EMPLOYMENT AGREEMENT EXHIBIT 10.26
OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH
DSP COMMUNICATIONS, INC. AND DSP TELECOM, INC.
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into
effective as of the 16th day of September, 1996, by and between DSP
COMMUNICATIONS, INC., a Delaware corporation (hereinafter "DSPC"), DSP TELECOM,
INC., a California corporation (hereinafter the "Corporation"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (hereinafter "Pezzola").
RECITALS
A. Effective September 16, 1996, Pezzola was employed by DSPC as its
General Counsel, and to serve as an employee of the Corporation. DSPC is the
parent corporation of the Corporation.
B. DSPC, the Corporation, and Pezzola desire to document the terms of
their employment agreement entered into on September 16, 1996 as set forth in
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. EMPLOYMENT DUTIES.
a. GENERAL. The Corporation hereby agrees to employ Pezzola, and
Pezzola hereby agrees to accept employment with the Corporation, on the terms
and conditions hereinafter set forth.
b. CORPORATION'S DUTIES. The Corporation shall allow Pezzola to,
and Pezzola shall, perform responsibilities normally incident to his position as
General Counsel of DSPC, commensurate with his background, education, experience
and professional standing. The Corporation shall provide Pezzola with a private
office, stenographic help, office equipment, supplies, customary services and
cooperation suitable for the performance of his duties.
▇. ▇▇▇▇▇▇▇'▇ DUTIES. Unless otherwise agreed to by the parties,
Pezzola shall serve as General Counsel of DSPC, and to the extent requested
by the Board of Directors, as General Counsel for any and all subsidiaries of
DSPC. For purposes of acting as an attorney for DSPC (or any of its
subsidiaries), Pezzola shall owe his duties of loyalty and confidentiality
directly to DSPC (or any of its subsidiaries). Pezzola shall devote such
time in executing his duties as General Counsel as is deemed needed by DSPC's
Chairman of the Board of Directors. Pezzola shall not be required to devote
his full time efforts to the Corporation or DSPC. It is intended that
Pezzola will work part time, approximately thirteen (13) hours per week, and
that he will serve as General Counsel of other entities and as an owner in an
investment entity.
Pezzola shall report directly to the Chairman of the Compensation Committee
and to the Board of Directors of DSPC. ▇▇. ▇▇▇▇▇▇▇ shall inform the Chairman
of the DSPC Compensation Committee of any other positions that he takes with
any other entity, beyond the positions that he currently holds. Pezzola's
duties shall be performed primarily in the San Francisco Bay Area, and more
particularly, in either Cupertino or Oakland, California, at the option of
Pezzola.
2. TERM. This Agreement shall terminate December 31, 1998, unless (a)
extended as set forth herein, or (b) terminated sooner under the terms of
this Agreement. Thereafter, this Agreement may be renewed by Pezzola and the
Board of Directors of DSPC on such terms as the parties may agree to in
writing. Absent written notice to the contrary, thirty (30) days prior to the
end of the employment term, this Agreement will be renewed for consecutive
one (1) year extensions. As used herein, the term "employment term" refers
to the entire period of employment of Pezzola hereunder, including any
extensions.
3. COMPENSATION. Pezzola shall be compensated as follows:
a. FIXED SALARY. Effective September 16, 1996, Pezzola shall
receive a fixed annual salary of Ninety Thousand Dollars ($90,000). Beginning
on January 1, 1997, and continuing thereafter, Pezzola shall receive a fixed
salary of Ninety-five Thousand Dollars ($95,000). The Corporation agrees to
review the fixed salary following the end of each calendar year during the
employment term based upon Pezzola's services and the financial results of DSPC
during the calendar year, and to make such increases as may be determined
appropriate in the discretion of DSPC's Compensation Committee of the Board of
Directors ("Compensation Committee").
b. PAYMENT. Pezzola's fixed salary shall be payable on a
semi-monthly basis.
c. BONUS COMPENSATION. During the employment term, Pezzola shall
participate in each bonus plan adopted by DSPC, and shall receive such other
bonus pay as may be determined reasonable in the discretion of the Compensation
Committee.
d. VACATION. Pezzola shall accrue paid vacation at the rate of
twenty-five (25) days for each twelve (12) months of employment. Pezzola shall
be compensated at his usual rate of compensation during any such vacation.
Pezzola shall be entitled to ten (10) paid holidays during each twelve (12)
months of employment. Pezzola shall receive sick leave or disability leave in
accordance with the terms of the Corporation's standard sick leave or disability
leave policy.
e. BENEFITS. Pezzola waives any entitlement he may have as a
Corporation employee to any benefits relating to group health, disability, life
insurance, retirement and
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other related benefits as in effect from time to time. Such waiver shall be
ineffective, however, for a Corporation employee benefit plan in the event
that such waiver would adversely impact the beneficial federal income tax
status of such plan. The Corporation shall provide Pezzola with Director and
Officer Insurance.
