Exhibit 10.85
CATALYST SEMICONDUCTOR, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of May 23, 2003, (the "Effective Date")
by and between Catalyst Semiconductor, Inc. (the "Company"), and Xxxx Xxxxx
("Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date, Executive will
serve as Chief Executive Officer of the Company. Executive will render such
business and professional services in the performance of his duties, consistent
with Executive's position within the Company, as shall reasonably be assigned
to him by the Company's Board of Directors (the "Board").
(b) Board Membership. During the Employment Term (as defined below),
Executive will serve as a member of the Board, subject to any required Board
and/or shareholder approval. In the event of Executive's termination of
employment with the Company for any reason, Executive agrees to resign his
position on the Board within three (3) business days of his termination of
employment.
(c) Obligations. During the Employment Term, Executive will perform
his duties faithfully and to the best of his ability and will devote his full
business efforts and time to the Company. For the duration of the Employment
Term, Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect remuneration
without the prior approval of the Board.
2. At-Will Employment. Executive's employment with the Company pursuant
to this Agreement (the "Employment Term") shall commence on the Effective Date
and shall continue, unless otherwise terminated earlier as provided herein,
until the date that is forty-eight (48) months from the Effective Date.
Notwithstanding the foregoing, the parties agree that Executive's employment
with the Company will be "at-will" employment and may be terminated at any time
with or without cause by giving the Executive a written notice. Executive
understands and agrees that neither his job performance nor promotions,
commendations, bonuses or the like from the Company give rise to or in any way
serve as the basis for continuation, modification, amendment, or extension, by
implication or otherwise, of his employment with the Company. However, as
described in this Agreement, Executive may be entitled to severance benefits
depending on the circumstances of Executive's termination of employment with
the Company.
3. Compensation.
(a) Base Salary. During the Employment Term, the Company will pay
Executive as compensation for his services a base salary at the annualized rate
of $300,000.00 (the "Base Salary") or such other rate not below $300,000.00 as
the Compensation Committee of the Board may determine from time to time. The
Base Salary will be paid periodically in accordance with the Company's normal
payroll practices and be subject to applicable withholding taxes.
Once the Compensation Committee has increased such base salary, it
thereafter shall not be reduced; provided, however, that if a Change of Control
(as defined below) has not occurred, such salary may be reduced by the
Compensation Committee if such reduction is in proportion to a salary reduction
program approved by the Board which affects a majority of the other executive
officers of the Company generally.
(b) Bonus. For each fiscal year of the Company, Executive will be
eligible to receive an annual bonus in an amount up to sixty-five percent (65%)
of his Base Salary based upon the achievement of performance criteria specified
by the Compensation Committee (the "Committee") of the Board (the "Bonus"). The
actual amount of the Bonus payable for any fiscal quarter will depend upon the
extent to which the applicable performance criteria have been satisfied, as
determined by the Committee at the end of each fiscal quarter. The maximum
amount of the Bonus payable in each fiscal quarter shall be as follows: Quarter
1: up to 12% of the Bonus; Quarter 2: up to 15% of the Bonus; Quarter 3: up to
23% of the Bonus; and Quarter 4: up to 50% of the Bonus. The foregoing
percentages are based on the dollar amount of the Bonus. Any Bonus that
actually is earned will be paid as soon as practicable after the end of the
fiscal quarter for which the Bonus is earned, but only if Executive was
employed with the Company through the end of such fiscal quarter. The Bonus
shall be subject to all applicable withholding taxes.
4. Employee Benefits. During the Employment Term, Executive will be
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives
of the Company. The Company reserves the right to cancel or change the benefit
plans and programs it offers to its employees at any time. During the
Employment Term, the Company shall provide Executive with a $1,000,000 term
life insurance policy.
5. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If (i) Executive's employment with the
Company terminates other than voluntarily (excluding a termination based on
Executive's death or Disability) or for "Cause" (as defined herein), or (ii)
Executive terminates his employment with the Company due to an Involuntary
Termination, and (iii) Executive signs and does not revoke a standard release
of claims with the Company, then, subject to Section 9, Executive shall be
entitled to receive: (1) continuing payments of severance pay (less applicable
withholding taxes) at a rate equal to his Base Salary rate, as then in effect,
for a period of twelve (12) months from the date of such termination of
employment, to be paid periodically in accordance with the Company's normal
payroll policies; (2) accelerated vesting of the shares of common stock subject
to the stock options granted to Executive by the Company (the "Options") in an
amount equal to the greater of (A) twelve (12) months or (B) fifty percent
(50%) of the unvested shares of common stock subject to the Options as of the
date of Executive's termination of employment; (3) all shares of common stock
subject to the Options which have vested (including pursuant to Section
6(a)(iii)(2) above) as of the date of Executive's termination of employment
shall be exercisable for a period of one (1) year following
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the date of such termination, provided, however, that in no event shall this
provision operate to extend an Option beyond the term/expiration date of such
Option; (4) continuing life insurance and health plan coverage for the
Executive and his dependents for a period of twelve (12) months from the date
of such termination of employment and (5) the pro-rated portion of the
projected Bonus for the fiscal year in which such termination of employment
occurs (less applicable withholding taxes) to be paid periodically over a
period of six (6) months from the date of termination in accordance with the
Company's normal payroll practices. The pro rata portion of the Bonus shall be
calculated as if 100% of the Bonus was to be paid for the fiscal year in which
termination occurs.
(b) Voluntary Termination; Termination for Cause. If Executive's
employment with the Company terminates voluntarily by Executive (including
death or disability) or for Cause by the Company, then (i) all vesting of all
options to purchase the common stock of the Company will terminate immediately
and all payments of compensation by the Company to Executive hereunder will
terminate immediately (except as to amounts already earned) and (ii) Executive
shall not receive any severance benefits or the continuation of any other
benefits.
(c) Change of Control.
(i) If within twelve (12) months following a "Change of Control"
(as defined below) (A) the Company or the Successor terminates Executive's
employment with the Company or any Successor corporation for other than Cause,
death or Disability, or (B) Executive terminates his employment with the
Company or a Successor due to an Involuntary Termination, and (C) Executive
signs and does not revoke a standard release of claims with the Company, then,
subject to Section 9, Executive shall be entitled to receive: (1) continuing
payments of severance pay (less applicable withholding taxes) at a rate equal
to his Base Salary rate, as then in effect, for a period of twelve (12) months
from the date of such termination of employment, to be paid periodically in
accordance with the Company's normal payroll policies; (2) continuing life
insurance and health plan coverage for the Executive and his dependents for a
period of twelve (12) months from the date of such termination of employment;
and (3) the pro-rated portion of the projected Bonus for the fiscal year in
which such termination of employment occurs (less applicable withholding taxes)
to be paid periodically over a period of six (6) months from the date of
termination in accordance with the Company's normal payroll practices. The pro
rata portion of the Bonus shall be calculated as if 100% of the Bonus was to be
paid for the fiscal year in which termination occurs.
(ii) If, in connection with a Change of Control, Executive is not
made the Chief Executive Officer of the Successor or does not remain employed as
the Chief Executive Officer of the Company where the Company is the surviving
corporation in a Change of Control, then, any unvested shares of common stock
subject to the Options shall fully accelerate and become exercisable. In
addition, all shares of common stock subject to the Options shall be exercisable
for that period of time following the closing date of the Change of Control
which is equal to the longest period of time for which any shares of common
stock subject to stock options granted to any non-employee director of the
Company are exercisable following such Change of Control (as determined at the
closing date of such Change of Control); provided, however, that in no event
shall this provision operate to extend an Option beyond the term/expiration date
of such Option.
7. Definitions.
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(a) Cause. For purposes of this Agreement, "Cause" is defined as (i)
Executive engaging in knowing and intentional illegal conduct that is injurious
to the Company, (ii) Executive's conviction of, or plea of nolo contendere to, a
felony, (iii) Executive's gross misconduct, or (iv) Executive's continued
substantial violations of his employment duties after Executive has received a
written demand for performance from the Company which specifically sets forth
the factual basis for the Company's belief that Executive has not substantially
performed his duties.
