Document:

<PAGE>

                                                                    EXHIBIT 4.36

December 28, 2002

Brent Flichel

Dear Brent;

Congratulations to your promotion to Vice President Finance and Chief Financial
Officer.

In your new position, effective January 1, 2003, you will report to the
undersigned.

Attached please find the amendment to your existing employment agreement with
Spectrum.

Please sign in the space provided below, initial each of the attached pages and
return the entire document to me.

I am looking forward to working with you in your new role and I am sure that you
will excel in this next step in your career as you have before.

Yours truly,

/s/ Pascal Spothelfer

Pascal Spothelfer
President &CEO
Spectrum Signal Processing Inc.

Attachments

                        I accept the promotion and the offer as outlined above
                        and in the attachment.

                        /s/ Brent Flichel         December 28, 2002
                        ---------------------     -----------------
                        Brent Flichel             Date

<PAGE>

                            PAY AND BENEFITS OUTLINE
                                       FOR

                                  Brent Flichel

                                       PAY

<TABLE>
<S>                                                    <C>
Your pay rate will be ...............................  $160,000 p.a
The effective date will be ..........................   January 1, 2003
Your pay period will be .............................   semi-monthly
</TABLE>

                                  ANNUAL BONUS

In addition to your base salary, you are eligible to earn a discretionary annual
performance bonus of up to $50,000, based on the achievement of your performance
objectives as well as corporate objectives. The annual performance objectives
will be established between you and the President and CEO in January of each
year.

                                  STOCK OPTION

Spectrum offers its senior employees stock options in the form of an initial
grant plus an annual performance-based option allotment at their annual
performance review date. The amount of your annual option grant will be
determined at the time of your annual performance evaluation and compensation
review. The strike price of all options will be set at the closing market price
the day prior to the granting by the Board of Directors, in accordance with the
regulations of the Toronto Stock Exchange. Your stock options will be governed
by the terms of Spectrum's Stock Option Plan and will vest in annual increments
of 25%, 25%, 25%, and 25%. The stock options will be for a ten (10) year term.
You will receive your stock option agreement shortly after your options are
granted.

                        RRSP, GROUP BENEFITS AND VACATION

RRSP, Group Benefits and Vacation Entitlement continue as in your previous
position based on your employment continuance with Spectrum and will not change
except for being adjusted to your increased compensation where applicable.

                           OTHER IMPORTANT INFORMATION

DOCUMENTATION

Changes in conditions of employment which alter the terms of this Agreement will
be documented in writing. Unless specifically changed in writing by Spectrum,
each individual term of this Agreement is binding for the full term of your
tenure at Spectrum.

TERMINATION

By signing this Agreement, you agree that any one of the following actions on
your part constitutes just cause for dismissal, enabling Spectrum to terminate
your employment immediately without further notice to you:

                                                        Employee Initial:_______

                                                                               2
<PAGE>

      -     repeated failure to show up for work without informing your direct
            supervisor or without adequate justification;

      -     theft from Spectrum or any of its employees;

      -     breach of the Assignment of Rights & Non-Disclosure Agreement;

      -     misrepresentation of your credentials inany manner; or

      -     breach of Spectrum's Insider Trading Policy (attached for
            reference).

It is acknowledged that this term of the Agreement is not intended to limit
Spectrum with regard to any other reasons which may be available to it for just
cause dismissal, including any action that would be considered cause under the
common law of British Columbia. Any dismissal for cause will be without notice
or any payment in lieu of notice.

NOTICE - SPECTRUM

Spectrum may terminate your employment without cause upon 12 months notice.

Notwithstanding existing stock option agreements, all of your stock options
which have vested at the date of termination will expire on the earlier of their
expiry date and 90 days after the date that notice is given to you. Where
Spectrum chooses payment in lieu of working notice, you will be paid on a month
to month basis. You will have an obligation to mitigate your loss as a result of
termination by finding alternate employment. Upon successful location of
replacement employment, Spectrum will pay as a lump sum, 50% of the
then-remaining balance of the base salary and average annual non-discretionary
bonus in the previous three years of Spectrum employment.

NOTICE - EMPLOYEE

Should you choose to leave Spectrum, you will provide a minimum of three months
notice.

CHANGE IN CONTROL AGREEMENT

These terms have to be read in conjunction with the Change in Control Agreement
between Mr. Flichel and Spectrum, dated December 28, 2002.

                                                        Employee Initial:_______

                                                                               3
<PAGE>

THIS AGREEMENT made the 28th day of December 2002.