4. EXPENSES. The Corporation shall reimburse Pezzola for his normal and
reasonable expenses incurred for travel, entertainment and similar items in
promoting and carrying out the business of the Corporation in accordance with
the Corporation's general policy as adopted by the Corporation's management from
time to time. The Corporation shall pay Pezzola's cellular telephone expenses
up to an amount equal to Three Hundred Dollars ($300) per month, unless Pezzola
provides documentation to DSPC that Pezzola's cellular telephone use during a
particular month was directly related to the business of DSPC, in which case
DSPC shall pay all of the cellular telephone expenses attributable to the
business of DSPC during such month. As a condition of payment or reimbursement,
Pezzola agrees to provide the Corporation with copies of all available invoices
and receipts, and otherwise account to the Corporation in sufficient detail to
allow the Corporation to claim an income tax deduction for such paid item, if
such item is deductible. Reimbursements shall be made on a monthly, or more
frequent, basis. The Corporation shall reimburse Pezzola for fifty percent
(50%) of all professional membership dues incurred, if any; fifty percent (50%)
of all technical books purchased by Pezzola; and one hundred (100%) of all legal
education and seminar expenses. The Corporation shall also reimburse Pezzola
for fifty percent (50%) of any California Bar Association dues or fees necessary
to maintain his certification as an attorney in California. It is noted that
Zen Research, Inc. is currently providing an office adjacent to the
Corporation's principal place of business to Pezzola at no expense to DSPC or
the Corporation.
5. INDEMNIFICATION. The parties agree to enter into an Indemnification
Agreement, effective September 16, 1996, under which DSPC will indemnify Pezzola
for actions he may take on behalf of the Corporation or DSPC.
6. CONFIDENTIALITY AND COMPETITIVE ACTIVITIES. Pezzola agrees that
during the employment term he is in a position of special trust and confidence
and has access to confidential and proprietary information about the
Corporation's business and plans. Pezzola agrees that he will not directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any similar individual
or representative capacity, engage or participate in any business that is in
competition, in any manner whatsoever, with the Corporation. Notwithstanding
anything in the foregoing to the
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contrary, Pezzola shall be allowed to invest as a shareholder in publicly
traded companies, or through a venture capital firm or an investment pool.
7. TERMINATION.
a. TERMINATION BY PEZZOLA. Pezzola may voluntarily terminate his
employment hereunder upon sixty (60) days' advance written notice to the
Corporation.
b. TERMINATION FOR CAUSE. The Corporation may immediately terminate
Pezzola's employment at any time for cause. Termination for cause shall be
effective from the receipt of written notice thereof to Pezzola specifying the
grounds for termination and all relevant facts. Cause shall be deemed to
include: (i) material neglect of his duties or a significant violation of any
of the provisions of this Agreement, which continues after written notice and a
reasonable opportunity (not to exceed thirty (30) days) in which to cure;
(ii) fraud, embezzlement, defalcation or conviction of any felonious offense; or
(iii) intentionally imparting confidential information relating to the
Corporation or DSPC or their business to competitors or to other third parties
other than in the course of carrying out his duties hereunder. The
Corporation's exercise of its rights to terminate with cause shall be without
prejudice to any other remedy it may be entitled at law, in equity, or under
this Agreement.
c. TERMINATION UPON DEATH OR DISABILITY. This Agreement shall
automatically terminate upon Pezzola's death. In addition, if any disability or
incapacity of Pezzola to perform his duties as the result of any injury,
sickness, or physical, mental or emotional condition continues for a period of
thirty (30) business days (excluding any accrued vacation) out of any one
hundred twenty (120) calendar day period, the Corporation may terminate
Pezzola's employment upon written notice. Payment of salary to Pezzola during
any sick leave shall only be to the extent that Pezzola has accrued sick leave
or vacation days. Pezzola shall accrue sick leave at the same rate generally
available to the Corporation's employees.
▇. ▇▇▇▇▇▇▇▇▇ PAY. If this Agreement is terminated without cause
pursuant to Section 7.a. (above), the Corporation shall pay Pezzola a
severance/consulting fee equal to the full amount of the compensation that he
could have expected under this Agreement, as and when payable under this
Agreement, without deduction except for tax withholding amounts, through the end
of the term, during which Pezzola shall remain as a consultant to the
Corporation. If this Agreement is terminated with cause pursuant to Section
7.b. (above), the Corporation shall not be obligated to pay Pezzola any
severance/consulting fee. If this Agreement is not renewed on or after December
31, 1998, then the Corporation shall pay Pezzola a severance/consulting fee
equal to his then-current monthly rate of fixed salary compensation, multiplied
by the number three (3).
