terminated by the Company
without Cause prior to the date of a Change in Control but the Executive
reasonably demonstrates that such termination (A) was at the request of a
third party who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control (a “Third Party”) and who effectuates a Change in
Control or (B) otherwise arose in connection with, or in anticipation of,
a Change in Control which has been threatened or proposed and which actually
occurs, such termination shall be deemed to have occurred after a Change in
Control, provided a Change in Control shall actually have occurred.

 

 

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                            (d) Additional
Limitation.

 

                                                (1)           Anything
in this Agreement to the contrary notwithstanding, in the event that any
compensation, payment or distribution by the Company or an Affiliate to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
“Severance Payments”), would be subject to the excise tax imposed by Section 4999
of the Code, the following provisions shall apply:

 

                     (A)          If
the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes payable by
the Executive on the amount of the Severance Payments which are in excess of
the Threshold Amount, are greater than or equal to the Threshold Amount, the
Executive shall be entitled to the full benefits payable under this Agreement.

 

                     (B)           If
the Threshold Amount is less than (x) the Severance Payments, but greater
than (y) the Severance Payments reduced by the sum of (1) the Excise
Tax and (2) the total of the Federal, state, and local income and
employment taxes on the amount of the Severance Payments which are in excess of
the Threshold Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the maximum
Severance Payments shall not exceed the Threshold Amount.  To the extent that there is more than one
method of reducing the payments to bring them within the Threshold Amount, the
Executive shall determine which method shall be followed; provided that if the
Executive fails to make such determination within 45 days after the Company has
sent the Executive written notice of the need for such reduction, the Company
may determine the amount of such reduction in its sole discretion.

 

                                                (2)           For the purposes of this Section 2(d),
“Threshold Amount” shall mean three times the Executive’s “base amount” within
the meaning of Section 280G(b)(3) of the Code and the regulations
promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the
excise tax imposed by Section 4999 of the Code, and any interest or
penalties incurred by the Executive with respect to such excise tax.

 

                                                (3)           The determination as to which of the
alternative provisions of Section 2(d)(1) shall apply to the
Executive shall be made by a nationally recognized accounting firm selected by
the Company (the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Company or the Executive.  For purposes of determining which of the
alternative provisions of Section 2(d)(1) shall apply, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation applicable to individuals for the calendar year in
which the determination is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes.  Any determination by
the Accounting Firm shall be binding upon the Company and the Executive.

 

 

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                                                (e)           The Executive shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no such payment shall be offset or reduced by
the amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 2(b)(3).

 

                                                (f)            The severance pay and benefits
provided for in this Section 2 shall be in lieu of any other severance pay
to which the Executive may be entitled under the Company’s Severance Procedure
or any other plan, agreement or arrangement of the Company or any Affiliate.

 

                                                (g)           The amounts provided for in Sections
2(a) and 2(b)(1) and (2) shall be paid in a single lum sum cash
payment within thirty (30) days after the Executive Termination Date (or
earlier, if required by applicable law).

 

                                                (h)           Anything in this Agreement to the
contrary notwithstanding, if at the time of the Executive’s separation from
service within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), the Executive is considered a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if
any payment or benefit that the Executive becomes entitled to under this
Agreement is considered deferred compensation subject to interest, penalties
and additional tax imposed pursuant to Section 409A(a) of the Code as
a result of the application of Section 409A(a)(2)(B)(i) of the Code,
then no such payment shall be payable or benefit shall be provided prior to the
date that is the earlier of (A) six months and one day after the Executive’s
separation from service, or (B) the Executive’s death, and the initial
payment or provision of benefit shall include a catch-up amount covering
amounts that would otherwise have been paid during the first six-month period
but for the application of this Section. 
The parties intend that this Agreement will be administered in
accordance with Section 409A of the Code. 
The parties agree that this Agreement may be amended, as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A
of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.

