1
EXHIBIT 26
EMPLOYMENT AGREEMENT
OF XXXXXX XXXXXX
WITH
DSP TELECOM, INC.
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
this 15th day of July, 1999 ("Effective Date"), by and between DSP TELECOM,
INC., a California corporation (hereinafter the "Corporation"), and XXXXXX
XXXXXX (hereinafter "Arditi").
RECITAL
The Corporation hereby agrees to employ Arditi, and Arditi hereby
agrees to accept employment with the Corporation, on the terms and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. EMPLOYMENT DUTIES.
a. CORPORATION'S DUTIES. The Corporation shall allow Arditi
to, and Arditi shall, perform responsibilities normally incident to his position
as Chief Operating Officer of the Corporation's parent corporation, DSP
COMMUNICATIONS, INC. ("DSPC"), or other equivalent position commensurate with
his background, education, experience and professional standing. The Corporation
shall provide Arditi with a private office, stenographic help, office equipment,
supplies, customary services and cooperation suitable for the performance of his
duties.
x. XXXXXX'X DUTIES. Unless otherwise agreed to by the parties,
Arditi shall serve as Chief Operating Officer of DSPC or other equivalent
position. Arditi shall devote his full productive time, attention, energy, and
skill to the business of DSPC during the employment term set forth below, and
shall not become engaged to render similar services on behalf of any other
entity while employed hereunder, without the Corporation's written consent.
Arditi shall report directly to Xxxxxx Xxxx, the Corporation's Chairman of the
Board and Chief Executive Officer. Arditi,
1
2
however, shall be allowed to perform services for the Corporation's affiliates,
including, without limitation: DSP TELECOMMUNICATIONS, LTD.; CTP SYSTEMS, LTD.;
DSPC (ISRAEL), LTD.; DSPC (JAPAN), INC.; CTP SYSTEMS, INC.; and ISOTEL CORP.
(Arditi may only spend time with ComBox, Ltd. and may only have limited duties
that do not consume in the aggregate more than five percent (5%) of his time.)
2. TERM. This Agreement shall be for an unlimited period of time
subject to termination as set forth herein. As used herein, "employment term"
refers to the entire period of employment of Arditi hereunder.
3. COMPENSATION. Arditi shall be compensated as follows:
a. FIXED SALARY. Arditi shall receive a fixed annual salary of
One Hundred Fifty-five Thousand Dollars ($155,000) effective May 1st. The
Corporation agrees to review the fixed salary following the end of each twelve
(12) month period during the employment term based upon Arditi's services and
the Corporation's financial results during the calendar year, and to make such
increases as may be determined appropriate in the discretion of the
Corporation's Chief Executive Officer.
b. PAYMENT. Arditi's fixed salary shall be payable on a
semi-monthly basis, in arrears.
c. BONUS COMPENSATION. During the employment term, Arditi
shall be entitled to a management by objective plan and Corporate bonus plan as
determined by the Corporation's Chief Executive Officer.
d. VACATION. Arditi shall accrue paid vacation at the rate of
twenty (20) working days for each twelve (12) months of employment. Arditi shall
be compensated at his usual rate of compensation during any such vacation.
Arditi shall be entitled to ten (10) paid holidays during each twelve (12)
months of employment as set forth in the Corporation's employee manual as
amended from time to time.
e. BENEFITS. During the employment term, Arditi and his
dependents shall be entitled to participate in any group plans or programs
maintained by the Corporation for any employees
2
3
relating to group health, disability, life insurance and other related benefits
as in effect from time to time. The level of benefits shall be based on the
salary payable to Arditi. The Corporation and DSPC shall provide Arditi with
Officer Insurance, if reasonably available to the Corporation and DSPC, and of
its officers. Arditi shall in no event receive less insurance coverage than that
available to any other vice-presidential level employee of the Corporation.
4. EXPENSES. The Corporation shall reimburse Arditi for expenses as
follows:
a. BUSINESS. For Arditi's normal and reasonable expenses
incurred for travel, entertainment and similar items in promoting and carrying
out the business of the Corporation in accordance with the Corporation's general
policy as adopted by the Corporation's management from time to time, and for all
expenses incurred at DSPC's request. As a condition of reimbursement, Arditi
agrees to provide the Corporation with copies of all available invoices and
receipts, and otherwise account to the Corporation in sufficient detail to allow
the Corporation to claim an income tax deduction for such paid item, if such
item is deductible. Reimbursements shall be made on a monthly, or more frequent,
basis.
b. PROFESSIONAL DUES. The Corporation shall also reimburse
Arditi for all professional membership dues incurred at the request of the
Corporation.
c. RELOCATION EXPENSES. The Corporation agrees to reimburse
Arditi for the airfare for Arditi and his immediate family to fly to the United
States (business class for Arditi and his spouse, economy class for his
children), plus up to Twenty Thousand Dollars ($20,000) for all reasonable
expenses incurred and substantiated by receipts for moving Arditi and his
immediate family from Israel to California, including but not limited to car
rental, and any other reasonable expenses associated with Arditi's relocation.
