EXHIBIT 10.1
SECOND AMENDED EXECUTIVE EMPLOYMENT AGREEMENT
This Second Amended Executive Employment Agreement (the "Agreement") is entered
into by and between IXYS Corporation (the "Company"), a Delaware corporation,
and Xxxxxx Xxxxxx ("Executive"), effective as of February 1, 2004 (the
"Effective Date").
WITNESSETH
WHEREAS, the Company and the Executive are parties to that certain First Amended
Executive Employment Agreement effective as of July 1, 1998, which is modified
and superseded by this Second Amended Executive Employment Agreement; and
WHEREAS, the Company desires to continue and extend the employment of Executive
under mutually satisfactory terms and conditions, and the Executive desires to
be employed by the Company, under the terms and conditions herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT BY THE COMPANY. The Company hereby employs Executive to
render full-time services to the Company as its Chief Executive Officer.
Executive shall have responsibilities, duties and authorities that are
customarily associated with such position, and such duties that are assigned by
the Company's Board of Directors (the "Board"). The Executive acknowledges that
the Board may delegate to a committee of the Board any matter referred to in
this Agreement as being for the Board's determination.
2. COMPENSATION, VACATION AND BENEFITS.
2.1 The Company agrees to pay Executive an annual base salary in the
amount of $480,000, payable every two weeks. The Executive shall be
considered for an annual performance bonus on such terms and conditions
as the Board shall determine in its sole discretion. The Executive's
performance, and his base salary and bonus arrangement will be reviewed
by the Board from time to time, as the Board determines in its sole
discretion.
2.2 Executive's paychecks will be distributed pursuant to ordinary
business practice, and shall be subject to ordinary payroll deductions
and tax withholdings. The Company also agrees to provide Executive with
benefits consistent with Company policy for senior executives. Details
about these benefits are set forth in the employee handbook and summary
plan descriptions, copies of which have been provided to Executive.
2.3 In addition to the benefits provided to Executive pursuant to
subsections 2.1 and 2.2 hereof, the Company shall:
(a) pay, or reimburse Executive, for all reasonable costs of
a yearly medical exam of Executive by a physician of his choice;
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(b) maintain term life insurance (without a buildup of
equity) in the amount of $1,000,000 on the life of the Executive
payable to such beneficiary or beneficiaries as Executive may
designate from time to time;
(c) pay, or reimburse Executive, for the services of a
personal tax and/or investment advisor, not to exceed $1,000 per
year;
(d) provide Executive with a car of such make and model as
Executive and Board shall agree is commensurate with Executive's
position with the Company, including insurance for such car and
reasonable maintenance thereof; provided, however, that
Executive shall at all times (i) comply with all policies of the
Company from time to time in effect with respect to the
maintenance and operation of motor vehicles, and (ii) maintain a
valid driver's license;
(e) provide Executive with up to 10 hours per month of xxxx
paying and bookkeeping services in connection with the payment of the
personal bills of Executive (but in no event shall the funds of the
Company be used to pay the personal bills of Executive): and
(f) provide Executive with annual vacation during each year
in an amount equal to the sum of (i) 15 working days and (ii) 1/2
working day for each full year of service by the Executive at the
Company after June 1, 2003.
3. EMPLOYEE HANDBOOK. By signing this Agreement, Executive acknowledges
that he has received and read the Company's employee handbook. Executive agrees
to abide by all company policies and procedures. Notwithstanding the foregoing,
if there shall be any conflict between this Agreement and such employee
handbook, the terms of this Agreement shall govern.
4. INCENTIVE BONUS.
4.1 CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean:
(a) any reorganization, consolidation or merger of the
Company in which the Company is not the surviving corporation or
pursuant to which shares of the Company's voting stock would be
converted into cash, securities or other property, in either
case other than a merger of the Company in which the holders of
the Company's voting stock immediately prior to the merger have
the same proportionate ownership of voting stock of the
surviving corporation immediately after the merger;
(b) the sale, exchange or other transfer (in one transaction
or a series of related transactions) to a third party not
affiliated as of the date of this Agreement with the Company of
at least a majority of the voting stock of the Company; or
(c) the sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company.
4.2 BONUS. In the event of a Change in Control during Executive's
active employment hereunder, he shall be entitled to receive a cash
bonus equal to three times
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his then annual base salary, payable immediately after the closing of
the transaction or the series of transactions effecting the Change of
Control.
5. TERMINATION OF EMPLOYMENT.
5.1 TERM. The initial term of this Agreement is from the date hereof
until January 31, 2007.