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8. CORPORATE OPPORTUNITIES.
a. DUTY TO NOTIFY. In the event that Pezzola, during the employment
term, shall become aware of any material and significant business opportunity
directly related to any of the Corporation's significant businesses, Pezzola
shall promptly notify the Corporation's Directors of such opportunity. Pezzola
shall not appropriate for himself or for any other person other than the
Corporation, or any affiliate of the Corporation, any such opportunity unless,
as to any particular opportunity, the Board of Directors of the Corporation
fails to take appropriate action within thirty (30) days. Pezzola's duty to
notify the Corporation and to refrain from appropriating all such opportunities
for thirty (30) days shall neither be limited by, nor shall such duty limit, the
application of the general law of California relating to the fiduciary duties of
an agent or employee.
b. FAILURE TO NOTIFY. In the event that Pezzola fails to notify the
Corporation of, or so appropriates, any such opportunity without the express
written consent of the Board of Directors, Pezzola shall be deemed to have
violated the provisions of this Section notwithstanding the following:
i. The capacity in which Pezzola shall have acquired such
opportunity; or
ii. The probable success in the Corporation's hands of such
opportunity.
c. CORPORATION DEFINED. For purposes of Sections 6 and 8 hereof,
the term "Corporation" shall also include DSPC and all of DSPC's subsidiaries.
9. MISCELLANEOUS.
a. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein, and supersedes and replaces any prior agreements and
understandings, whether oral or written between them with respect to such
matters. The provisions of this Agreement may be waived, altered, amended or
repealed in whole or in part only upon the written consent of both parties to
this Agreement.
b. NO IMPLIED WAIVERS. The failure of either party at any time to
require performance by the other party of any provision hereof shall not affect
in any way the right to require such performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of any subsequent breach of the same provision or any other
provision.
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c. PERSONAL SERVICES. It is understood that the services to be
performed by Pezzola hereunder are personal in nature and the obligations to
perform such services and the conditions and covenants of this Agreement cannot
be assigned by Pezzola. Subject to the foregoing, and except as otherwise
provided herein, this Agreement shall inure to the benefit of and bind the
successors and assigns of the Corporation.
d. SEVERABILITY. If for any reason any provision of this Agreement
shall be determined to be invalid or inoperative, the validity and effect of the
other provisions hereof shall not be affected thereby, provided that no such
severability shall be effective if it causes a material detriment to any party.
e. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.
f. NOTICES. All notices, requests, demands, instructions or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given upon delivery, if
delivered personally, or if given by prepaid telegram, or mailed first-class,
postage prepaid, registered or certified mail, return receipt requested, shall
be deemed to have been given seventy-two (72) hours after such delivery, if
addressed to the other party at the addresses as set forth on the signature page
below. Either party hereto may change the address to which such communications
are to be directed by giving written notice to the other party hereto of such
change in the manner above provided.
g. MERGER, TRANSFER OF ASSETS, OR DISSOLUTION OF THE CORPORATION.
This Agreement shall not be terminated by any dissolution of the Corporation
resulting from either merger or consolidation in which the Corporation is not
the consolidated or surviving corporation or a transfer of all or substantially
all of the assets of the Corporation. In such event, the rights, benefits and
obligations herein shall automatically be assigned to the surviving or resulting
corporation or to the transferee of the assets.
h. CONFLICT POTENTIAL AND DUTY TO NOTIFY. Pezzola agrees to
notify the Chairman of the Compensation Committee of: (1) any investments in
any company or other entity of his own personal funds which is in excess of
$200,000; (2) any investment which results in Pezzola owning over five
percent (5%) of an entity; or (3) any other employment or consulting
arrangement to which Pezzola is a party. If the Chairman of the Compensation
Committee deems such investment or arrangement to be a conflict, he and
Pezzola shall attempt to resolve the conflict. If such conflict cannot be so
resolved, then the Chairman of
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the Compensation Committee shall discuss the matter with the entire Board,
and bring the matter to the Corporation's outside counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
DSP TELECOM, INC. DSP COMMUNICATIONS, INC.
a California corporation a California corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ Hod By: /s/ ▇▇▇▇▇ Broad
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▇▇▇▇▇▇ Hod, Chairman of the Board ▇▇▇▇▇ Broad, Chairman of the
Compensation Committee
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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