<PAGE> 1
As filed with the Securities and Exchange Commission on December 11, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DSC COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 54-1025763
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 COIT ROAD 75075
PLANO, TEXAS (Zip Code)
(Address of principal executive offices)
EMPLOYMENT AGREEMENT BETWEEN DSC MARKETING SERVICES, INC.
AND THOMAS R. BERGER
EMPLOYMENT AGREEMENT BETWEEN DSC MARKETING SERVICES, INC.
AND JAMES M. FOLEY
EMPLOYMENT AGREEMENT BETWEEN DSC MARKETING SERVICES, INC.
AND JOSEPH J. GONZALEZ
(Full title of the plan)
GEORGE B. BRUNT
DSC COMMUNICATIONS CORPORATION
1000 COIT ROAD
PLANO, TEXAS 75075
(972) 519-3000
(Name and address of agent for service)
with a copy to:
DANIEL W. RABUN
BAKER & MCKENZIE
2001 ROSS AVENUE, SUITE 4500
DALLAS, TEXAS 75201
(214) 978-3000
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CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF OFFERING PRICE PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE PER AGGREGATE OFFERING REGISTRATION
REGISTERED (1) REGISTERED(2) SECURITY (3) PRICE (3) FEE (4)
<S> <C> <C> <C> <C>
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Common Stock, $.01 par value 111,754 Shares $ 23.375 $ 2,612,250 $ 771.00
- ---------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights 111,754 Rights Not Applicable Not Applicable Not Applicable
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</TABLE>
(1) Shares of common stock of DSC Communications Corporation (the
"Company"), $.01 par value per share (the "Common Stock"), being
registered hereby relate to the Employment Agreements dated October 29,
1997 between DSC Marketing Services, Inc. and each of Thomas R. Berger,
James M. Foley and Joseph J. Gonzalez. Pursuant to Rule 416
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), there are also being registered such additional
shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Plan.
(2) The shares covered by this Registration Statement were previously
registered under the Company's Registration Statement, Registration
No. 333-39591 (which covers 1,515,098 shares of Common Stock). A
registration fee in the amount of $2,194.00 was paid with respect to
such Registration Statement.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) promulgated under the Securities Act
on the basis of the average of the high and low sale prices of the
Common Stock on December 9, 1997, as reported on the Nasdaq
Stock Market.
(4) In accordance with rule 457(g), no additional registration fee is
required in respect of Preferred Stock Purchase Rights.
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<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (a) through (h) below are hereby incorporated
by reference into this Registration Statement. All documents subsequently
filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of Common Stock, including the preferred stock
purchase rights attaching to such stock pursuant to that certain Rights
Agreement dated April 25, 1996 by and between the Company and Harris Trust and
Savings Bank, formerly KeyCorp Shareholder Services, Inc. (the "Preferred Stock
Purchase Rights"), offered hereunder have been sold or which deregisters all
shares then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997;
(d) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997;
(e) The Company's Current Report on Form 8-K filed August 26,
1997;
(f) The Company's Current Report on Form 8-K filed November 3,
1997;
(g) The Company's Current Report on Form 8-K filed November 13,
1997; and
(h) The description of the Company's Common Stock as contained in
the Company's Registration Statement on Form 8-A dated October
27, 1981, including all amendments and reports filed for the
purpose of updating such descriptions; and the description of
the Company's Preferred Stock Purchase Rights as contained in
the Company's Registration Statement on Form 8-A dated May 13,
1996, including all amendments and reports filed for the
purpose of updating such descriptions.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws require that directors and officers be
indemnified to the maximum extent permitted by law. The Company's Restated
Certificate of Incorporation includes a provision eliminating, to the fullest
extent permitted by the General Corporation Law of the State of Delaware (the
"DGCL"), director liability for monetary damages for breaches of fiduciary
duty.