5.2 COMPANY INITIATED TERMINATION.
(a) In the event the Company terminates Executive's
employment without cause, but not for reasons of Disability or
death, Executive shall receive as severance a one-time payment
equal to one month of his then annual salary multiplied by the
number of calendar years (a fraction of a year shall be paid on
a prorated basis), but not to exceed a total of twelve months,
of Executive's service with the Company, payable within fifteen
(15) days of such termination. No other benefits or payments
shall be provided.
(b) In the event Executive's employment is terminated at any
time with cause, all of Executive's compensation and benefits
will cease immediately, and Executive shall not be entitled to
any severance benefits and all other benefits provided hereunder
shall cease as of such termination. For purposes of this
Agreement, "cause" shall mean (i) conviction of any felony or
any crime involving moral turpitude or dishonesty; (ii)
participation in a fraud or act of dishonesty against the
Company; (iii) willful breach of the Company's policies; (iv)
intentional damage to the Company's property; or (v) breach of
this Agreement, the Proprietary Information Agreement, or any
other agreements with the Company including, but not limited to
agreements regarding confidentiality or proprietary information.
Physical or mental disability shall not constitute "cause".
Failure to accomplish corporate financial and management goals
shall not constitute "cause".
(c) For purposes of this Agreement, "good reason" for
voluntary termination shall mean: (i) reduction of Executive's
rate of salary compensation as in effect immediately prior to
the Change of Control; (ii) failure to provide a package of
welfare benefit plans which, taken as a whole, provide
substantially similar benefits to those in which Executive is
entitled to participate immediately prior to the Change of
Control (except that employee contributions may be raised to the
extent of any cost increases imposed by third parties) or any
action by the Company which would adversely affect Executive's
participation or reduce Executive's benefits under any of such
plans; (iii) change in Executive's responsibilities, authority,
titles or offices resulting in diminution of position, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith which is remedied by the Company
promptly after notice thereof is given by Executive; (iv)
request that Executive relocate to a worksite that is more than
35 miles from his prior worksite, unless Executive accepts such
relocation opportunity; (v) material reduction in duties; (vi)
failure or refusal of the successor company to assume the
Company's obligations under this Agreement; or (vii) material
breach by the Company or any successor company of any of the
material provisions of this Agreement.
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(d) In the event Executive suffers and continues to suffer a
disability that renders him unable to perform the essential
functions of his position, for three months within any six-month
period ("Disability"), the Company shall, for twelve months
commencing at the conclusion of such three-month period of
disability, (i) continue to pay Executive his annual base salary
and (ii) maintain life insurance in the manner and in the amount
set forth in Section 2.3(b) (ii) hereof. If upon the conclusion
of the twelve-month period, Executive remains unable to perform
the essential functions of the job, or the Company has no
suitable vacant position for him, Executive's employment shall
be terminated.
(e) In the event of Executive's termination of employment
hereunder either by the Company without cause, or by Executive
for good reason, but not for reasons of Disability or death,
within one year following a Change of Control, he shall be
entitled to receive a cash payment equal to (i) three times his
average total annual cash compensation, including base salary
and bonus, of the prior three years minus (ii) any amount paid
or payable pursuant to Section 4.2. The average of the prior
three years ("Average") shall be computed by dividing by three
the sum of all cash compensation he received from the Company
during the three years prior to the termination. No payment
shall be made pursuant to Section 5.2(a) in the event of a
termination covered by this Section 5.2(e).
(f) In the event of Executive's termination of employment
hereunder either by the Company without cause, or by Executive
for good reason, but not for reasons of Disability or death,
within one year following a Change of Control, Executive shall
continue to receive all employment benefits as defined in
Sections 2.2 and 2.3 above, or their equivalent where benefit
plan participation by Executive is not available, for eighteen
(18) months following the termination.
(g) In the event of Executive's termination of employment
hereunder either by the Company without cause, or by Executive
for good reason, but not for reasons of Disability or death,
within one year following a Change of Control, the vesting of
all shares of Company stock covered by options granted to
Executive to purchase such Company shares, shall be accelerated
such that all unvested such shares shall become vested as of the
termination date.
(h) Except as expressly provided in this Section 5.2,
Executive will not be entitled to any other compensation,
severance, pay-in-lieu of notice or any such compensation.
5.3 EXECUTIVE INITIATED TERMINATION. Executive may voluntarily
terminate his employment with the Company at any time by giving the
Board 30 days written notice. In the event Executive voluntarily
terminates his employment with the Company, all of Executive's
compensation and benefits will cease as of such termination date.
Executive acknowledges that he will not receive any severance pay or
benefits, except as defined in the Employee Handbook, and except as
specified in this Agreement at Sections 5.2(e), (f) and (g) if
applicable, upon such voluntary termination.