(b) Change of Control. For purposes of this Agreement, "Change of
Control" of the Company is defined as: (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of
the total voting power represented by the Company's then outstanding voting
securities; or (ii) a change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" will mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or (iii) the date of the consummation of a merger
or consolidation of the Company with any other corporation that has been
approved by the shareholders of the Company, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company; or (iv)
the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company's assets.
(c) Disability. For purposes of this Agreement, "Disability" means the
inability of Executive, due to a physical or mental impairment, to perform the
essential functions of the Executive's position, with or without reasonable
accommodation, for a period of ninety (90) days. Whether Executive is disabled
shall be determined by the Company based on evidence provided by one or more
physicians selected by the Company.
(d) Involuntary Termination. For purposes of this Agreement,
"Involuntary Termination" means Executive's termination of employment within
ninety (90) days after the occurrence of any of the following (i) a reduction in
compensation below Executive's Base Salary, except for reductions that are in
proportion to any salary reduction program approved by the Board that affects a
majority of the senior executives of the Company or such reduction is consented
to in writing by Executive; (ii) a material reduction by the Company in the kind
of employee benefits to which Executive is entitled to and participates in
immediately prior to such reduction with the result that Executive's overall
benefits package is significantly and materially reduced in the aggregate,
unless such reduction affects a majority of the senior executives of the Company
or such reduction is consented to in writing by Executive; (iii) a significant
reduction of Executive's duties, position or responsibilities relative to
Executive's duties, position or responsibilities in effect immediately prior to
such reduction, or the removal of Executive from such position, duties and
responsibilities, unless
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Executive is provided with comparable duties, position and responsibilities; or
(iv) the relocation of the Company's primary place of business without
Executive's consent to a location more than 50 miles from the Company's primary
place of business immediately prior to such relocation.
(e) Successor. For purposes of this Agreement, "Successor" means any
person, firm, corporation or other business entity which at any time, whether
by purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.
8. Confidential Information. Executive covenants that he has executed the
Company's standard Confidential Information and Invention Assignment Agreement
(the "Confidential Information Agreement") and such agreement is and shall
remain in full force and effect upon commencing employment with the Company as
its Chief Executive Officer. Executive further agrees to sign any future
amendments to the Confidential Information Agreement provided that such
amendment is also signed by a majority of the officers of the Company.
9. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of the
Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company during
the twelve (12) months following the termination of Executive's employment with
the Company, it would be very difficult for Executive not to rely on or use the
Company's trade secrets and confidential information. Thus, to avoid the
inevitable disclosure of the Company's trade secrets and confidential
information, Executive agrees and acknowledges that Executive's right to receive
the severance payments set forth in Section 6 (to the extent Executive is
otherwise entitled to such payments) shall be conditioned upon Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, shareholder, corporate officer, director or
otherwise), nor having any ownership interested in or participating in the
financing, operation, management or control of, any person, firm, corporation or
business that competes with Company or is a customer of the Company. Upon any
breach of this section, all severance payments pursuant to this Agreement shall
immediately cease.
(b) Non-Solicitation. Until the date one (1) year after the
termination of Executive's employment with the Company for any reason, Executive
agrees and acknowledges that Executive's right to receive the severance payments
set forth in Section 6 (to the extent Executive is otherwise entitled to such
payments) shall be conditioned upon Executive not either directly or indirectly
soliciting, inducing, attempting to hire, recruiting, encouraging, taking away,
hiring any employee of the Company or causing an employee to leave his or her
employment either for Executive or for any other entity or person.
(c) Consequences of Breach of Section 9(a) or 9(b). Executive agrees
and acknowledges that upon any breach by Executive of either Section 9(a) or
(b), the Company shall have the right (i) to terminate all severance benefits
set forth in this Agreement, (ii) to seek reimbursement from Executive for all
severance payments previously made to Executive pursuant to this Agreement,
(iii) to reclaim ownership of any shares of Common Stock owned by Executive for
which vesting was accelerated pursuant to this Agreement and (iv) to immediately
cancel all outstanding Options held by Executive.
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(d) Understanding of Covenants. Executive represents that he (i) is
familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.
10. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any Successor of the Company. Any Successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. None of the rights of Executive to receive any form
of compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of Executive's
right to compensation or other benefits will be null and void.
11. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:
If to the Company:
Catalyst Semiconductor, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Chairman of the Board of Directors
If to Executive:
at the last residential address known by the Company.
12. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
13. Arbitration.
(a) General. In consideration of Executive's service to the
Company, its promise to arbitrate all employment related disputes and
Executive's receipt of the compensation, pay raises and other benefits paid to
Executive by the Company, at present and in the future, Executive agrees that
any and all controversies, claims, or disputes with anyone (including the
Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive's service to the Company under this Agreement or
otherwise or the termination of Executive's service with the Company, including
any breach of this Agreement, shall be subject to binding arbitration under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
through 1294.2, including Section 1283.05 (the "RULES") and pursuant to
California law. Disputes which Executive agrees to arbitrate, and thereby
agrees to waive any right to a trial by jury, include any statutory claims
under state or federal
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law, including, but not limited to, claims under Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination
in Employment Act of 1967, the Older Workers Benefit Protection Act, the
California Fair Employment and Housing Act, the California Labor Code, claims of
harassment, discrimination or wrongful termination and any statutory claims.
Executive further understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with Executive.
(b) Procedure. Executive agrees that any arbitration will be administered
by the JAMSE endispute ("JAMSE") and that a neutral arbitrator will be selected
in a manner consistent with its National Rules for the Resolution of Employment
Disputes. The arbitration proceedings will allow for discovery according to the
rules set forth in the National Rules for the Resolution of Employment Disputes
or California Code of Civil Procedure. Executive agrees that the arbitrator
shall have the power to decide any motions brought by any party to the
arbitration, including motions for summary judgment and/or adjudication and
motions to dismiss and demurrers, prior to any arbitration hearing. Executive
agrees that the arbitrator shall issue a written decision on the merits.
Executive also agrees that the arbitrator shall have the power to award any
remedies, including attorneys' fees and costs, available under applicable law.
Executive and Company agree they shall each be responsible and pay one half of
any administrative or hearing fees charged by the arbitrator or JAMSE except
that Executive shall pay the first $200.00 of any filing fees associated with
any arbitration Executive initiates. Executive agrees that the arbitrator shall
administer and conduct any arbitration in a manner consistent with the Rules and
that to the extent that the JAMSE's National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules shall take precedence.
The Company and Executive agree that the arbitration proceedings shall take
place in San Jose, California.
(c) Remedy. Except as provided by the Rules, arbitration shall be the sole,
exclusive and final remedy for any dispute between Executive and the Company.
Accordingly, except as provided for by the Rules, neither Executive nor the
Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.
(d) Availability of Injunctive Relief. In addition to the right under the
Rules to petition the court for provisional relief, Executive agrees that any
party may also petition the court for injunctive relief where either party
alleges or claims a violation of this Agreement or the Confidentiality Agreement
or any other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code [Section]2870. In the event either party seeks
injunctive relief, the prevailing party shall be entitled to recover reasonable
costs and attorneys fees.
(e) Administrative Relief. Executive understands that this Agreement does
not prohibit Executive from pursuing an administrative claim with a local, state
or federal administrative body such as the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.
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(f) Voluntary Nature of Agreement. Executive acknowledges and agrees
that Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understand it,
including that Executive is waiving Executive's right to a jury trial. Finally,
Executive agrees that Executive has been provided an opportunity to seek the
advice of an attorney of Executive's choice before signing this Agreement.
14. Integration. This Agreement, together with the Company's stock option
plan, any stock option agreements and the Confidential Information Agreement
represents the entire agreement and understanding between the parties as to the
subject matter herein and supersedes all prior or contemporaneous agreements
whether written or oral. No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in writing and signed by
duly authorized representatives of the parties hereto.
15. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
16. Governing Law. This Agreement will be governed by the laws of the State
of California (with the exception of its conflict of laws provisions).
17. Acknowledgment. Executive acknowledges that he has had the opportunity
to discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.
COMPANY:
CATALYST SEMICONDUCTOR, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx Date: 5/23/03
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Xxxxx X. Xxxxxxxxxx
Chairman of the Board of Directors
EXECUTIVE:
/s/ Xxxx Xxxxx Date: 5/23/03
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Xxxx Xxxxx
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