Section 145 of the DGCL provides that a director or officer of a
corporation (i) shall be indemnified by the corporation for all expenses of
litigation or other legal proceedings brought against such person by reason of
the fact that such person is or was a director or an officer of the corporation
when he is successful on the merits, (ii) may be indemnified by the corporation
for the expenses, judgments, fines, and amounts paid in settlement of such
litigation (other than a derivative suit) even if he is not successful on the
merits if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation (and, in the case of
a criminal proceeding, had no reason to believe his conduct was unlawful), and
(iii) may be indemnified by the corporation for
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<PAGE> 3
expenses of a derivative suit (a suit by a stockholder alleging a breach by a
director or officer of a duty owed to the corporation), even if he is not
successful on the merits, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, provided that no such indemnification may be made in accordance
with this clause (iii) if the director or officer is adjudged liable to the
corporation, unless a court determines that, despite such adjudication but in
view of all circumstances, he is fairly and reasonably entitled to
indemnification of such expenses. The indemnification described in clauses
(ii) and (iii) above shall be made only upon order by a court or a
determination by (a) a majority of directors who are not parties to such
action, (b) a majority vote of a committee consisting of such disinterested
directors, (c) independent legal counsel in a written opinion if no such
disinterested directors exist, or if such disinterested directors so direct, or
(d) the stockholders, that indemnification is proper because the applicable
standard of conduct is met. Expenses incurred by a director or officer in
defending an action may be advanced by the corporation prior to the final
disposition of such action upon receipt of an undertaking by such director or
officer to repay such expenses if it is ultimately determined that he is not
entitled to be indemnified in connection with the proceeding to which the
expenses relate.
The Company has purchased and currently has in force directors' and
officers' liability insurance policies which cover certain liabilities of
directors and officers arising out of claims based on certain acts or omissions
by them in their capacity as directors or officers. The Company has entered
into indemnification agreements with certain of its directors and executive
officers. Each of these agreements, among other things, contractually
obligates the Company to, under certain circumstances, indemnify the officer or
director against certain expenses and liabilities arising out of legal
proceedings which may be brought against such officer or director by reason of
his status or service as a director or officer. In addition, in a related
trust agreement (the "Trust Agreement"), the Company has provided $1 million to
be held in trust by a third-party trustee to be used to satisfy The Company's
obligations pursuant to the indemnification agreements which have been executed
and any similar agreements which may be executed in the future. The Trust
Agreement further provides that the Company's Board of Directors may, in its
discretion, provide up to an additional $1 million to the trustee.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
None.
ITEM 8. EXHIBITS.
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EXHIBIT
NUMBER DESCRIPTION
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4 .1 Indenture, dated August 12, 1997, between the Company and The Bank of New York, as Trustee
(incorporated by reference to Exhibit No. 4.1 to the Company's Current Report on Form 8-K, Commission
File No. 0-10018, dated August 26, 1997)
4 .2 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the Company's
Current Report on Form 8-K, Commission File No. 0-10018, dated August 26, 1997)
4 .3 Restated Certificate of Incorporation of the Company, dated November 3, 1997 (incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement on Form
S-8, Registration No. 333-41929, dated December 10, 1997)
4 .4 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit No. 3.4 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 0-10018,
dated March 31, 1997)
4 .5 Rights Agreement, dated April 25, 1996 between the Company and Harris Trust and Savings Bank, formerly
KeyCorp Shareholder Services, Inc., as rights agent (incorporated by reference to Exhibit No. 4 to the
Company's Current Report on Form 8-K, Commission File No. 0-010018, dated May 9, 1996)
</TABLE>
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<TABLE>
<S> <C>
4.6 Form of Notes (included in Exhibit 4.1)
*4.7 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and Thomas R. Berger
*4.8 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and
Thomas R. Berger
*4.9 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and James M. Foley
*4.10 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and
James M. Foley
*4.11 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and Joseph J. Gonzalez
*4.12 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and
Joseph J. Gonzalez
*4.13 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of Thomas R.
Berger
*4.14 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of James M.
Foley
*4.15 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of Joseph J.
Gonzalez
*5.1 Opinion of Baker & McKenzie
*23 .1 Consent of Baker & McKenzie (included in Exhibit 5.1)
*23 .2 Consent of Ernst & Young LLP
*24 Power of Attorney (see signature pages of Registration Statement)
</TABLE>
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* Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
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<PAGE> 5
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to
the Plan of Distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Plano, State of Texas, on December 10, 1997.
DSC COMMUNICATIONS CORPORATION
By: /s/ James L. Donald
------------------------------------
Name: James L. Donald
Title: Chairman of the Board,
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby authorizes and appoints James L. Donald and Gerald F. Montry, and
each of them, either one of whom may act without joinder of the other, as his
attorney-in-fact to sign on his behalf individually and in the capacity stated
below all amendments and post-effective amendments to this Registration
Statement as that attorney-in-fact may deem necessary or appropriate.