BETWEEN:

            SPECTRUM SIGNAL PROCESSING INC., a corporation incorporated pursuant
            to the laws of the Province of British Columbia and having an
            address at One Spectrum Court, #200 - 2700 Production Way, Burnaby,
            British Columbia

            (herein called "Company")

                                                               OF THE FIRST PART

AND:

            BRENT ALLAN FLICHEL

            (herein called "Employee")

                                                              OF THE SECOND PART

WHEREAS:

A.          The Employee is employed by the Company under a letter of employment
(hereafter the "Employment Contract");

B.          The Company and the Employee are desirous of having certain rights
and benefits in the event that the Employee's employment with the Company is
terminated in a manner set forth hereinafter;

C.          The Company wishes to retain the benefit of the Employee's services
and to ensure that the Employee is able to carry out his responsibilities with
the Company free from any distractions associated with any potential change in
the ownership or control of the Company or its assets;

D.          In consideration of the rights and benefits conferred on the
Employee by this Agreement, the Employee has agreed to provide certain
restrictive covenants in favour of the Company;

<PAGE>

                                      -2-

NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by each of the
Employee and the Company, it is agreed by and between the Employee and the
Company as follows:

1.          DEFINITIONS AND INTERPRETATION

1.1         Definitions

            In this Agreement, the following words and terms with the initial
letter or letters thereof capitalized shall have the meanings set forth below:

      (a)   "Accrued Compensation" means an amount equal to amounts earned or
            accrued up to and including the date on which the Employee's
            employment is terminated but not paid as of that date, including (i)
            base salary, (ii) vacation pay, and (iii) non-discretionary bonuses
            and incentive compensation;

      (b)   "Agreement" means this agreement as amended from time to time;

      (c)   "Average Bonus" means the average of the annual non-discretionary
            bonuses paid to the Employee during the three full fiscal years
            ended prior to the termination of the employment of the Employee as
            provided hereunder;

      (d)   "Change in Control" means a transaction or series of transactions
            whereby directly or indirectly:

            (i)   any person or combination of persons acting in concert
                  acquires a sufficient number of securities of the Company to
                  affect the control of the Company, whether by way of
                  acquisition of previously issued securities or as a result of
                  issuances from treasury, or a combination thereof, and for the
                  purposes of this Agreement, a person or combination of persons
                  acting in concert holding shares or other securities in excess
                  of the number which,

<PAGE>

                                      -3-

                  directly or following the conversion or exercise thereof,
                  would entitle the holders thereof to cast more than 40% of the
                  votes attached to all shares of the Company which may be cast
                  to elect directors of the Company, shall be deemed to be in a
                  position to affect the control of the Company;

            (ii)  the Company shall consolidate or merge with or into,
                  amalgamate with, or enter into a statutory arrangement with
                  any other person, or any other person shall consolidate or
                  merge with or into, or amalgamate with or enter into a
                  statutory arrangement with the Company, and, in connection
                  therewith, all or part of the outstanding shares of the
                  Company which have voting rights attached thereto shall be
                  changed in any way, reclassified or converted into, exchanged
                  or otherwise acquired for shares or other securities of the
                  Company or any other person or for cash or any other property
                  (other than a transaction which has been approved by the
                  directors of the Company, a majority of whom are directors of
                  the Company holding office at the date of this Agreement); or

            (iii) the Company shall sell or otherwise transfer, including by way
                  of the grant of a leasehold interest (or one or more
                  subsidiaries of the Company shall sell or otherwise transfer,
                  including by way of the grant of a leasehold interest)
                  property or assets (A) aggregating more than 50% of the
                  consolidated assets (measured by either book value or fair
                  market value) of the Company and its subsidiaries as at the
                  end of the most recently completed financial year of the
                  Company or (B) which during the most recently completed
                  financial year of the Company generated, or during the then
                  current financial year of the Company are expected to
                  generate, more than 50% of the consolidated revenue or cash
                  flow of the Company and its subsidiaries, to any other person
                  or persons (other than the Company or one or more subsidiaries
                  of the Company); other than a transaction or series of
                  transactions which involves a sale of securities or assets of
                  the Company with which the Employee is involved as a purchaser
                  in any

<PAGE>

                                      -4-

                  manner, whether directly or indirectly, and whether by way of
                  participation in a corporation or partnership that is a
                  purchaser or by provision of debt, equity or
                  purchase-leaseback financing;

      (e)   "Company's Business" means the development and commercialization of
            signal processing boards, sub-systems, systems and related products
            and services;

      (f)   "Expiry Date" means the date which is 12 months after a Change in
            Control occurs;

      (g)   "Restricted Period" means the period of 18 months commencing upon
            the date of termination of the Employee's employment pursuant to
            Section 2.1 or Section 2.2;

      (h)   "Triggering Event" means any one of the following events which
            occurs following a Change of Control without the express agreement
            in writing of the Employee:

            (i)   an adverse change in any of the duties, powers, rights,
                  discretion, working conditions or compensation of the Employee
                  as they exist immediately prior to the Change of Control which
                  would constitute constructive dismissal at law; or

            (ii)  a change in the location of the Employee's place of employment
                  by more than 80 kilometres.

<PAGE>

                                      -5-

1.2         Plural and Gender

            Whenever used in this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing the masculine
gender shall include the feminine gender.

1.3         Binding Effect

            This Agreement shall be binding on the successors and assigns of the
Company and shall enure to the benefit of the heirs, executors, personal
representatives and permitted assigns of the Employee.