6. NOTICES. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered or delivered by
registered or certified mail (return receipt requested), or
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private overnight mail (delivery confirmed by such service, to the address
listed below, or to such other address as either party shall designate by notice
in writing to the other in accordance herein):
If to the Company:
IXYS Corporation
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chairman of the Compensation
Committee of the Board of Directors
If to Executive:
Xxxxxx Xxxxxx
00 Xxxxxxxxx Xxx.
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
7. ARBITRATION. To ensure rapid and economical resolution of any and all
disputes which may arise under this Agreement, the Company and Executive each
agree that any and all disputes or controversies, whether of law or fact of any
nature whatsoever (including, but not limited to, all state and federal
statutory and discrimination claims), arising from or regarding the
interpretation, performance, enforcement or breach of this Agreement shall be
resolved by final and binding arbitration under the procedures set forth in
Exhibit A to this Agreement and the then existing Judicial Arbitration and
Mediation Services Rules of Practice and Procedure (except insofar as they are
inconsistent with the procedures set forth in Exhibit A).
8. CERTAIN REDUCTIONS IN PAYMENTS OR BENEFITS. Executive and the Company
hereby agree as follows:
8.1 Anything in this Agreement to the contrary notwithstanding, in
the event that any payment, distribution or other benefit provided by
the Company to or for the benefit of Executive (whether paid or payable
or provided or to be provided pursuant to the terms of this Agreement or
otherwise) ("Payments") would (i) constitute a "parachute payment"
within the meaning of Section 280G of the Internal Revenue Code (the
"Code"), and (ii) but for this Section 8, be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then, in
accordance with this Section 8, such Payments shall be reduced to the
maximum amount that would result in no portion of the payments being
subject to the Excise Tax, but only if and to the extent that such a
reduction would result in Executive's receipt of Payments that are
greater than the net amount Executive would receive (after application
of the Excise Tax) if no reduction is made. The amount of required
reduction, if any, shall be the smallest amount so that Executive's net
proceeds with respect to the Payments (after taking into account payment
of any Excise Tax and all federal, state and local income, employment or
other taxes) shall be maximized. If, notwithstanding any reduction
described in this Section 8 (or in the absence of any such reduction),
the IRS determines that a Payment is subject to the Excise Tax (or
subject to a different amount of the Excise Tax than determined by the
Company or Executive), then Section 8.3 shall apply. If the Excise Tax
is not eliminated pursuant to this Section 8, Executive shall pay the
Excise Tax.
8.2 All determinations required to be made under this Section 8
shall be made by the Company's independent auditors. Such auditors shall
provide detailed supporting calculations both to the Company and
Executive. Any such determination by the Company's independent auditors
shall be binding upon the Company and Executive. Executive shall
determine which and how much of the Payments, including without
limitation any option acceleration benefits provided under this
Agreement or otherwise
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("Option Benefits"), shall be eliminated or reduced consistent with the
requirements of this Section 8, provided that, if Executive does not
make such determination within ten business days of the receipt of the
calculations made by the Company's independent auditors, the Company
shall elect which and how much of the Option Benefits or other Payments,
as the case may be, shall be eliminated or reduced consistent with the
requirements of this Section 8 and shall notify Executive promptly of
such election. Within five business days thereafter, the Company shall
pay to or distribute to or for the benefit of Executive such amounts as
are then due to Executive under this Agreement.
8.3 As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the
Company's independent auditors hereunder, it is possible that Option
Benefits or other Payments, as the case may be, will have been made by
the Company which should not have been made ("Overpayment") or that
additional Option Benefits or other Payments, as the case may be, which
will not have been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Company's
independent auditors, based upon the assertion of a deficiency by the
IRS against Executive or the Company which the Company's independent
auditors believe has a high probability of success, determine that an
Overpayment has been made, any such Overpayment paid or distributed by
the Company to or for the benefit of Executive shall be treated for all
purposes as a loan ab initio to Executive which Executive shall repay to
the Company together with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code; provided, however, that
no such loan shall be deemed to have been made and no amount shall be
payable by Executive to the Company if and to the extent such deemed
loan and payment would not either reduce the amount on which Executive
is subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Company's
independent auditors, based upon controlling precedent or other
substantial authority, determine that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code.
9. CERTAIN DEFERRAL OF PAYMENTS. Notwithstanding the other provisions of
this Agreement, to the extent that any amounts payable to Executive
pursuant to this Agreement would not be deductible by the Company for
federal income tax purposes on account of the limitations of Section
162(m) of the Code, the Company may defer payment of such amounts to the
earliest one or more subsequent calendar years in which the payment of
such amounts would be deductible by the Company.
10. GENERAL.
10.1 ENTIRE AGREEMENT. This Agreement sets forth the complete, final
and exclusive embodiment of the entire agreement between Executive and
the Company with respect to the subject matter hereof. This Agreement is
entered into without reliance upon any promise, warranty or
representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties,
representations or agreements.