In addition, Arditi shall be given a monthly housing subsidy of up to an
aggregate amount of One Thousand Five Hundred Dollars ($1,500) per month for the
first two (2) years for housing
3
4
in California, as well as housing while in Israel on the Corporation's business.
For amounts to be eligible for said housing subsidy, receipts for the expenses
must be delivered to the Corporation. The Corporation also agrees to reimburse
Arditi for the airfare for Arditi and his immediate family to fly back to Israel
(business class for Arditi and his spouse, economy class for his children) and
up to Ten Thousand Dollars ($10,000) for all other reasonable expenses incurred
and substantiated by receipts to relocate Arditi and his immediate family back
to Israel at the conclusion of Arditi's employment with the Corporation. There
shall be no reimbursement for return travel to Israel should Arditi take other
employment in the United States prior to returning to Israel. The Corporation
shall reimburse Arditi for his reasonable expenses in attaining a Green Card
Visa status.
d. TRAVEL TO ISRAEL. For each six (6) months of Arditi's
employment with the Corporation, Arditi and his family will be entitled to
travel once to Israel by business class, at the Corporation's expense.
5. CONFIDENTIALITY AND COMPETITIVE ACTIVITIES. Arditi agrees that
during the employment term, he is in a position of special trust and confidence
and has access to confidential and proprietary information about the
Corporation's business and plans. Arditi agrees that he will not, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any similar individual
or representative capacity, engage or participate in any business that is in
competition, in any manner whatsoever, with the Corporation. Notwithstanding
anything in the foregoing to the contrary, Arditi shall be allowed to invest as
a shareholder in publicly-traded companies, or through a venture capital firm or
an investment pool. Further notwithstanding anything to the contrary herein,
Arditi may remain as a shareholder and director of ComBox, LTD under the terms
above.
For purposes of this Section 5, the term "Corporation" shall also mean
DSPC or any of its subsidiaries.
4
5
6. TRADE SECRETS.
a. SPECIAL TECHNIQUES. It is hereby agreed that the
Corporation has developed or acquired certain products, technology, unique or
special method, manufacturing and assembly processes and techniques, trade
secrets, special written marketing plans and special customer arrangements, and
other proprietary rights and confidential information and shall during the
employment term continue to develop, compile and acquire said items (all
hereinafter collectively referred to as the "Corporation's Property"). It is
expected that Arditi will gain knowledge of and utilize the Corporation's
Property during the course and scope of his employment with the Corporation, and
will be in a position of trust with respect to the Corporation's Property.
b. CORPORATION'S PROPERTY. It is hereby stipulated and agreed
that the Corporation's Property shall remain the Corporation's sole property. In
the event that Arditi's employment is terminated, for whatever reason, Arditi
agrees not to copy, make known, disclose or use, any of the Corporation's
Property without the Corporation's prior written consent, which shall not be
unreasonably withheld. In such event, Arditi further agrees not to endeavor or
attempt in any way to interfere with or induce a breach of any prior proprietary
contractual relationship that the Corporation may have with any employee,
customer, contractor, supplier, representative, or distributor for twelve (12)
months. Arditi agrees upon termination of employment to deliver to the
Corporation all confidential papers, documents, records, lists and notes
(whether prepared by Arditi or others) comprising or containing the
Corporation's Property. Arditi recognizes that violation of covenants and
agreements contained in this Section 6 may result in irreparable injury to the
Corporation which would not be fully compensable by way of money damages.
c. COVENANT NOT TO COMPETE. For a period of one (1) year from
the date of any termination of Arditi's employment with the Corporation,
provided that he has sold substantially all of his stock in the Corporation,
Arditi shall not, directly or
5
6
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, Director, or in any other individual or
representative capacity, engage or participate in any activities within the
State of California, which are the same as, or directly competitive with, the
activities in which the Corporation is presently engaged.
d. CORPORATION DEFINED. For purposes of this Section 6, the
term "Corporation" shall also mean DSPC and any of its subsidiaries.
7. TERMINATION.
a. GENERAL. The Corporation may terminate Arditi's employment
under this Agreement without cause, upon sixty (60) days' advance written notice
to Arditi. Arditi may voluntarily terminate his employment hereunder upon sixty
(60) days' advance written notice to the Corporation.
b. TERMINATION FOR CAUSE. The Corporation may immediately
terminate Arditi's employment at any time for cause. Termination for cause shall
be effective from the receipt of written notice thereof to Arditi specifying the
grounds for termination and all relevant facts. Cause shall be deemed to include
clearly proven: (i) material neglect of his duties or a significant violation of
any of the provisions of this Agreement, which continues after written notice
and a reasonable opportunity (not to exceed fifteen (15) days) in which to cure;
(ii) fraud, embezzlement, defalcation or conviction of any felonious offense; or
(iii) intentionally imparting confidential information relating to the
Corporation or DSPC or their business to competitors or to other third parties
other than in the course of carrying out his duties hereunder. The Corporation's
exercise of its rights to terminate with cause shall be without prejudice to any
other remedy it may be entitled at law, in equity, or under this Agreement.