 

                             3.             Notice of Termination.  Following a Change in Control, any intended
termination of the Executive’s employment by the Company shall be communicated
by a Notice of Termination from the Company to the Executive, and any intended
termination of the Executive’s employment by the Executive for Good Reason
shall be communicated by a Notice of Termination from the Executive to the
Company.

 

                             4.             Fees
and Expenses.  The
Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by the Executive as they become due as
a result of (a) the termination of the Executive’s employment by the
Company or by the Executive for Good Reason (including all such fees and
expenses, if any, incurred in contesting, defending or disputing the basis for
any such termination of employment), (b) the 

 

 

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Executive’s hearing
before the Board as contemplated in Section 15.5 of this Agreement or (c) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under
which the Executive is or may be entitled to receive benefits.

 

                             5.             Transfer
of Employment.  Notwithstanding any
other provision herein to the contrary, the Company shall cease to have any
further obligation or liability to the Executive under this Agreement if (a) the
Executive’s employment with the Company terminates as a result of the transfer
of his employment to any Affiliate, (b) this Agreement is assigned to such
other Affiliate, and (c) such other Affiliate expressly assumes and agrees
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no assignment had taken place.  Any Affiliate to which this Agreement is so
assigned shall be treated as the “Company” for all purposes of this Agreement
on or after the date as of which such assignment to the Affiliate, and the
Affiliate’s assumption and agreement to so perform this Agreement, becomes
effective.

 

                            6.             Stock Option Acceleration.  Upon any Change of Control, all stock options
previously granted by Company to Executive which are then unvested shall become
exercisable in full, notwithstanding the vesting schedule applicable to any
such stock options.

 

                             7.             Notice.  For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including any
Notice of Termination) shall be in writing, shall be signed by the Executive if
to the Company or by a duly authorized officer of the Company if to the
Executive, and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other,
provided that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company.  All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.

 

                            8.             Nature of Rights.  The Executive shall have the status of a mere
unsecured creditor of the Company with respect to his right to receive any
payment under this Agreement.  This
Agreement shall constitute a mere promise by the Company to make payments in
the future of the benefits provided for herein. 
It is the intention of the parties hereto that the arrangements
reflected in this Agreement shall be treated as unfunded for tax purposes and,
if it should be determined that Title I of ERISA is applicable to this
Agreement, for purposes of Title I of ERISA. 
Except as provided in Section 2(f), nothing in this Agreement shall
prevent or limit the Executive’s continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any Affiliate and for which the Executive may qualify, nor shall anything
herein limit or reduce such rights as the Executive may have under any other
agreements with the Company or any Affiliate. 
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company or any Affiliate
shall be payable in accordance with such plan or program, except as explicitly modified
by this Agreement.

 

 

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                             9.             Settlement of Claims.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, defense, recoupment, or other right
which the Company may have against the Executive or others.

 

                             10.           Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and the Company.  No waiver by any party hereto at any time of
any breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.  No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are not
expressly set forth in this Agreement.

 

                             11.           Successors; Binding Agreement.

 

                                                (a)           This Agreement shall be binding upon
and shall inure to the benefit of the Company and its Successors and
Assigns.  The Company shall require its
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.

 

                                                (b)           Neither this Agreement nor any right
or interest hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
personal representative.

 

                             12.           Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of The Commonwealth of
Massachusetts without giving effect to the conflict of laws principles
thereof.  Any action brought by any party
to this Agreement shall be brought and maintained in a court of competent
jurisdiction in Middlesex or Suffolk Counties in The Commonwealth of
Massachusetts.

 

                             13.           Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

 

                             14.           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto, with respect to the subject matter hereof.

 

                             15.           Definitions.

 

                                             15.1.        Accrued Compensation.  For purposes of this Agreement, “Accrued
Compensation” shall mean all amounts of compensation for services rendered to
the Company 

 

 

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that have been earned or
accrued through the Termination Date but that have not been paid as of the
Termination Date including (a) base salary, (b) reimbursement for
reasonable and necessary business expenses incurred by the Executive on behalf
of the Company during the period ending on the Termination Date, (c) vacation
pay and (d) bonuses and incentive compensation; provided,
however, that Accrued Compensation shall not include any amounts
described in clause (a) or clause (d) that have been deferred
pursuant to any salary reduction or deferred compensation elections made by the
Executive.