<TABLE>
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SIGNATURE TITLE DATE
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<S> <C> <C> <C>
/s/ James L. Donald Chairman of the Board, President and Chief December 10, 1997
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JAMES L. DONALD Executive Officer (Principal Executive
Officer)
/s/ Gerald F. Montry Senior Vice President, Chief Financial December 10, 1997
--------------------------------------
GERALD F. MONTRY Officer, and Director (Principal Financial
Officer)
/s/ Kenneth R. Vines Vice President, Finance (Principal December 10, 1997
--------------------------------------
KENNETH R. VINES Accounting Officer)
/s/ Raymond J. Dempsey Director December 10, 1997
--------------------------------------
RAYMOND J. DEMPSEY
/s/ Sir John Fairclough Director December 10, 1997
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SIR JOHN FAIRCLOUGH
/s/ James L. Fischer Director December 10, 1997
--------------------------------------
JAMES L. FISCHER
</TABLE>
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<TABLE>
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SIGNATURE TITLE DATE
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<S> <C> <C> <C>
/s/ Robert S. Folsom Director December 10, 1997
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ROBERT S. FOLSOM
/s/ William O. Hunt Director December 10, 1997
--------------------------------------
WILLIAM O. HUNT
/s/ Morton L. Topfer Director December 10, 1997
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MORTON L. TOPFER
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
4.1 Indenture, dated August 12, 1997, between the Company and The Bank of New York, as Trustee
(incorporated by reference to Exhibit No. 4.1 to the Company's Current Report on Form 8-K,
Commission File No. 0-10018, dated August 26, 1997)
4.2 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs &
Co. and NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the
Company's Current Report on Form 8-K, Commission File No. 0-10018, dated August 26, 1997)
4.3 Restated Certificate of Incorporation of the Company, dated November 3, 1997 (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-8, Registration No. 333-41929, dated
December 10, 1997)
4.4 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit No. 3.4 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 0-10018, dated March
31, 1997)
4.5 Rights Agreement, dated April 25, 1996 between the Company and Harris Trust and Savings Bank, formerly
KeyCorp Shareholder Services, Inc., as rights agent (incorporated by reference to Exhibit No. 4 to the
Company's Current Report on Form 8-K, Commission File No. 0-010018, dated May 9, 1996)
4.6 Form of Notes (included in Exhibit 4.1)
*4.7 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and Thomas R. Berger
*4.8 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and
Thomas R. Berger
*4.9 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and James M. Foley
*4.10 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and James
M. Foley
*4.11 Employment Agreement dated October 29, 1997 between DSC Marketing Services, Inc. and Joseph J. Gonzalez
*4.12 Amendment dated December 3, 1997 to the Employment Agreement between DSC Marketing Services, Inc. and
Joseph J. Gonzalez
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
*4.13 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of
Thomas R. Berger
*4.14 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of James M. Foley
*4.15 Promissory Note dated December 4, 1997 executed by the Company and payable to the order of Joseph J.
Gonzalez
*5.1 Opinion of Baker & McKenzie
*23.1 Consent of Baker & McKenzie (included in Exhibit 5.1)
*23.2 Consent of Ernst & Young LLP
*24 Power of Attorney (see signature pages of Registration Statement)
</TABLE>
<PAGE> 1
EXHIBIT 4.7
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 Thomas R.
Berger ("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-Celcore Division 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 eight thousand seven hundred
and thirteen and 47/100 Dollars ($8,713.47).