2.          RIGHTS OF EMPLOYEE

2.1         Right Upon Occurrence of Triggering Event

      (a)   Right: If a Change in Control occurs and if, in respect of the
            Employee, a Triggering Event occurs on or before the Expiry Date,
            the Employee shall be entitled, on at least 30 days written notice
            to the Company given within six months after the Triggering Event,
            to elect to terminate his employment with the Company and to receive
            from the Company in lieu of any amount he would have been entitled
            to receive on the termination of his employment pursuant to the
            provisions of the Employment Contract:

            (i)   all Accrued Compensation;

            (ii)  a sum equivalent to one and one-half (1.5) times the base
                  salary of the Employee for the period specified in the
                  Employment Contract upon Spectrum terminating the Employees
                  employment without cause;

            (iii) a sum equivalent to the Average Bonus multiplied by one and
                  one-half (1.5); and

<PAGE>

                                      -6-

            (iv)  all stock options provided for in the Employment Contract or
                  otherwise allotted to the Employee, save and except that such
                  options, if not already vested, shall vest forthwith, and all
                  options shall expire upon the earlier of their expiry date and
                  120 days after the election to terminate by the Employee.

      (b)   Assistance: Should the Employee elect to terminate his employment
            with the Company as provided in Section 2.1(a), the Employee shall,
            at the request of the Company, provide the Company with all
            information and assistance relating to his or her employment with
            the Company as may be reasonably requested by the Company in order
            to transfer the Employee's duties and responsibilities to another
            employee.

2.2         Right Upon Termination

            The Employee shall be entitled to a payment from the Company in the
amount calculated in accordance with Section 2.1(a) hereof if his employment
with the Company is terminated by the Company within 12 months after a Change of
Control other than for cause.

2.3         Benefits

            If the Employee is entitled to a payment pursuant to Section 2.1 or
2.2 hereof, then regardless of the Employee's country of residence, the Company
shall also continue to pay the Employee's health insurance premiums and other
benefits as outlined in the Employment Contract and as permitted by the relevant
insurers for a period which is the lesser of eighteen months from termination or
until the Employee has otherwise secured comparable benefits.

<PAGE>

                                      -7-

3.          PAYMENTS AND REVIEW

3.1         Payments under this Agreement

            Subject to any arrangements made pursuant to Section 5.3 hereof, any
payment to be made by the Company pursuant to the terms of this Agreement shall
be paid by the Company, less all statutory deductions, as follows:

      (a)   the amounts payable under Sections 2.1(a)(i) (excluding bonuses),
            2.1(a)(ii) and 2.1(a)(iii) within five business days of the last day
            of the Employee's employment by the Company;

      (b)   the bonus component of the Accrued Compensation payable under
            Section 2.1(a)(i) within sixty business days of the end of the
            current fiscal year of the Company.

Any such payment shall be calculated, in the case of Section 2.1, at the date of
giving notice pursuant to Section 2.1, and in the case of Section 2.2 hereof, at
the date of termination of the Employee's employment.

The Company covenants and agrees to assist the Employee to receive all payments
made under this Agreement in a tax effective manner so long as such assistance
is not adverse to the interests of the Company.

4.          RESTRICTIVE COVENANTS

4.1         Non-Competition

            During the term of employment, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to or competitive with the Company's Business.

<PAGE>

                                      -8-

4.2         Post-employment Non-Competition

            During the period of 12 months commencing upon the date of
termination of the Employee's employment, whether the termination is pursuant to
Section 2.1 or Section 2.2 of this Agreement or termination is voluntary by
Employee of for cause by the Company, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to and competitive with the Company's Business.

4.3         Non-Solicitation of Customers

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation of any customers of the Company or
any prospective customers of the Company with whom the Employee had contact
during his employment.

4.4         Non-Solicitation of Employees

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation for employment any person who is,
at the time of such solicitation, employed by the Company and the Employee shall
not directly or indirectly induce any person to leave his or her employment with
the Company.

4.5         Remedies

            The Employee acknowledges and agrees that any breach of this
Agreement could cause irreparable damage to the Company and that in the event of
a breach by the Employee, the Company shall have in addition to any and all
other remedies at law or in equity, the right to an injunction, specific
performance or other equitable relief to prevent any violation by the Employee
of any of the provisions of this Agreement including without limitation, the
provisions of Sections 4.1, 4.2, 4.3 and 4.4. In the event of any dispute under
any of Sections 4.1 to 4.4, the Employee agrees that the Company shall be
entitled, without showing actual damages, to a

<PAGE>

                                      -9-

temporary or permanent injunction restraining the conduct of the Employee
pending a determination of such dispute and that no bond or other security shall
be required from the Company in connection therewith.

5.          MISCELLANEOUS

5.1         Agreement Supplemental

            This Agreement shall be supplemental to the Employment Contract
except insofar as the Employment Contract relates to the termination of the
Employee's employment after a Change in Control, in which case this Agreement
shall supersede the termination provisions of the Employee Contract. To the
extent that the terms of the Employment Contract are not inconsistent with this
Agreement, such terms shall continue to apply, and the Employment Agreement is
hereby ratified and confirmed.