 

                                             15.2.           Affiliate.  For purposes of this Agreement, “Affiliate”
means any entity, directly or indirectly, controlled by, controlling or under
common control with the Company or any corporation or other entity acquiring,
directly or indirectly, all or substantially all the assets and business of the
Company, whether by operation of law or otherwise, including by a Change of
Control hereunder.

 

                                             15.3.           Base Amount.  For purposes of this Agreement, “Base Amount”
shall mean the Executive’s annual base salary at the rate in effect as of the
date of a Change in Control or, if greater, at any time thereafter, determined
without regard to any salary reduction or deferred compensation elections made
by the Executive.

 

                                             15.4.           Bonus Amount.  For purposes of this Agreement, “Bonus
Amount” shall mean the greater of (a) the target annual bonus payable to
the Executive under the Incentive Plan in respect of the fiscal year during
which the Termination Date occurs or (b) the highest annual bonus paid or
payable under the Incentive Plan in respect of any of the three full fiscal
years ended prior to the Termination Date or, if greater, the three (3) full
fiscal years ended prior to the Change in Control.

 

                                             15.5.           Cause.  For purposes of this Agreement, a termination
of employment is for “Cause” if the Executive has been convicted of a felony or
the termination is evidenced by a resolution adopted in good faith by
two-thirds of the Board that the Executive:

 

                                                                (a)           intentionally and continually failed
substantially to perform his reasonably assigned duties with the Company (other
than a failure resulting from the Executive’s incapacity due to physical or
mental illness or from the assignment to the Executive of duties that would
constitute Good Reason) which failure continued for a period of at least thirty
(30) days after a written notice of demand for substantial performance, signed
by a duly authorized officer of the Company, has been delivered to the
Executive specifying the manner in which the Executive has failed substantially
to perform, or

 

                                                                (b)           intentionally engaged in conduct
which is demonstrably and materially injurious to the Company; provided, however, that no termination of the Executive’s
employment shall be for Cause as set forth in this Section 15.5(b) until
(1) there shall have been delivered to the Executive a copy of a written
notice, signed by a duly authorized officer of the Company, setting forth that
the Executive was guilty of the conduct set forth in this Section 15.5(b) and
specifying the particulars thereof in detail, and (2) the Executive shall
have been provided an opportunity to be heard in person by the Board (with the
assistance of the Executive’s counsel if the Executive so desires).

 

 

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                                                                No
act, nor failure to act, on the Executive’s part, shall be considered
“intentional” unless the Executive has acted, or failed to act, with a lack of
good faith and with a lack of reasonable belief that the Executive’s action or
failure to act was in the best interest of the Company.  Notwithstanding anything contained in this
Agreement to the contrary, no failure to perform by the Executive after a
Notice of Termination is given to the Company by the Executive shall constitute
Cause for purposes of this Agreement.

 

                                            15.6.            Change in Control.  A “Change in Control” shall mean the
occurrence during the term of the Agreement of:

 

                                                                (a)           the direct or indirect acquisition by
any person, entity or group acting in concert of more than 35% of the aggregate
voting power of the outstanding securities of the Company having the right to
vote at elections of directors;

 

                                                                (b)           a majority of the board of directors
of the Company ceasing to consist of individuals who are members of such board
on December 19, 1997 (the “Incumbent Board”); provided,
however, that if the election, or nomination for election by the
Company’s shareholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of
this definition, be considered as a member of the Incumbent Board;

 

                                                                (c)           the disposition by the Company of
substantially all its business, other than in connection with a mere change of
place of incorporation or similar mere change in form; or

 

                                                                (d)           a complete liquidation or dissolution
of the Company;

 

provided, however, in determining whether a Change in Control has
occurred, voting securities which are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) a
Company employee benefit plan (or a trust forming a part thereof) maintained (A) by
the Company or (B) by any corporation or other entity of which a majority
of its voting power is owned, directly or indirectly, by the Company (a
“Subsidiary”) or (ii) the Company or its Subsidiaries.