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 $350,000 is payable
in two installments as follows: $100,000 on the Closing Date and $250,000 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
March 1, 1995, July 15, 1995, June 6, 1996 and September 15, 1996 by and
between CELCORE and the Employee (as amended, the "1995 Option Agreement"), and
(ii) that certain Stock Incentive
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<PAGE> 2
Agreement under 1996 Stock Incentive Plan, dated as of December 24, 1996 by and
between CELCORE and the Employee (as amended, the "1996 Option Agreement"),
each of which was amended by that certain Amendment to Stock Option Agreement
under 1995 Stock Option Plan dated January 30, 1997 and by that certain
Amendment to Stock Option Agreement under 1995 Stock Option Plan dated as of
the date hereof (the 1995 Option Agreement and the 1996 Option Agreement are
collectively referred to herein as 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 DSC's Annual Incentive Compensation
Plan. Currently, for aforementioned position, the annual incentive award
target is forty percent (40%). 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 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 40,000 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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<PAGE> 3
(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
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attorneys' 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/ George B. Brunt
-----------------------------------------
GEORGE B. BRUNT
Vice President
By: /s/ Thomas R. Berger
-----------------------------------------
THOMAS R. BERGER, Employee
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<PAGE> 1
EXHIBIT 4.8
December 3, 1997
Mr. Thomas R. Berger
3000 Forest Hill-Irene Road
Memphis, Tennessee 38125
Re: Amendment to Employment Agreement
Dear Mr. Berger:
Reference is made to that certain Employment Agreement (the
"Employment Agreement") dated October 29, 1997, by and between you and DSC
Marketing Services, Inc. (the "Company"). By execution of this letter
agreement, the parties hereby amend the Employment Agreement such that each
reference in the Employment Agreement to the term "Acquisition Agreement" shall
mean that certain Amended and Restated Agreement and Plan of Merger, dated on
or about the date hereof, among CELCORE, Inc., the Company and CI Acquisition
Company. Except as expressly modified and superseded by this letter agreement,
you and the Company each hereby (a) ratify and confirm the Employment
Agreement, (b) agree that the same shall continue in full force and effect, and
(c) agree that the same are the legal, valid and binding obligations of you and
Company, enforceable against you and the Company in accordance with its
respective terms. This letter 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.
If you are in agreement with the foregoing, please so indicate by
affixing your signature where indicated below.
DSC MARKETING SERVICES, INC.
By: /s/ GEORGE B. BRUNT
-----------------------------------------
George B. Brunt
Vice President
Agreed to this 3rd day of December, 1997, but effective as of the Effective
Time (as defined in the Merger Agreement).
/s/ THOMAS R. BERGER
- -----------------------------------------
Thomas R. Berger
<PAGE> 1
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 James M. Foley
("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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<PAGE> 2
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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<PAGE> 3
(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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<PAGE> 6
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/ George B. Brunt
-----------------------------------------
GEORGE B. BRUNT
Vice President
By: /s/ James M. Foley
-----------------------------------------
JAMES M. FOLEY, Employee
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<PAGE> 1
EXHIBIT 4.10
December 3, 1997
Mr. James M. Foley
3000 Forest Hill-Irene Road
Memphis, Tennessee 38125
Re: Amendment to Employment Agreement
Dear Mr. Foley:
Reference is made to that certain Employment Agreement (the
"Employment Agreement") dated October 29, 1997, by and between you and DSC
Marketing Services, Inc. (the "Company"). By execution of this letter
agreement, the parties hereby amend the Employment Agreement such that each
reference in the Employment Agreement to the term "Acquisition Agreement" shall
mean that certain Amended and Restated Agreement and Plan of Merger, dated on
or about the date hereof, among CELCORE, Inc., the Company and CI Acquisition
Company. Except as expressly modified and superseded by this letter agreement,
you and the Company each hereby (a) ratify and confirm the Employment
Agreement, (b) agree that the same shall continue in full force and effect, and
(c) agree that the same are the legal, valid and binding obligations of you and
the Company, enforceable against you and the Company in accordance with its
respective terms. This letter 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.
If you are in agreement with the foregoing, please so indicate by
affixing your signature where indicated below.
DSC MARKETING SERVICES, INC.
By: /s/ GEORGE B. BRUNT
-----------------------------------------
George B. Brunt
Vice President
Agreed to this 3rd day of December, 1997, but effective as of the Effective
Time (as defined in the Merger Agreement).
/s/ JAMES M. FOLEY
- -----------------------------------------
James M. Foley
<PAGE> 1
EXHIBIT 4.11
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 Joseph J.
Gonzalez ("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-Finance 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 seven hundred
twenty-seven and 89/100 Dollars ($5,727.89).
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 those certain Stock Option
Agreements under 1995 Stock Option Plan (the "1995 Plan"), dated as of January
8, 1996 and September 15, 1996 by and between CELCORE and the Employee, as
amended by that certain Amendment to Stock Option Agreement under 1995 Stock
Option Plan dated
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<PAGE> 2
January 30, 1997 and that certain Amendment to Stock Option Agreement under
1995 Stock Option Plan dated as of the date hereof (collectively referred to
herein as 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 the DSC Annual Incentive
Compensation Plan. Currently, for aforementioned position, the annual
incentive award target is thirty percent (30%). 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 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.