5.2         Assignment and Assumption

            This Agreement shall be assigned by the Company to any successor
corporation of the Company and shall be binding upon such successor corporation.
For the purposes of this Section 5.2, "successor corporation" shall include any
person referred to in paragraphs 1.1(d)(ii) or (iii) hereof. The Company shall
use its best efforts to ensure that the successor corporation shall continue the
provisions of this Agreement as if it were the original party in place of the
Company; provided however that the Company shall not thereby be relieved of any
obligation to the Employee pursuant to this Agreement.

5.3         Further Assurances

            Each of the Company and the Employee agrees to make, do and execute
or cause to be made, done and executed, all such further and other things, acts,
deeds, documents, assignments and assurances as may be necessary or reasonably
required to carry out the intent and purpose of this Agreement fully and
effectually. Without limiting the generality of the foregoing, the Company shall
take all reasonable steps in order to structure the payment or

<PAGE>

                                      -10-

payments provided for in this Agreement in the manner most advantageous to the
Employee with respect to the provisions of the Income Tax Act (Canada).

5.4         Notice

      (a)   Any notice required or permitted to be given under this Agreement
            will be in writing and may be given by delivering, sending by
            telecopier, or sending by prepaid registered mail the notice to the
            following address or telecopier number:

            If to the Company:

            Spectrum Signal Processing Inc.
            One Spectrum Court
            #200 - 2700 Production Way
            Burnaby, British Columbia V5A 4X1

            Attention: Chief Executive Officer and Chair of the Board of
            Directors

            Telecopier No.: (604) 421-1764

            If to the Employee:

            as set out in the Employment Contract.

            (or to such other address or telecopier number as any party may
            specify by notice in writing to another party).

      (b)   Any notice delivered or sent by telecopier on a business day will be
            deemed conclusively to have been effectively given on the day the
            notice was delivered, or the telecopy transmission was sent
            successfully to the telecopier number set out above, as the case may
            be.

      (c)   Any notice sent by prepaid registered mail will be deemed
            conclusively to have been effectively given on the third business
            day after posting; but if at the time of posting or between the time
            of posting and the third business day thereafter there

<PAGE>

                                      -11-

            is a strike, lockout, or other labour disturbance affecting postal
            service, then the notice will not be effectively given until
            actually delivered.

5.5         Independent Legal Advice

            The Employee acknowledges having been advised to obtain independent
legal advice with respect to this Agreement.

5.6         Governing Law

            This Agreement shall be governed by and be construed in accordance
with the laws of British Columbia.

5.7         Severability

            Any provision of this Agreement which contravenes any applicable law
or which is found to be unenforceable shall, to the extent of such contravention
or unenforceability, be deemed severable and shall not cause this Agreement to
be held invalid or unenforceable or affect any other provision or provisions of
this Agreement.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the date first above written.

SPECTRUM SIGNAL PROCESSING INC.

By: /s/ Pascal E. Spothelfer
PASCAL E. SPOTHELFER, PRESIDENT & CEO

By: /s/ Brent A. Flichel
BRENT ALLAN FLICHEL, VP, FINANCE & CFO<PAGE>

                                                                    EXHIBIT 4.37

January 30, 2004

Mario Palumbo
1440 Creekside
Suite 505
Vancouver BC V6J 5B6

Dear Mario

RE: YOUR APPOINTMENT TO VP ENGINEERING

Congratulations to your appointment. I am very much looking forward to working
with you and welcome you as member of the executive team.

In line with your appointment, your terms of employments are being adjusted:

PAY

<TABLE>
<S>                           <C>
Your pay rate will be ......  $160,000 p.a.
The effective date will be .   January 1, 2004
Your pay period will be ....   Semi-monthly
</TABLE>

ANNUAL BONUS

In addition to your salary, you are eligible to earn a discretionary annual
performance bonus of up to $60,000 in cash, restricted shares or alternative
instruments. The senior management bonus plan is currently being developed
together with the Board's compensation committee. As soon as it has been
finalized, your personal plan will be determined and documented in an amendment
to this agreement. The annual performance objectives will be established between
you and the President and CEO in January of each year.

STOCK OPTIONS

Spectrum offers its senior employees stock options in the form of an initial
grant plus an annual performance-based option allotment at their annual
performance review date. Your initial grant in connection with your executive
appointment amounts to 30,000 options, which will be granted effective February
1, 2004. Additional option awards will be considered by the Board's compensation
committee at mid-year 2004. Future annual option grants will be determined at
the time of your annual performance evaluation and compensation review. The
strike price of all options will be set at the closing market price the day
prior to the granting by the Board of Directors, in accordance with the
regulations of the Toronto Stock Exchange. Your stock options will be governed
by the terms of Spectrum's Stock Option Plan and will vest in annual increments
of 25%, 25%,

                                        1
<PAGE>

25% and 25%. The stock options will be for a five (5) year term. You will
receive your stock option agreement shortly after your options are granted.

RRSP, GROUP BENEFITS AND VACATION

RRSP, Group Benefits and Vacation Entitlement continue as in your previous
position based on your employment continuance with Spectrum and will not change
except for being adjusted to your increased compensation where applicable.

OTHER IMPORTANT INFORMATION

DOCUMENTATION

Changes in condition of employment, which alter the terms of this Agreement will
be documented in writing. Unless specifically changed in writing by Spectrum,
each individual term of this Agreement is binding for the full term of your
tenure at Spectrum.