c. TERMINATION UPON DEATH OR DISABILITY. This Agreement shall
automatically terminate upon Arditi's death. In addition, if any disability or
incapacity of Arditi to perform his duties as the result of any injury,
sickness, or physical, mental
6
7
or emotional condition continues for a period of thirty (30) business days
(excluding any accrued vacation) out of any one hundred twenty (120) calendar
day period, the Corporation may terminate Arditi's employment upon written
notice. Payment of salary to Arditi during any sick leave shall only be to the
extent that Arditi has accrued sick leave or vacation days. Arditi shall accrue
sick leave at the same rate generally available to the Corporation's
vice-president level employees.
x. XXXXXXXXX PAY. If this Agreement is terminated by the
Corporation without cause pursuant to the first sentence in Section 7.a (above),
the Corporation shall pay Arditi a severance fee equal to his monthly salary at
his then current rate of fixed salary compensation, multiplied by the number six
(6). There shall be no severance in the event that this Agreement is terminated
in accordance with Section 7.b. If Arditi voluntarily terminates his employment,
he shall not be entitled to any severance unless he gives the Corporation at
least four (4) months' written notice and actively works to train a successor
and provides the Corporation with a list of all of his marketing contacts and
current projects ("Arditi Cooperation"). In the event of Arditi's voluntary
termination and Arditi Cooperation, Arditi shall be entitled to a severance fee
equal to his monthly salary at his then current rate of fixed salary
compensation, multiplied by the number four (4).
7
8
8. CORPORATE OPPORTUNITIES.
a. DUTY TO NOTIFY. In the event that Arditi, during the
employment term, shall become aware of any material and significant business
opportunity related to the Corporation's or DSPC's business, Arditi shall
promptly notify the Corporation's Chief Executive Officer of such opportunity.
Arditi shall not appropriate for himself or for any other person other than the
Corporation, or any affiliate of the Corporation, any such opportunity unless,
as to any particular opportunity, the Board of Directors, or the Chief Executive
Officer, of the Corporation fails to take appropriate action within thirty (30)
days. Arditi's duty to notify the Corporation and to refrain from appropriating
all such opportunities for thirty (30) days shall neither be limited by, nor
shall such duty limit, the application of the general law of California relating
to the fiduciary duties of an agent or employee.
b. FAILURE TO NOTIFY. In the event that Arditi fails to notify
the Corporation of, or so appropriates, any such opportunity without the express
written consent of the Chief Executive Officer, Arditi shall be deemed to have
violated the provisions of this Section, notwithstanding the following:
i. The capacity in which Arditi shall have acquired
such opportunity; or
ii. The probable success in the Corporation's hands
of such opportunity.
9. MISCELLANEOUS.
a. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein, and supersedes and replaces any prior agreements and
understandings, whether oral or written between them with respect to such
matters, specifically excluding stock option agreements, the terms of which
shall not change by the mere fact that Arditi is employed by the Corporation and
not the Israeli affiliate of the Corporation. The provisions of this Agreement
may be waived, altered, amended or repealed in whole or
8
9
in part only upon the written consent of both parties to this Agreement.
b. NO IMPLIED WAIVERS. The failure of either party at any time
to require performance by the other party of any provision hereof shall not
affect in any way the right to require such performance at any time thereafter,
nor shall the waiver by either party of a breach of any provision hereof be
taken or held to be a waiver of any subsequent breach of the same provision or
any other provision.
c. PERSONAL SERVICES. It is understood that the services to be
performed by Arditi hereunder are personal in nature and the obligations to
perform such services and the conditions and covenants of this Agreement cannot
be assigned by Arditi. Subject to the foregoing, and except as otherwise
provided herein, this Agreement shall inure to the benefit of, and bind the
successors and assigns of, the Corporation.
d. SEVERABILITY. If for any reason any provision of this
Agreement shall be determined to be invalid or inoperative, the validity and
effect of the other provisions hereof shall not be affected thereby, provided
that no such severability shall be effective if it causes a material detriment
to any party.
e. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.
f. NOTICES. All notices, requests, demands, instructions or
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered personally, or if given by prepaid telegram, or mailed first-class,
postage prepaid, registered or certified mail, return receipt requested, shall
be deemed to have been given seventy-two (72) hours after such delivery, if
addressed to the other party at the addresses as set forth on the signature page
below. Either party hereto may change the address to which such communications
are to be directed by
9
10
giving written notice to the other party hereto of such change in the manner
above provided.
g. MERGER, TRANSFER OF ASSETS, OR DISSOLUTION OF THE
CORPORATION. This Agreement shall not be terminated by any dissolution of the
Corporation resulting from either merger or consolidation in which the
Corporation is not the consolidated or surviving corporation or a transfer of
all or substantially all of the assets of the Corporation. In such event, the
rights, benefits and obligations herein shall automatically be assigned to the
surviving or resulting corporation or to the transferee of the assets.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first written above.
DSP TELECOM, INC.,
a California corporation
00000 Xxxxxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
By: /s/ XXXXXXX X. XXXXXXX /s/ Xxxxxx Xxxxxx
---------------------------------- ------------------------------------
Xxxxxxx X. Xxxxxxx XXXXXX XXXXXX
Secretary and General Counsel
------------------------------------
------------------------------------
(Print Address)
10