(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
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<PAGE> 3
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, 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.
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<PAGE> 4
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 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
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<PAGE> 5
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' 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-
<PAGE> 6
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/ George B. Brunt
-----------------------------------------
GEORGE B. BRUNT
Vice President
By: /s/ Joseph J. Gonzalez
-----------------------------------------
JOSEPH J. GONZALEZ, Employee
-6-
<PAGE> 1
EXHIBIT 4.12
December 3, 1997
Mr. Joseph J. Gonzalez
3000 Forest Hill-Irene Road
Memphis, Tennessee 38125
Re: Amendment to Employment Agreement
Dear Mr. Gonzalez:
Reference is made to that certain Employment Agreement (the
"Employment Agreement") dated October 29, 1997, by and between you and DSC
Marketing Services, Inc. (the "Company"). By execution of this letter
agreement, the parties hereby amend the Employment Agreement such that each
reference in the Employment Agreement to the term "Acquisition Agreement" shall
mean that certain Amended and Restated Agreement and Plan of Merger, dated on
or about the date hereof, among CELCORE, Inc., the Company and CI Acquisition
Company. Except as expressly modified and superseded by this letter agreement,
you and the Company each hereby (a) ratify and confirm the Employment
Agreement, (b) agree that the same shall continue in full force and effect, and
(c) agree that the same are the legal, valid and binding obligations of you and
the Company, enforceable against you and the Company in accordance with its
respective terms. This letter 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.
If you are in agreement with the foregoing, please so indicate by
affixing your signature where indicated below.
DSC MARKETING SERVICES, INC.
By: /s/ GEORGE B. BRUNT
-----------------------------------------
George B. Brunt
Vice President
Agreed to this 3rd day of December, 1997, but effective as of the Effective
Time (as defined in the Merger Agreement).
/s/ JOSEPH J. GONZALEZ
- -----------------------------------------
Joseph J. Gonzalez
<PAGE> 1
EXHIBIT 4.13
PROMISSORY NOTE
[Berger]
December 4, 1997
US$1,671,056.95
FOR VALUE RECEIVED, subject to Section 3 below, the undersigned, DSC
Communications Corporation, a Delaware corporation (the "Payor"), promises to
pay to the order of Thomas R. Berger (the "Payee"), the principal sum of One
Million Six Hundred Seventy-One Thousand Fifty-Six and 95/100 Dollars
(US$1,671,056.95), at such times and on such terms as described below.
1. Repayment of Principal. The aggregate principal amount of
this Promissory Note shall be payable in two equal installments the first of
which shall be in the amount of US $835,528.48 and shall be payable on the
first anniversary date of the Effective Time and the second of which shall be
in the amount of US $835,528.47 and shall be payable on the second anniversary
date of the Effective Time (or earlier as hereinafter referred to). For
purposes hereof, the term "Effective Time" shall have the meaning ascribed to
such term in that certain Amended and Restated Agreement and Plan of Merger
among Payor, CI Acquisition Company, a Delaware corporation and a wholly owned
subsidiary of Payor, and CELCORE, Inc., a Delaware corporation ("CELCORE"),
dated as December 3, 1997 (the "Merger Agreement"). Payor will pay Payee at
c/o Celcore, Inc., 3800 Forest Hill - Irene Road, Memphis, Tennessee 38125 or
at such other place as Payee may designate in writing. Payment of any
principal installment due hereunder shall be made by delivery of that number of
whole shares of Payor's common stock, $.01 per share ("Stock"), having an
aggregate Fair Market Value on the last trading day immediately preceding the
date such payment is due equal to the principal installment due. No fractional
share of Stock shall be delivered hereunder, and, in lieu thereof, a cash
payment shall be made to Payee in an amount equal to the Fair Market Value
multiplied by the fraction of a share of Stock to which Payee would otherwise
be entitled, without interest. For purposes hereof, the term "Fair Market
Value" shall mean the reported last sale prices of a share of Stock on the
NASDAQ National Market as reported on the last trading day immediately
preceding the date such principal installment is due. The principal balance of
this Promissory Note shall bear no interest.