TERMINATION

By signing this Agreement, you agree that any one of the following actions on
your part constitute just cause for dismissal, enabling Spectrum to terminate
your employment immediately without further notice to you:

      -     Repeated failure to show up for work without informing your direct
            supervisor or without justification;

      -     Theft from Spectrum or any of its employees;

      -     Breach of the Assignment of Rights & Non-Disclosure Agreement;

      -     Misrepresentation of your credentials in any manner; or

      -     Breach of Spectrum's Insider Trading Policy (attached for reference)

It is acknowledged that this term of the Agreement is not intended to limit
Spectrum with regard to any other reasons, which may be available to it for just
cause dismissal, including any action that would be considered cause under the
common law of British Columbia. Any dismissal for cause will be without notice
or any payment in lieu of notice.

NOTICE-SPECTRUM

Spectrum may terminate your employment without cause upon 9 months notice. With
every completed year of employment as an executive, the notice period will be
increased by an additional month up to a total of 12 months notice.

Notwithstanding existing stock option agreements, all or your stock options,
which have vested at the date of termination will expire on the earlier of their
expiry date and 90 days after the date that notice is given to you. Where
Spectrum chooses payment in lieu of working notice, your salary plus your
average annual non-discretionary bonus in the previous three years of Spectrum
employment will be paid on a month to month basis. This salary continuance is
subject to the following mitigation clause: Should you earn Cdn$ 2,000 or more
in any given month (including equity compensation and bonuses, excluding
options) in connection with an employment or self employment activity then you
must advise Spectrum's Payroll Manager of the total alternate income amount

                                        2
<PAGE>

earned. In such case your Spectrum salary continuance payments will be reduced
by the total amount of alternate income earned for the following salary
continuance pay period. At the end of the salary continuance period, Spectrum
will pay you a lump sum amount equal to 50% of the total alternate income amount
you earned.

NOTICE-EMPLOYEE

Should you choose to leave Spectrum, you will provide a minimum of three months
notice.

I hope that you will find the terms acceptable to you. Once you have read
through the documentation and if you are in agreement, please sign and date
below and initial each page of the attachment returning it to me at your
earliest convenience.

Again, congratulations and all the best for your new position.

Yours sincerely
SPECTRUM SIGNAL PROCESSING, INC.

/s/ Pascal E. Spothelfer

Pascal E. Spothelfer
President & CEO

I acknowledge and accept the Offer and Terms of Employment.

/s/ Mario Palumbo                                    January 30, 2004
-----------------------------                        ---------------------------
Mario Palumbo                                        Date

                            PAY AND BENEFITS OUTLINE
                                       FOR

                                  Mario Palumbo

                                        3
<PAGE>

                                       PAY

<TABLE>
<S>                                 <C>
Your pay rate will be ........      $ 160,000 p.a.
The effective date will be ...      February 1, 2004
Your pay period will be ......      Semi-monthly
</TABLE>

ANNUAL BONUS

In addition to your salary, you are eligible to earn a discretionary annual
performance bonus of up to $60,000 in cash, restricted shares or alternative
instruments. The senior management bonus plan is currently being developed
together with the Board's compensation committee. As soon as it has been
finalized, your personal plan will be determined and documented in an amendment
to this agreement. The annual performance objectives will be established between
you and the President and CEO in January of each year.

                                  STOCK OPTION

Spectrum offers its senior employees stock options in the form of an initial
grant plus an annual performance-based option allotment at their annual
performance review date. Your initial grant in connection with your executive
appointment amounts to .......options, which will be granted effective February
1, 2004. The annual amount of your option grant will be determined at the time
of your annual performance evaluation and compensation review. The strike price
of all options will be set at the closing market price the day prior to the
granting by the Board of Directors, in accordance with the regulations of the
Toronto Stock Exchange. Your stock options will be governed by the terms of
Spectrum's Stock Option Plan and will vest in annual increments of 25%, 25%, 25%
and 25%. The stock options will be for a ten (5) year term. You will receive
your stock option agreement shortly after your options are granted.

                        RRSP, GROUP BENEFITS AND VACATION

RRSP, Group Benefits and Vacation Entitlement continue as in your previous
position based on your employment continuance with Spectrum and will not change
except for being adjusted to your increased compensation where applicable.

                           OTHER IMPORTANT INFORMATION

Documentation
Changes in condition of employment which alter the terms of this Agreement will
be documented in writing. Unless specifically changed in writing by Spectrum,
each individual term of this Agreement is binding for the full term of your
tenure at Spectrum.

TERMINATION

By signing this Agreement, you agree that any one of the following actions on
your part

                                                         Employee Initial_______

constitutes just cause for dismissal, enabling Spectrum to terminate your
employment immediately without further notice to you:

                                        4
<PAGE>

      -     Repeated failure to show up for work without informing your direct
            supervisor or without justification;

      -     Theft from Spectrum or any of its employees;

      -     Breach of the Assignment of Rights & Non-Disclosure Agreement;

      -     Misrepresentation of your credentials in any manner; or

      -     Breach of Spectrum's Insider Trading Policy (attached for reference)

It is acknowledged that this term of the Agreement is not intended to limit
Spectrum with regard to any other reasons which may be available to it for just
cause dismissal, including any action that would be considered cause under the
common law of British Columbia. Any dismissal for cause will be without notice
or any payment in lieu of notice.