 

                                             15.7.           Company.  For purposes of this Agreement, all
references to the Company shall include its Successors and Assigns.

 

                                             15.8.           Disability.  For purposes of this Agreement, “Disability”
shall mean a physical or mental infirmity which impairs the Executive’s ability
to substantially perform his duties with the Company for six (6) consecutive
months, and within the time period set forth in a Notice of Termination given
to the Executive (which time period shall not be less than thirty (30) days),
the Executive shall not have returned to full-time performance of his duties; provided, however, that if the Company’s long term
disability plan, or any successor plan (the “Disability Plan”), is then in
effect, the Executive shall not be deemed disabled for purposes of this 

 

 

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Agreement unless the
Executive is also eligible for “Total Disability” (as defined in the Disability
Plan) benefits (or similar benefits in the event of a successor plan) under the
Disability Plan.

 

                                             15.9.           Good Reason. (a) 
For purposes of this Agreement, “Good Reason” shall mean the occurrence after a
Change in Control of any of the following events or conditions:

 

                                                                (1)           a change in the Executive’s status,
title, position or responsibilities (including reporting responsibilities)
which represents a material adverse change from his status, title, position or
responsibilities as in effect immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which are inconsistent with his
status, title, position or responsibilities and which represent a material
adverse change thereto; or any removal of the Executive from or failure to
reappoint or reelect him to any of such offices or positions, except in
connection with the termination of his employment for Disability, Cause, as a
result of his death or by the Executive other than for Good Reason;

 

                                                                (2)           a material reduction in the
Executive’s annual base salary below the Base Amount;

 

                                                                (3)           the relocation of the offices of the
Company at which the Executive is principally employed to a location more than
twenty-five (25) miles from the location of such offices immediately prior
to the Change in Control, or the Company’s requiring the Executive to be based
anywhere other than such offices, except to the extent the Executive was not
previously assigned to a principal location and except for required travel on
the Company’s business to an extent substantially consistent with the
Executive’s business travel obligations at the time of the Change in Control;

 

                                                                (4)           the failure by the Company to pay to
the Executive any material portion of the Executive’s current compensation or
to pay to the Executive any material portion of an installment of deferred
compensation under any deferred compensation program of the Company in which
the Executive participated, within seven (7) days of the date such
compensation is due;

 

                                                                (5)           the failure by the Company to (A) continue
in effect (without reduction in benefit level, and/or reward opportunities) any
material compensation or employee benefit plan in which the Executive was
participating immediately prior to the Change in Control, unless a substitute
or replacement plan has been implemented which provides substantially identical
compensation or benefits to the Executive or (B) provide the Executive
with compensation and benefits, in the aggregate, at least equal (in terms of
benefit levels and/or reward opportunities) in all material respects to those
provided for under each other compensation or employee benefit plan, program
and practice in which the Executive was participating immediately prior to the
Change in Control;

 

                                                                (6)           the failure of the Company to obtain
from its Successors or Assigns the express assumption and agreement required
under Section 10 hereof; or

 

 

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                                                                (7)           any purported termination of the
Executive’s employment by the Company which is not effected pursuant to a
Notice of Termination satisfying the terms set forth in the definition of
Notice of Termination (and, if applicable, the terms set forth in the
definition of Cause).

 

                                                                (b)           Any event or condition described in Section 15.9(a)(2) through
(8) which occurs prior to a Change in Control but which the Executive
reasonably demonstrates (A) was at the request of a Third Party or (B) otherwise
arose in connection with, or in anticipation of a Change in Control which has
been threatened or proposed and which actually occurs, shall constitute Good
Reason for purposes of this Agreement notwithstanding that it occurred prior to
a Change in Control.

 

                                             15.10.         Incentive Plan.  For purposes of this Agreement, “Incentive
Plan” shall mean the annual executive incentive plan, maintained by the
Company.