2. Acceleration. The entire unpaid principal balance of this
Promissory Note shall immediately become due and payable in the event (i)
Payee's employment with Payor and its subsidiaries is terminated for any reason
other than "for cause" (as defined in those certain Stock Option Agreements
under the 1995 Stock Option Plan dated March 1, 1995, July 15, 1995, June 6,
1996 and September 15, 1996, and that certain Stock Incentive Agreement under
1996 Stock Incentive Plan dated December 24, 1996, each of which as amended on
January 30, 1997 and October 29, 1997, by and between CELCORE and Payee (as
amended, collectively, the "Option Agreement")), (ii) Payee's employment with
Payor and its subsidiaries is terminated by reason of a Constructive Discharge
(as defined in the Option Agreement), or (iii) Payee's employment with Payor
and its subsidiaries is terminated by reason of a Payee's death or Disability
(as defined in the Option Agreement) (each an "Event of Default"). Upon the
occurrence of an Event of Default, Payee shall have all rights to collect and
accelerate, without demand, presentment for payment, notice of dishonor, notice
of intent to demand or accelerate payment, notice of acceleration, diligence in
collection, grace, notice and protest or legal process of any kind, all of
which Payor hereby expressly waives, and immediately, without any grace period,
enforce all rights with respect to, the indebtedness evidenced by this
Promissory Note and declare the same at once due and payable.
3. Release of Liability. Notwithstanding the foregoing or
anything contained herein to the contrary, in the event (i) Payee's employment
with Payor, or its subsidiaries, is terminated "for cause" (as defined in the
Option Agreement) or (ii) Payee ceases to be employed by Payor or its
subsidiaries because Payee voluntarily terminates such employment (other than
by reason of a Constructive Discharge), then in each such case Payee shall be
deemed to have forever released and fully discharged Payor of any obligation
whatsoever to pay Payee any remaining principal balance payable hereunder as of
the date of such termination of Payee's employment.
This Promissory Note may not be changed or modified orally. This
Promissory Note, or any interest herein, may not be assigned without the prior
written consent of Payor; except to Payor's successors, if any, due to a
merger, acquisition of substantially all of its assets, liquidation or similar
change in form.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
DSC COMMUNICATIONS CORPORATION
/s/ GERALD F. MONTRY
-----------------------------------------
Gerald F. Montry,
Senior Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 4.14
PROMISSORY NOTE
[Foley]
December 4, 1997
US$368,359.56
FOR VALUE RECEIVED, subject to Section 3 below, the undersigned, DSC
Communications Corporation, a Delaware corporation (the "Payor"), promises to
pay to the order of James M. Foley (the "Payee"), the principal sum of Three
Hundred Sixty-Eight Thousand Three Hundred Fifty-Nine and 56/100 Dollars
(US$368,359.56), at such times and on such terms as described below.
1. Repayment of Principal. The aggregate principal amount of
this Promissory Note shall be payable in two equal installments of US
$184,179.78 each, of which the first installment shall be payable on the first
anniversary date of the Effective Time and the second installment shall be
payable on the second anniversary date of the Effective Time (or earlier as
hereinafter referred to). For purposes hereof, the term "Effective Time" shall
have the meaning ascribed to such term in that certain Amended and Restated
Agreement and Plan of Merger among Payor, CI Acquisition Company, a Delaware
corporation and a wholly owned subsidiary of Payor, and CELCORE, Inc., a
Delaware corporation ("CELCORE"), dated as December 3, 1997 (the "Merger
Agreement"). Payor will pay Payee at c/o Celcore, Inc., 3800 Forest Hill -
Irene Road, Memphis, Tennessee 38125 or at such other place as Payee may
designate in writing. Payment of any principal installment due hereunder shall
be made by delivery of that number of whole shares of Payor's common stock,
$.01 per share ("Stock"), having an aggregate Fair Market Value on the last
trading day immediately preceding the date such payment is due equal to the
principal installment due. No fractional share of Stock shall be delivered
hereunder, and, in lieu thereof, a cash payment shall be made to Payee in an
amount equal to the Fair Market Value multiplied by the fraction of a share of
Stock to which Payee would otherwise be entitled, without interest. For
purposes hereof, the term "Fair Market Value" shall mean the reported last sale
prices of a share of Stock on the NASDAQ National Market as reported on the
last trading day immediately preceding the date such principal installment is
due. The principal balance of this Promissory Note shall bear no interest.