NOTICE-SPECTRUM

Spectrum may terminate your employment without cause upon 9 months notice. With
every completed year of employment as an executive, the notice period will be
increased by an additional month up to a total of 12 months notice.

Notwithstanding existing stock option agreements, all or your stock options,
which have vested at the date of termination will expire on the earlier of their
expiry date and 90 days after the date that notice is given to you. Where
Spectrum chooses payment in lieu of working notice, your salary plus your
average annual non-discretionary bonus in the previous three years of Spectrum
employment will be paid on a month to month basis. This salary continuance is
subject to the following mitigation clause: Should you earn Cdn$ 2,000 or more
in any given month (including equity compensation and bonuses, excluding
options) in connection with an employment or self employment activity then you
must advise Spectrum's Payroll Manager of the total alternate income amount
earned. In such case your Spectrum salary continuance payments will be reduced
by the total amount of alternate income earned for the following salary
continuance pay period. At the end of the salary continuance period, Spectrum
will pay you a lump sum amount equal to 50% of the total alternate income amount
you earned.

NOTICE-EMPLOYEE

Should you choose to leave Spectrum, you will provide a minimum of three months
notice.

CHANGE IN CONTROL AGREEMENT

These terms have to be read in conjunction with the Change of Control Agreement
between Mr. Palumbo and Spectrum, dated _________________.

                                        5
<PAGE>

                                                         Employee Initial_______

                                        6
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THIS AGREEMENT made the 1st day of February 2004.

BETWEEN:

            SPECTRUM SIGNAL PROCESSING INC., a corporation incorporated
            pursuant to the laws of the Province of British Columbia
            and having an address at One Spectrum Court, #200 - 2700
            Production Way, Burnaby, British Columbia

            (herein called "Company")

                                                               OF THE FIRST PART

AND:

            MARIO PALUMBO, a businessman having an address at Suite 505,
            1440 Creekside, Vancouver, British Columbia, V6J 5B6

            (herein called "Employee")

                                                              OF THE SECOND PART

WHEREAS:

A.          The Employee is employed by the Company under a letter of employment
(hereafter the "Employment Contract");

B.          The Company and the Employee are desirous of having certain rights
and benefits in the event that the Employee's employment with the Company is
terminated in a manner set forth hereinafter;

C.          The Company wishes to retain the benefit of the Employee's services
and to ensure that the Employee is able to carry out his responsibilities with
the Company free from any distractions associated with any potential change in
the ownership or control of the Company or its assets;

D.          In consideration of the rights and benefits conferred on the
Employee by this Agreement, the Employee has agreed to provide certain
restrictive covenants in favour of the Company;

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NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by each of the
Employee and the Company, it is agreed by and between the Employee and the
Company as follows:

1.          DEFINITIONS AND INTERPRETATION

1.1         Definitions

            In this Agreement, the following words and terms with the initial
letter or letters thereof capitalized shall have the meanings set forth below:

      (a)   "Accrued Compensation" means an amount equal to amounts earned or
            accrued up to and including the date on which the Employee's
            employment is terminated but not paid as of that date, including (i)
            base salary, (ii) vacation pay, and (iii) non-discretionary bonuses
            and incentive compensation;

      (b)   "Agreement" means this agreement as amended from time to time;

      (c)   "Average Bonus" means the average of the annual non-discretionary
            bonuses paid to the Employee during the three full fiscal years
            ended prior to the termination of the employment of the Employee as
            provided hereunder;

      (d)   "Change in Control" means a transaction or series of transactions
            whereby directly or indirectly:

            (i)   any person or combination of persons acting in concert
                  acquires a sufficient number of securities of the Company to
                  affect the control of the Company, whether by way of
                  acquisition of previously issued securities or as a result of
                  issuances from treasury, or a combination thereof, and for the
                  purposes of this Agreement, a person or combination of persons
                  acting in concert holding shares or other securities in excess
                  of the number which,

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                                       -3-

                  directly or following the conversion or exercise thereof,
                  would entitle the holders thereof to cast more than 40% of the
                  votes attached to all shares of the Company which may be cast
                  to elect directors of the Company, shall be deemed to be in a
                  position to affect the control of the Company;

            (ii)  the Company shall consolidate or merge with or into,
                  amalgamate with, or enter into a statutory arrangement with
                  any other person, or any other person shall consolidate or
                  merge with or into, or amalgamate with or enter into a
                  statutory arrangement with the Company, and, in connection
                  therewith, all or part of the outstanding shares of the
                  Company which have voting rights attached thereto shall be
                  changed in any way, reclassified or converted into, exchanged
                  or otherwise acquired for shares or other securities of the
                  Company or any other person or for cash or any other property
                  (other than a transaction which has been approved by the
                  directors of the Company, a majority of whom are directors of
                  the Company holding office at the date of this Agreement); or