 

                                             15.11.         Notice of Termination.  For purposes of this Agreement, following a
Change in Control, “Notice of Termination” shall mean a written notice of
termination of the Executive’s employment, signed by the Executive if to the
Company or by a duly authorized officer of the Company if to the Executive,
which indicates the specific termination provision in this Agreement, if any,
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.

 

                                             15.12.         Successors and Assigns.  For purposes of this Agreement, “Successors
and Assigns” shall mean, with respect to the Company, a corporation or other
entity acquiring all or substantially all the assets and business of the
Company, as the case may be (including a Change of Control under this
Agreement), whether by operation of law or otherwise.

 

                                             15.13.         Termination Date.  For purposes of this Agreement, “Termination
Date” shall mean (a) in the case of the Executive’s death, his date of
death, (b) if the Executive’s employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period) and (c) if the
Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination for Cause
shall not be less than thirty (30) days, and in the case of a termination for
Good Reason shall not be more than sixty (60) days, from the date such Notice
of Termination is given); provided, however,
that if within thirty (30) days after any Notice of Termination is given the
party receiving such Notice of Termination in good faith notifies the other
party that a dispute exists concerning the basis for the termination, the
Termination Date shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken).  Notwithstanding the pendency of any such
dispute, the Company shall continue to pay the Executive his Base Amount and
continue the Executive as a participant in all compensation, incentive, bonus,
pension, profit sharing, medical, hospitalization, dental, life insurance and
disability benefit plans in which he was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in 

 

 

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accordance with this Section whether
or not the dispute is resolved in favor of the Company, and the Executive shall
not be obligated to repay to the Company any amounts paid or benefits provided
pursuant to this sentence.

 

                             IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officers and the Executive has executed this Agreement as of
the day and year first above written.

 

	
   

  	
   

  	
  NMS
  Communications Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Robert P. Schechter

  
	
   

  	
   

  	
   

  	
  Robert
  P. Schechter

  
	
  ATTEST:

  	
   

  	
   

  	
  Chairman,
  President and CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   /s/ Dianne Callan

  	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   /s/ Todd Donahue

  
	
   

  	
   

  	
   

  	
  Todd
  Donahue EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

11Filed by Automated Filing Services Inc. (604) 609-0244 - American Bonanza Gold Corp. - Exhibit 4.7

EMPLOYMENT AGREEMENT

          THIS
AGREEMENT made as of the 1st day of May, 2007

BETWEEN:

AMERICAN BONANZA GOLD
CORP., a corporation continued 
under the Business Corporation Act
(British Columba), Canada

(herein referred to as "American
Bonanza" or the "Corporation")

OF THE FIRST PART

- and -

GIULIO T. BONIFACIO, of
the City of Vancouver, in the Province of British 
Columbia, Canada

(herein referred to as "Bonifacio")

OF THE SECOND PART

          WHEREAS
American Bonanza wishes to engage Bonifacio’s services in connection with the
continuing operation of the business of the exploration and development of gold
properties, principally in North America, which is presently carried on by
American Bonanza (the "Business");

           AND
WHEREAS American Bonanza and Bonifacio wish to set out the terms of Bonifacio’s
employment;

          NOW
THEREFORE IN CONSIDERATION OF the payment of the sum of $1.00, the covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

AGREEMENT TO EMPLOY

1.          
American Bonanza agrees to continue to employ Bonifacio in connection with the
Business on the terms and conditions set out herein (the "Employment"), and
Bonifacio agrees to accept employment on such terms.

          The
parties acknowledge and agree that the agreement dated July 1, 2006 between the
Company and Bonifacio (the “Prior Agreement”) is hereby terminated and
replaced by this Agreement. Bonifacio acknowledges that the Company is hereby
offering terms and conditions at least as favourable as those under the Prior
Agreement and that the termination of the Prior Agreement will not give rise to
any obligation by the Company to provide notice or payment in lieu of notice or
any other payment. Bonifacio further acknowledges that the Company has made
final 

payment of any and all amounts owing by it under the Prior
Agreement. Bonifacio releases and forever holds the Company harmless for any
liability arising under or in respect of the Prior Agreement.