2. Acceleration. The entire unpaid principal balance of this
Promissory Note shall immediately become due and payable in the event (i)
Payee's employment with Payor and its subsidiaries is terminated for any reason
other than "for cause" (as defined in those certain Stock Option Agreements
under the 1995 Stock Option Plan dated February 26, 1996, May 31, 1996 and June
6, 1996, and as amended on January 30, 1997 and October 29, 1997, by and
between CELCORE and Payee (as amended, collectively, the "Option Agreement")),
(ii) Payee's employment with Payor and its subsidiaries is terminated by reason
of a Constructive Discharge (as defined in the Option Agreement), or (iii)
Payee's employment with Payor and its subsidiaries is terminated by reason of a
Payee's death or Disability (as defined in the Option Agreement) (each an
"Event of Default"). Upon the occurrence of an Event of Default, Payee shall
have all rights to collect and accelerate, without demand, presentment for
payment, notice of dishonor, notice of intent to demand or accelerate payment,
notice of acceleration, diligence in collection, grace, notice and protest or
legal process of any kind, all of which Payor hereby expressly waives, and
immediately, without any grace period, enforce all rights with respect to, the
indebtedness evidenced by this Promissory Note and declare the same at once due
and payable.
3. Release of Liability. Notwithstanding the foregoing or
anything contained herein to the contrary, in the event (i) Payee's employment
with Payor, or its subsidiaries, is terminated "for cause" (as defined in the
Option Agreement) or (ii) Payee ceases to be employed by Payor or its
subsidiaries because Payee voluntarily terminates such employment (other than
by reason of a Constructive Discharge), then in each such case Payee shall be
deemed to have forever released and fully discharged Payor of any obligation
whatsoever to pay Payee any remaining principal balance payable hereunder as of
the date of such termination of Payee's employment.
This Promissory Note may not be changed or modified orally. This
Promissory Note, or any interest herein, may not be assigned without the prior
written consent of Payor; except to Payor's successors, if any, due to a
merger, acquisition of substantially all of its assets, liquidation or similar
change in form.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
DSC COMMUNICATIONS CORPORATION
/s/ GERALD F. MONTRY
-----------------------------------------
Gerald F. Montry,
Senior Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 4.15
PROMISSORY NOTE
[Gonzalez]
December 4, 1997 US$530,935.65
FOR VALUE RECEIVED, subject to Section 3 below, the undersigned, DSC
Communications Corporation, a Delaware corporation (the "Payor"), promises to
pay to the order of Joseph J. Gonzalez (the "Payee"), the principal sum of Five
Hundred Thirty Thousand Nine Hundred Thirty-Five and 65/100 Dollars
(US$530,935.65), at such times and on such terms as described below.
1. Repayment of Principal. The aggregate principal amount of
this Promissory Note shall be payable in two installments, the first of which
shall be in the amount of US $265,467.83 and shall be payable on the first
anniversary date of the Effective Time and the second of which shall be in the
amount of US $265,467.82 and shall be payable on the second anniversary date of
the Effective Time (or earlier as hereinafter referred to). For purposes
hereof, the term "Effective Time" shall have the meaning ascribed to such term
in that certain Amended and Restated Agreement and Plan of Merger among Payor,
CI Acquisition Company, a Delaware corporation and a wholly owned subsidiary of
Payor, and CELCORE, Inc., a Delaware corporation ("CELCORE"), dated December 3,
1997 (the "Merger Agreement"). Payor will pay Payee at c/o Celcore, Inc., 3800
Forest Hill - Irene Road, Memphis, Tennessee 38125 or at such other place as
Payee may designate in writing. Payment of any principal installment due
hereunder shall be made by delivery of that number of whole shares of Payor's
common stock, $.01 per share ("Stock"), having an aggregate Fair Market Value
on the last trading day immediately preceding the date such payment is due
equal to the principal installment due. No fractional share of Stock shall be
delivered hereunder, and, in lieu thereof, a cash payment shall be made to
Payee in an amount equal to the Fair Market Value multiplied by the fraction of
a share of Stock to which Payee would otherwise be entitled, without interest.
For purposes hereof, the term "Fair Market Value" shall mean the reported last
sale prices of a share of Stock on the NASDAQ National Market as reported on
the last trading day immediately preceding the date such principal installment
is due. The principal balance of this Promissory Note shall bear no interest.