            (iii) the Company shall sell or otherwise transfer, including by way
                  of the grant of a leasehold interest (or one or more
                  subsidiaries of the Company shall sell or otherwise transfer,
                  including by way of the grant of a leasehold interest)
                  property or assets (A) aggregating more than 50% of the
                  consolidated assets (measured by either book value or fair
                  market value) of the Company and its subsidiaries as at the
                  end of the most recently completed financial year of the
                  Company or (B) which during the most recently completed
                  financial year of the Company generated, or during the then
                  current financial year of the Company are expected to
                  generate, more than 50% of the consolidated revenue or cash
                  flow of the Company and its subsidiaries, to any other person
                  or persons (other than the Company or one or more subsidiaries
                  of the Company); other than a transaction or series of
                  transactions which involves a sale of securities or assets of
                  the Company with which the Employee is involved as a purchaser
                  in any

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                                       -4-

                  manner, whether directly or indirectly, and whether by way of
                  participation in a corporation or partnership that is a
                  purchaser or by provision of debt, equity or
                  purchase-leaseback financing;

      (e)   "Company's Business" means the development and commercialization of
            signal processing boards, sub-systems, systems and related products
            and services;

      (f)   "Expiry Date" means the date which is 12 months after a Change in
            Control occurs;

      (g)   "Restricted Period" means the period of 18 months commencing upon
            the date of termination of the Employee's employment pursuant to
            Section 2.1 or Section 2.2;

      (h)   "Triggering Event" means any one of the following events which
            occurs following a Change of Control without the express agreement
            in writing of the Employee:

            (i)   an adverse change in any of the duties, powers, rights,
                  discretion, working conditions or compensation of the Employee
                  as they exist immediately prior to the Change of Control which
                  would constitute constructive dismissal at law; or

            (ii)  a change in the location of the Employee's place of employment
                  by more than 80 kilometres.

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1.2         Plural and Gender

            Whenever used in this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing the masculine
gender shall include the feminine gender.

1.3         Binding Effect

            This Agreement shall be binding on the successors and assigns of the
Company and shall enure to the benefit of the heirs, executors, personal
representatives and permitted assigns of the Employee.

2.          RIGHTS OF EMPLOYEE

2.1         Right Upon Occurrence of Triggering Event

      (a)   Right: If a Change in Control occurs and if, in respect of the
            Employee, a Triggering Event occurs on or before the Expiry Date,
            the Employee shall be entitled, on at least 30 days written notice
            to the Company given within six months after the Triggering Event,
            to elect to terminate his employment with the Company and to receive
            from the Company in lieu of any amount he would have been entitled
            to receive on the termination of his employment pursuant to the
            provisions of the Employment Contract:

            (i)   all Accrued Compensation;

            (ii)  a sum equivalent to one and one-half (1.5) times the base
                  salary of the Employee for the period specified in the
                  Employment Contract upon Spectrum terminating the Employees
                  employment without cause;

            (iii) a sum equivalent to the Average Bonus multiplied by one and
                  one-half (1.5); and

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                                       -6-

            (iv)  all stock options provided for in the Employment Contract or
                  otherwise allotted to the Employee, save and except that such
                  options, if not already vested, shall vest forthwith, and all
                  options shall expire upon the earlier of their expiry date and
                  120 days after the election to terminate by the Employee.

      (b)   Assistance: Should the Employee elect to terminate his employment
            with the Company as provided in Section 2.1(a), the Employee shall,
            at the request of the Company, provide the Company with all
            information and assistance relating to his or her employment with
            the Company as may be reasonably requested by the Company in order
            to transfer the Employee's duties and responsibilities to another
            employee.

2.2         Right Upon Termination

            The Employee shall be entitled to a payment from the Company in the
amount calculated in accordance with Section 2.1(a) hereof if his employment
with the Company is terminated by the Company within 12 months after a Change of
Control other than for cause.

2.3         Benefits

            If the Employee is entitled to a payment pursuant to Section 2.1 or
2.2 hereof, then regardless of the Employee's country of residence, the Company
shall also continue to pay the Employee's health insurance premiums and other
benefits as outlined in the Employment Contract and as permitted by the relevant
insurers for a period which is the lesser of eighteen months from termination or
until the Employee has otherwise secured comparable benefits.

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                                       -7-

3.          PAYMENTS AND REVIEW

3.1         Payments under this Agreement

            Subject to any arrangements made pursuant to Section 5.3 hereof, any
payment to be made by the Company pursuant to the terms of this Agreement shall
be paid by the Company, less all statutory deductions, as follows:

      (a)   the amounts payable under Sections 2.1(a)(i) (excluding bonuses),
            2.1(a)(ii) and 2.1(a)(iii) within five business days of the last day
            of the Employee's employment by the Company;

      (b)   the bonus component of the Accrued Compensation payable under
            Section 2.1(a)(i) within sixty business days of the end of the
            current fiscal year of the Company.

Any such payment shall be calculated, in the case of Section 2.1, at the date of
giving notice pursuant to Section 2.1, and in the case of Section 2.2 hereof, at
the date of termination of the Employee's employment.