TERM

2.          
The term of this Agreement and the Employment shall be for an indefinite period,
provided that:

	 	(a) 	
      American Bonanza may terminate this Agreement and the
      Employment at any time as set out in paragraphs 9 and 10 hereof;

	 	 	 
	 	(b) 	
      Bonifacio may terminate this Agreement and the Employment
      at any time as set out in paragraph 11 hereof;

	 	 	 
	 	(c) 	
      this Agreement and the Employment are automatically
      terminated when Bonifacio dies or when he reaches the age of 65;
  and

	 	 	 
	 	(d) 	
      Bonifacio may terminate this Agreement and the Employment
      if there is a change in control as set out in paragraph 12
  hereof.

DUTIES AND RESPONSIBILITIES

3.          
Bonifacio shall be the Chief Financial Officer of American Bonanza and shall, in
such capacity, have the jurisdiction, and perform the duties, assigned to him
from time to time by the Board of Directors of American Bonanza. American
Bonanza agrees that it shall not relocate Bonifacio outside of the Vancouver
area without the consent of Bonifacio. 

CONFLICT OF INTEREST/DUTY OF LOYALTY

4.          
Bonifacio agrees to devote 50% of his working time during the Employment to the
Business. Bonifacio agrees not to become directly or indirectly engaged in any
business, whether as a principal, agent, director, officer, employee or
otherwise, which competes with American Bonanza’s interests or which employment
would constitute a conflict of interest on Bonifacio’s part with American
Bonanza's interests.

5.          
Bonifacio agrees to keep the affairs of the Business, financial and otherwise,
strictly confidential and shall not disclose the same to any person, company or
firm, directly or indirectly, during or after his employment by American Bonanza
except within his capacity of acting as a senior officer of American Bonanza or
as otherwise authorized in writing by the Board of Directors of American
Bonanza. Bonifacio agrees not to use such information, directly or indirectly,
for his own interests, or any interests other than those of the Business,
whether or not those interests conflict with the interests of the Business
during or after his employment by American Bonanza.

REMUNERATION

	6. 	
      (a) 
	
      Subject to paragraph 13, Bonifacio shall be remunerated
      as follows during the term of this Agreement:

	 	 	
       

			
      (i) 
	
      minimum base salary of CDN $100,000 per annum payable
      monthly and to be reviewed annually by the Board of Directors of American
      Bonanza;

	 	 	
       

			
      (ii) 
	
      such bonus as may be determined by the Board of Directors
      of American Bonanza form time to time in accordance with paragraph 6(b) of
      this Agreement;

	 	 	
       

		
      (b) 
	
      Each year during the term of this Agreement, the
      Directors shall determine, in such amount as the Directors consider
      appropriate, a bonus for Bonifacio; the amount of such bonus to be based
      on achievements necessary for the growth and development of American
      Bonanza.

7.          
Subject to paragraph 13, Bonifacio shall also be given incentive stock options
to acquire Common Shares of American Bonanza in such amounts as approved by the
Board of Directors from time to time.

REIMBURSEMENT OF EXPENSES

8.          
All Bonifacio’ reasonable expenses related to the Business will be reimbursed
upon the submittal by Bonifacio of an expense report with appropriate supporting
documentation.

TERMINATION

9.          
This Agreement and the Employment may be terminated by American Bonanza
summarily and without notice, or payment in lieu of notice, severance payments,
benefits, damages or any sums whatsoever, in the event that there is just cause
for termination of Bonifacio’s employment at common law.

	10. 	
      (a) 
	
      This Agreement and the Employment may be terminated on
      notice by American Bonanza to Bonifacio for any reason other than for the
      reasons set out in paragraph 9 of this Agreement upon payment to Bonifacio
      at termination of 12 months' base salary as described under subparagraph
      6(a)(i).

