-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TWyl2n90D6M2DZGsfrHTbEWAjD0xP8WaNNXzUn0sbmg/J1wNqKmUUSxC2JbgwIUJ VTav6huTI24IV8UZFF3qzg== 0000950134-97-009237.txt : 19971212 0000950134-97-009237.hdr.sgml : 19971212 ACCESSION NUMBER: 0000950134-97-009237 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19971211 EFFECTIVENESS DATE: 19971211 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSC COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000316004 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 541025763 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-41963 FILM NUMBER: 97736028 BUSINESS ADDRESS: STREET 1: 1000 COIT RD CITY: PLANO STATE: TX ZIP: 75075 BUSINESS PHONE: 2145193000 MAIL ADDRESS: STREET 1: 1000 COIT ROAD CITY: PLANO STATE: TX ZIP: 75075-5813 FORMER COMPANY: FORMER CONFORMED NAME: DIGITAL SWITCH CORP DATE OF NAME CHANGE: 19850425 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on December 11, 1997 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ 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 -------------------- CALCULATION OF REGISTRATION FEE
===================================================================================================================== 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) - --------------------------------------------------------------------------------------------------------------------- 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 =====================================================================================================================
(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. ================================================================================ 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 -2- 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.
EXHIBIT NUMBER DESCRIPTION ------ ----------- 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)
-3- 4 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)
- ------------------------ * 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; -4- 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. -5- 6 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.
SIGNATURE TITLE DATE --------- ----- ---- /s/ James L. Donald Chairman of the Board, President and Chief December 10, 1997 -------------------------------------- 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 -------------------------------------- SIR JOHN FAIRCLOUGH /s/ James L. Fischer Director December 10, 1997 -------------------------------------- JAMES L. FISCHER
-6- 7
SIGNATURE TITLE DATE --------- ----- ---- /s/ Robert S. Folsom Director December 10, 1997 -------------------------------------- ROBERT S. FOLSOM /s/ William O. Hunt Director December 10, 1997 -------------------------------------- WILLIAM O. HUNT /s/ Morton L. Topfer Director December 10, 1997 -------------------------------------- MORTON L. TOPFER
-7- 8 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 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
9 *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)
EX-4.7 2 EMPLOYMENT AGREEMENT - THOMAS R. BERGER 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 -1- 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. -2- 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, -3- 4 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 -4- 5 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 -5- 6 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 -6- EX-4.8 3 AMEND EMPLOYMENT AGREEMENT - THOMAS R. BERGER 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 EX-4.9 4 EMPLOYMENT AGREEMENT - JAMES M. FOLEY 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 -1- 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. -2- 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, -3- 4 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 -4- 5 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' -5- 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 -6- EX-4.10 5 AMENDMENT NO. 1 EMPLOYMENT AGREEMENT-JAMES M FOLEY 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 EX-4.11 6 EMPLOYMENT AGREEMENT - JOSEPH J. GONZALEZ 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 -1- 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 -2- 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. -3- 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 -4- 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- 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- EX-4.12 7 AMENDMENT-EMPLOYMENT AGREEMENT-JOSEPH J. GONZALEZ 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 EX-4.13 8 PROMISSORY NOTE - THOMAS R. BERGER 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 EX-4.14 9 PROMISSORY NOTE - JAMES M. FOLEY 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 EX-4.15 10 PROMISSORY NOTE - JOSEPH J. GONZALEZ 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 EX-5.1 11 OPINION OF BAKER & MCKENZIE 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 EX-23.2 12 CONSENT OF ERNST & YOUNG LLP 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 -----END PRIVACY-ENHANCED MESSAGE-----