2. Acceleration. The entire unpaid principal balance of this
Promissory Note shall immediately become due and payable in the event (i)
Payee's employment with Payor and its subsidiaries is terminated for any reason
other than "for cause" (as defined in those certain Stock Option Agreements
under the 1995 Stock Option Plan dated January 8, 1996 and September 15, 1996,
and as amended on January 30, 1997 and October 29, 1997, by and between CELCORE
and Payee (as amended, collectively, the "Option Agreement")), (ii) Payee's
employment with Payor and its subsidiaries is terminated by reason of a
Constructive Discharge (as defined in the Option Agreement), or (iii) Payee's
employment with Payor and its subsidiaries is terminated by reason of a Payee's
death or Disability (as defined in the Option Agreement) (each an "Event of
Default"). Upon the occurrence of an Event of Default, Payee shall have all
rights to collect and accelerate, without demand, presentment for payment,
notice of dishonor, notice of intent to demand or accelerate payment, notice of
acceleration, diligence in collection, grace, notice and protest or legal
process of any kind, all of which Payor hereby expressly waives, and
immediately, without any grace period, enforce all rights with respect to, the
indebtedness evidenced by this Promissory Note and declare the same at once due
and payable.
3. Release of Liability. Notwithstanding the foregoing or
anything contained herein to the contrary, in the event (i) Payee's employment
with Payor, or its subsidiaries, is terminated "for cause" (as defined in the
Option Agreement) or (ii) Payee ceases to be employed by Payor or its
subsidiaries because Payee voluntarily terminates such employment (other than
by reason of a Constructive Discharge), then in each such case Payee shall be
deemed to have forever released and fully discharged Payor of any obligation
whatsoever to pay Payee any remaining principal balance payable hereunder as of
the date of such termination of Payee's employment.
This Promissory Note may not be changed or modified orally. This
Promissory Note, or any interest herein, may not be assigned without the prior
written consent of Payor; except to Payor's successors, if any, due to a
merger, acquisition of substantially all of its assets, liquidation or similar
change in form.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
DSC COMMUNICATIONS CORPORATION
/s/ GERALD F. MONTRY
--------------------------------------
Gerald F. Montry,
Senior Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 5.1
December ___, 1997
DSC Communications Corporation
1000 Coit Road
Plano, Texas 75075
Gentlemen:
DSC Communications Corporation, a Delaware corporation (the
"Company"), intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") on Form
S-8 under the Securities Act of 1933, as amended (the "Act"). The Registration
Statement covers (i) [113,921] shares of the Company's common stock, $.01 par
value per share, including the preferred stock purchase rights attaching to
such stock pursuant to that certain Rights Agreement dated April 25, 1996 by
and between the Company and Harris Trust and Savings Bank, formerly KeyCorp
Shareholder Services, Inc. (the "Common Stock"), which shall be issued pursuant
to the Employment Agreements between DSC Marketing Services, Inc. and each of
Thomas R. Berger, James M. Foley and Joseph J. Gonzalez (the "Plan"), and (ii)
such additional shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Plan (such shares collectively referred to as
the "Securities").
We have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement. In rendering this
opinion we have examined such corporate records, documents and instruments of
the Company and such certificates of public officials, have received such
representations from officers of the Company, and have reviewed such questions
of law as in our judgment are necessary, relevant or appropriate to enable us
to render the opinion expressed below. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all corporate records,
documents and instruments submitted to us as originals, the conformity to
original documents of all documents submitted to us as conformed, certified or
photostatic copies thereof, and the authenticity of the originals of such
photostatic, certified or conformed copies.
Based upon such examination and review and upon representations made
to us by officers of the Company, we are of the opinion that upon issuance and
delivery of the Securities in accordance with the terms and conditions of the
Plan, and upon receipt by the Company of the full consideration for the
Securities as determined pursuant to the Plan, the Securities will be legally
issued, fully paid and nonassessable shares of Common Stock of the Company.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Respectfully submitted,
BAKER & MCKENZIE
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Employment Agreements between DSC Marketing
Services, Inc. and Thomas R. Berger, James M. Foley and Joseph J. Gonzalez of
our reports dated January 23, 1997, with respect to the consolidated financial
statements of DSC Communications Corporation incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1996 and the related
financial statement schedule included therein, filed with the Securities and
Exchange Commission.
/S/ ERNST & YOUNG, LLP
Dallas, Texas,
December 5, 1997