	 	 	
       

		(b) 	
      The parties agree that any payment to Bonifacio pursuant
      to paragraph 10(a) is not intended and will not be of the nature of a
      penalty and shall be considered by the parties as liquidated
    damages.

11.          
This Agreement and the Employment may be terminated on notice by Bonifacio to
American Bonanza by giving 30 days written notice.

CHANGE OF CONTROL

	12. 	(a) 	
      If at any time during the term of this
      Agreement there is a change in control of American
      Bonanza, as defined below, then Bonifacio shall have one year from the
      date of such change of control to elect whether or not
      he wishes to terminate this Agreement and the
      Employment, after which time he shall be deemed to have elected
      not to do so. If he elects to terminate this Agreement
      and the Employment hereunder, then he shall give
      written notice of his election to the Corporation and this Agreement and the Employment shall terminate 30 days from the day
      of such notice. Bonifacio shall then be entitled to
      receive from American Bonanza an amount equal to 12
      month’s base salary in lieu of notice, severance, damages or other
      payments of any kind whatsoever. 

	  	  	
        
	
        
	
        

	  	(b) 	
      For the purposes of this Agreement:
      

	  	  	
        
	
        
	
        

			
      (i) 
	
      a "change of control of American Bonanza"
      shall mean the occurrence of any of the following
      events: 

	  	  	
        
	
        
	
        

			
      
	
      (1) 
	
      less than 75% of the Board of Directors of
      American Bonanza being composed of Continuing
      Directors; or 

	  	  	
        
	
        
	
        

			
      
	
      (2) 
	
      a person (within the meaning of the
      provisions of the Securities Act (British Columbia)
      (the "Securities Act")), alone or with its affiliates, associates or persons with whom such person is acting jointly or in
      concert (all within the meaning of the Securities
      Act), becoming, following the date of this Agreement,
      the beneficial owner (also within the meaning of the
      Securities Act) of more than 30% of the total voting
      rights attaching to all classes then outstanding of American Bonanza having under all circumstances the right to vote
      on any resolution concerning the election of
      directors; and 

	  	  	
        
	
        
	
        

	  	  	
      (ii) 
	
      "Continuing Director" shall mean either:
      

	  	  	
        
	
        
	
        

			
      
	
      (1) 
	
      an individual who is a member of the Board
      of Directors of American Bonanza on the date of this
      Agreement; or 

	  	  	
        
	
        
	
        

			
      
	
      (2) 
	
      an individual who becomes a member of the
      Board of Directors of American Bonanza subsequent to
      the date of this Agreement at the request of at least
      a majority of the Continuing Directors who are members
      of the Board of Directors of American Bonanza at the date that the individual became a member of the Board of Directors of
      American Bonanza. 

LONG-TERM DISABILITY

13.          
In the event of Bonifacio’s inability to perform his duties under the Agreement
for a period of at least 120 continuous days Bonifacio’s remuneration under
subparagraphs 6(a)(i), 6(a)(ii) and future grants under subparagraph 7 shall be
suspended for the period of such disability.

SEVERABILITY

14.          
The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision, and any invalid
provision will be severable from this Agreement.

GOVERNING LAW

15.          
This Agreement is governed by and is to be construed, interpreted and enforced
in accordance with the laws of British Columbia.

HEIRS/SUCCESSORS BOUND

16.          
This Agreement enures to the benefit of and is binding upon the parties and
their respective heirs, administrators, executors, successors and assigns as
appropriate.

ASSIGNMENT

17.          
This Agreement is not assignable by a party without the consent in writing of
the other party, which consent may not be unreasonably withheld.

ENTIRE AGREEMENT

18.          
As of its date of execution, the Agreement supersedes all prior agreements
between the parties, and constitutes the entire agreement between the parties.
The parties agree that there are no other collateral agreements or
understandings between them except as set out in the Agreement.

AMENDMENT

19.          
This Agreement may be amended only in writing signed by the parties and
witnessed.

HEADINGS

20.          
All headings in this Agreement are for convenience only and shall not be used
for the interpretation of this Agreement.