The Company covenants and agrees to assist the Employee to receive all payments
made under this Agreement in a tax effective manner so long as such assistance
is not adverse to the interests of the Company.

4.          RESTRICTIVE COVENANTS

4.1         Non-Competition

            During the term of employment, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to or competitive with the Company's Business.

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4.2         Post-employment Non-Competition

            During the period of 12 months commencing upon the date of
termination of the Employee's employment, whether the termination is pursuant to
Section 2.1 or Section 2.2 of this Agreement or termination is voluntary by
Employee of for cause by the Company, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to and competitive with the Company's Business.

4.3         Non-Solicitation of Customers

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation of any customers of the Company or
any prospective customers of the Company with whom the Employee had contact
during his employment. 4.4 Non-Solicitation of Employees

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation for employment any person who is,
at the time of such solicitation, employed by the Company and the Employee shall
not directly or indirectly induce any person to leave his or her employment with
the Company.

4.5         Remedies

            The Employee acknowledges and agrees that any breach of this
Agreement could cause irreparable damage to the Company and that in the event of
a breach by the Employee, the Company shall have in addition to any and all
other remedies at law or in equity, the right to an injunction, specific
performance or other equitable relief to prevent any violation by the Employee
of any of the provisions of this Agreement including without limitation, the
provisions of Sections 4.1, 4.2, 4.3 and 4.4. In the event of any dispute under
any of Sections 4.1 to 4.4, the Employee agrees that the Company shall be
entitled, without showing actual damages, to a

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                                       -9-

temporary or permanent injunction restraining the conduct of the Employee
pending a determination of such dispute and that no bond or other security shall
be required from the Company in connection therewith.

5.          MISCELLANEOUS

5.1         Agreement Supplemental

            This Agreement shall be supplemental to the Employment Contract
except insofar as the Employment Contract relates to the termination of the
Employee's employment after a Change in Control, in which case this Agreement
shall supersede the termination provisions of the Employee Contract. To the
extent that the terms of the Employment Contract are not inconsistent with this
Agreement, such terms shall continue to apply, and the Employment Agreement is
hereby ratified and confirmed.

5.2         Assignment and Assumption

            This Agreement shall be assigned by the Company to any successor
corporation of the Company and shall be binding upon such successor corporation.
For the purposes of this Section 5.2, "successor corporation" shall include any
person referred to in paragraphs 1.1(d)(ii) or (iii) hereof. The Company shall
use its best efforts to ensure that the successor corporation shall continue the
provisions of this Agreement as if it were the original party in place of the
Company; provided however that the Company shall not thereby be relieved of any
obligation to the Employee pursuant to this Agreement.

5.3         Further Assurances

            Each of the Company and the Employee agrees to make, do and execute
or cause to be made, done and executed, all such further and other things, acts,
deeds, documents, assignments and assurances as may be necessary or reasonably
required to carry out the intent and purpose of this Agreement fully and
effectually. Without limiting the generality of the foregoing, the Company shall
take all reasonable steps in order to structure the payment or

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payments provided for in this Agreement in the manner most advantageous to
the Employee with respect to the provisions of the Income Tax Act (Canada).

5.4         Notice

      (a)   Any notice required or permitted to be given under this Agreement
            will be in writing and may be given by delivering, sending by
            telecopier, or sending by prepaid registered mail the notice to the
            following address or telecopier number:

            If to the Company:

            Spectrum Signal Processing Inc.
            One Spectrum Court
            #200 - 2700 Production Way
            Burnaby, British Columbia  V5A 4X1

            Attention: Chief Executive Officer and Chair of the Board of
            Directors

            Telecopier No.: (604) 421-1764

            If to the Employee:

            as set out in the Employment Contract.

            (or to such other address or telecopier number as any party may
            specify by notice in writing to another party).

      (b)   Any notice delivered or sent by telecopier on a business day will be
            deemed conclusively to have been effectively given on the day the
            notice was delivered, or the telecopy transmission was sent
            successfully to the telecopier number set out above, as the case may
            be.

      (c)   Any notice sent by prepaid registered mail will be deemed
            conclusively to have been effectively given on the third business
            day after posting; but if at the time of posting or between the time
            of posting and the third business day thereafter there

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            is a strike, lockout, or other labour disturbance affecting postal
            service, then the notice will not be effectively given until
            actually delivered.

5.5         Independent Legal Advice

            The Employee acknowledges having been advised to obtain independent
legal advice with respect to this Agreement.

5.6         Governing Law

            This Agreement shall be governed by and be construed in accordance
with the laws of British Columbia.

5.7         Severability

            Any provision of this Agreement which contravenes any applicable law
or which is found to be unenforceable shall, to the extent of such contravention
or unenforceability, be deemed severable and shall not cause this Agreement to
be held invalid or unenforceable or affect any other provision or provisions of
this Agreement.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the date first above written.

SPECTRUM SIGNAL PROCESSING INC.

By: /s/ Pascal E. Spothelfer
PASCAL E. SPOTHELFER, PRESIDENT & CEO

By: /s/ Mario Palumbo
MARIO PALUMBO, VP, ENGINEERING

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