10.2 SEVERABILITY. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be excessively broad as to
duration, activity or subject, it shall be deemed to extend only over
the maximum duration, activity and/or subject as to which such provision
shall be valid and enforceable under applicable law. If any provisions
shall, for any reason, be held by a court of competent jurisdiction to
be
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invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other provision of this agreement,
but this agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
10.3 SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs,
personal representatives, assigns, executors and administrators of each
party, and inure to the benefit of each party, its heirs, successors and
assigns. However, because of the unique and personal nature of
Executive's duties under this Agreement, Executive agrees not to
delegate the performance of his duties under this Agreement without the
prior consent of the Board.
10.4 APPLICABLE LAW. This Agreement shall be deemed to have been
entered into and shall be construed in accordance with the laws of the
state of California as applied to contracts made and to be performed
entirely within California.
10.5 HEADINGS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10.6 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly authorized and caused this Executive
Employment Agreement to be executed as follows:
XXXXXX XXXXXX, IXYS CORPORATION,
An individual a Delaware Corporation
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx Xxxx
Xxxxxx Xxxx, Chairman of the
Compensation Committee of the
Board of Directors
Date: February 20, 2004 Date: February 20, 2004
7.
Exhibit A
ARBITRATION PROCEDURE
1. The parties agree that any dispute that arises in connection with this
Agreement or the termination of this Agreement shall be resolved by binding
arbitration in the manner described below.
2. A party intending to seek resolution of any dispute under the Agreement
by arbitration shall provide a written demand for arbitration to the other
party, which demand shall contain a brief statement of the issues to be
resolved.
3. The arbitration shall be conducted by a mutually acceptable retired
judge from the panel of Judicial Arbitration and Mediation Services, Inc.
("JAMS"). At the request of either party, arbitration proceedings will be
conducted in the utmost secrecy and, in such case, all documents, testimony and
records shall be received, heard and maintained by the arbitrator in secrecy
under seal, available for inspection only by the parties to the arbitration,
their respective attorneys, and their respective expert consultants or witnesses
who shall agree, in advance and in writing, to receive all such information
confidentially and to maintain such information in secrecy, and make no use of
such information except for the purposes of arbitration, unless compelled by
legal process.
4. The arbitrator is required to disclose any circumstances that might
preclude the arbitrator from rendering an objective and impartial determination.
In the event the parties cannot mutually agree upon the selection of a JAMS
arbitrator, the President and vice president of JAMS shall designate the
arbitrator.
5. The party demanding arbitration shall promptly request that JAMS conduct
a scheduling conference within 15 days of the date of the that party's written
demand for arbitration or on the first available date thereafter on the
arbitrator's calendar. The arbitration hearing shall be held within 30 available
date thereafter on the arbitrator's calendar. Nothing in this paragraph shall
prevent a party from seeking temporary equitable relief at any time, from JAMS
or any court of competent jurisdiction, to prevent irreparable harm pending the
resolution of the arbitration.
6. Discovery shall be conducted as follows: (a) prior to the arbitration
any party may make a written demands for lists of the witnesses to be called and
the documents to be introduced at the hearing; (b) the lists must be served
within 15 days of the date of receipt of the demand, or one day prior to the
arbitration, whichever is earlier; and (c) each party may take no more than two
dispositions (pursuant to the procedure set forth in the California Code of
Civil Procedure) with a maximum of five hours of examination time per
deposition, and no other form of pre-arbitration discovery shall be permitted.
7. It is the intent of the parties that the Federal Arbitration Act ("FAA")
shall apply to the enforcement of this provision unless it is held inapplicable
by a court with jurisdiction over the dispute, in which event the California
Arbitration Act ("CAA") shall apply.
8. The arbitrator shall apply California law, including the California
Evidence Code, and shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a preliminary injunction, a permanent injunction, or replevin of Company
property. The arbitrator shall also be able to award actual, general or
consequential damages, but shall not award any other form of damage (e.g.,
punitive damages).
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9. Each party shall pay its pro rata share of the arbitrator's fees and
expenses, in addition to other expenses of the arbitration approved by the
arbitrator, pending the resolution of the arbitration. The arbitrator shall have
authority to award the payment of such fees and expenses to the prevailing
party, as appropriate in the discretion of the arbitrator. Each party shall pay
its own attorneys' fees, witness fees and other expenses incurred for its own
benefit.
10. The arbitrator shall render a written award setting forth the reasons
for his or her decision. The decree or judgment of an award by the arbitrator
may be entered and enforced in any court having jurisdiction over the parties.
The award of the arbitrator shall be final and binding upon the parties without
appeal or review except as permitted by the FAA, or if the FAA is not
applicable, as permitted by the CAA.
2.