RECOURSE ON BREACH

21.          
Bonifacio acknowledges that damages would be an insufficient remedy for a breach
of this Agreement and agrees that American Bonanza may apply for and obtain any
relief available to it in a court of law or equity, including injunctive relief,
whether interim, interlocutory or permanent to restrain breach or threat of
breach of this Agreement or to enforce the covenants contained therein and, in
particular, the covenant contained in paragraph 25, in addition to rights
American Bonanza may have to damages arising from said breach or threat of
breach. Bonifacio hereby waives any defences he may or can have to strict
enforcement of this Agreement by American Bonanza.

CONFIDENTIALITY OF AGREEMENT

22.          
The parties agree that this Agreement is confidential and shall remain so. The
parties agree that this Agreement or the contents hereof shall not be divulged
by any party without the consent in writing of the other party, with the
exception of disclosure to personal advisors and disclosure that may be required
by the laws of any jurisdiction in which the Business is conducted or may be
conducted in future. Each party agrees to request of its personal advisors that
they enter into similar agreements of confidentiality if requested to do so by
the other party to this Agreement. American Bonanza shall not be obliged to put
up security in respect of damages in respect of any injunctive relief it obtains
pursuant hereto.

INDEPENDENT LEGAL ADVICE

23.          
Bonifacio agrees that he has had independent legal advice in connection with the
execution of this Agreement and has read this Agreement in its entirety,
understands its contents and is signing this Agreement freely and voluntarily,
without duress or undue influence from any party.

NOTICE

24.          
Any notice required or permitted to be made or given under this Agreement to
either party shall be in writing and shall be sufficiently given if delivered
personally, or if sent by prepaid registered mail to the intended recipient of
such notice at:

	 	(a) 	in the case of American Bonanza, to: 
	 	  	           
             Suite 305-675 West Hastings Street 
	 	  	           
             Vancouver, British Columbia, V6B 1N2 
	 	  	  
	 	(b) 	in the case of Bonifacio, to: 
	 	  	           
             6287 Alberta Street 
	 	  	           
             Vancouver, British Columbia, V5Y 3N3
  

or at such other address as the party to whom such writing is
to be given shall provide in writing to the party giving the said notice. Any
notice delivered to the party to whom it is addressed shall be deemed to have
been given and received on the day it is so delivered or, if such day is not a
business day, then on the next business day following any such day. Any notice
mailed shall be deemed to 

have been given and received on the fifth business day
following the date of mailing.

CONFIDENTIALITY

25.          
The parties hereby agree that all trade secrets, trade names, client
information, client files and processing relating to the Business shall become,
on execution of this Agreement, and shall be thereafter, as the case may be, the
sole property of American Bonanza whether arising before or after the execution
of this Agreement. Bonifacio agrees not to divulge any of the foregoing to any
person, partnership or corporation or to assist in the disclosure or divulging
of any such information, directly or indirectly, except as authorized in writing
by the Board of Directors of American Bonanza.

SURVIVAL

26.          
Paragraphs 5, 21, 22 and 25 shall survive the termination of this Agreement and
the Employment and shall continue in full force and effect according to their
terms.

              
IN WITNESS WHEREOF the parties hereto have executed these presents under their
respective seals and hands of their proper offices authorized in that behalf, as
applicable.

	The Corporate Seal of AMERICAN 	) 	  
	BONANZA GOLD CORP. was hereunto 	) 	  
	affixed in the presence of: 	) 	  
	  	) 	  
	/s/ Joe Chan 	) 	  
	  	) 	c/s 
	Authorized Signatory 	) 	  
	  	) 	  
	/s/ Catherine Tanaka 	) 	  
	  	) 	  
	Authorized Signatory 	  	  
	  	  	  
	SIGNED, SEALED AND DELIVERED in 	) 	  
	the presence of: 	) 	  
	  	) 	  
	/s/ Lisa Ng 	) 	/s/ Giulio Bonifacio 
	  	) 	 
    
	Witness 	  	GIULIO T. BONIFACIO

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