CHANGE IN CONTROL AGREEMENT
EXHIBIT
10.1
THIS
CHANGE IN CONTROL AGREEMENT ("Agreement") is made and entered into on December
19, 2007 by and between ZiLOG, Inc. (the "Company") and
Xxxxx X. Xxxxxxxxxx, the Company's President and Chief Executive
Officer ("Executive") (together the "Parties").
WHEREAS,
Executive is currently employed as the President and Chief Executive Officer
of
the Company;
WHEREAS,
the Company recognizes that there is a possibility that the Company may become
the subject of a Change in Control (defined below), either now or at some
time
in the future;
WHEREAS,
the Company believes that it is in the best interests of the Company and
its
stockholders to xxxxxx Executive's objectivity in making decisions with respect
to any pending or threatened Change in Control of the Company and to assure
that
the Company will have the continued dedication and availability of Executive
as
an employee of the Company, notwithstanding the possibility or occurrence
of a
Change in Control; and
WHEREAS,
with these and other considerations in mind, the Board of Directors of the
Company (the "Board"), acting through its Compensation Committee, has authorized
the Company to enter into this Agreement with Executive to provide the
protections set forth herein.
NOW,
THEREFORE, in consideration of the mutual premises, covenants and agreements
herein contained, intending to be legally bound, the Parties agree as
follows:
1. Term
of Agreement. This Agreement shall be effective for the two-year
period commencing on December 21, 2007, provided, however, that on each
anniversary of December 21, 2007 the Term of the Agreement shall be
automatically extended for an additional one-year period unless prior to
such
date, either party notifies the other of its intention not to so extend the
Agreement (the "Term") and provided further, that if a Change in Control
(defined below) occurs during the Term, the Term shall be extended as necessary
such that the Agreement expires no earlier than the date twelve (12) months
following the Change in Control.
2. Change
in Control. For purposes of this Agreement, a Change in Control shall
mean the first to occur after the date of this agreement of the
following:
(a) dissolution,
liquidation or sale of all or substantially all of the assets of the
Company;
(b) the
consummation of a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation or other entity,
other than a merger or consolidation that results in the voting securities
of
the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof),
in combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary
of
the Company, at least 50% of the combined voting power of the securities
of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation; or
(c) the
acquisition by any person, entity or group within the meaning of Section
13(d)
or 14(d) of the Securities Exchange Act of 1934, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored
or
maintained by the Company or any affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, or comparable successor rule) of securities of the
Company
representing at least 50% of the combined voting power entitled to vote in
the
election of directors.
3. Termination
in Connection with a Change in Control. In the event Executive
experiences a Qualifying Termination (defined below) anytime during the Change
in Control Protection Period (defined below), Executive shall be entitled
to the
following payments and benefits (collectively, the "Change in Control
Payments"), which shall be in addition to any payments to Executive for earned
but unpaid salary and accrued but unused vacation through the date of
termination, as well as any vested benefits to which Executive is entitled
in
accordance with the terms of any applicable employee benefit plan:
(a) a
lump sum payment equal to eighteen (18) months of Executive's base salary,
at
the rate in effect at the time of termination, payable within thirty (30)
days
of Executive's termination;
(b) any
and all of Executive's Company stock options that are outstanding at the
time of
termination and not yet vested and that would otherwise vest within 12 months
of
a Qualifying Termination shall immediately become exercisable and the exercise
period of any stock option shall continue for the length of the exercise
period
specified in the applicable stock option agreement or plan; and
(c) continuation
of Executive's Company medical and dental benefits for the period of one
year
from the date of termination; provided, however, that, if such continuation
is
not permitted under the terms of the Company's benefit plans, the Company
shall
reimburse the Executive for the costs and any premiums paid to the Executive
for
continuation of coverage required under the Consolidated Omnibus Budget
Reconciliation Act for such one year period; and provided further that the
Company's obligation to provide medical benefits under this section shall
cease
prior to the end of one year if Executive becomes eligible for coverage under
another employer's medical plans. Notwithstanding the foregoing, the
Company shall not be obligated to provide long-term disability
benefits.
4. Restricted
Stock in Connection with a Change of Control. In the event of a
Change in Control, any and all of Executive's Company restricted stock awards
that are outstanding at the time of the Change in Control and not free from
restrictions but which would otherwise become free of restrictions under
the
terms of the award within 12 months from the time of the Change of Control,
shall immediately become free from restrictions (other than
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restrictions
required by applicable law or any national securities exchange upon which
any
securities of the Company are then listed).
5. Waiver
and Release Required. The Change in Control Payments described above
are expressly conditioned upon Executive's execution of a valid waiver and
release of any and all claims that Executive may have, or have had, against
the
Company and its agents, including but not limited to its officers, directors
and
employees, in a form provided by the Company or its successor.
6. Qualifying
Termination. For purposes of this Agreement, a Qualifying Termination
shall mean Executive's termination by the Company or its successor without
Cause
(as defined below) or Executive's resignation of his employment for Good
Reason
(as defined below). Executive's termination or resignation of his
employment for any other reason, including without limitation, death, Disability
(defined below) , termination for Cause or resignation without Good Reason,
shall not be deemed a Qualifying Termination and Executive shall not be entitled
to the Change in Control Payments described above.
(a) For
purposes of this Agreement, "Cause" shall mean one or more of the
following: (i) Executive's failure to reasonably and substantially
perform his employment duties or to observe Company policies in all material
respects; (ii) Executive's willful misconduct or gross negligence which
materially injures the Company; or (iii) Executive's conviction or plea of
nolo
contendere to a felony or other serious crime involving moral
turpitude. In all of the foregoing cases, the Company shall provide
written notice to Executive indicating in reasonable detail the event or
circumstances that constitute Cause under this Agreement, and, if such breach
or
failure is reasonably susceptible to cure, the Company will provide Executive
with thirty days to cure such breach or failure prior to termination for
Cause.
(b) For
purposes of this Agreement, "Good Reason" shall be deemed to exist if, without
the Executive's approval: (i) the Company or its successor
materially reduces Executive's duties or responsibilities; or (ii) the
Company or its successor materially reduces Executive's overall compensation,
including annual base salary and bonus opportunity; or (iii) Executive's
principal place of employment is moved more than 50 miles from its location
on
the date of this Agreement. Within 60 days of becoming aware of an
event or circumstances that constitutes Good Reason under this Agreement,
Executive shall provide written notice, describing such event or circumstances
in reasonable detail, to Company and Executive will provide the Company with
thirty days to cure such diminution prior to termination for Good
Reason.
(c) For
purposes of this Agreement, "Disability" shall mean any illness, disability
or
other incapacity that renders Executive physically or mentally unable regularly
to perform his duties hereunder for a period in excess or sixty (60) consecutive
days or more than ninety (90) days in any consecutive twelve (12) month
period. The Board shall make a good faith determination of whether
Executive is physically or mentally unable to regularly perform his duties,
subject to its review and consideration of any physical and/or mental health
information provided to it by Executive as determined by a physician reasonably
acceptable to the Company.
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7. Change
in Control Protection Period. For purposes of this Agreement, the
Change in Control Protection Period shall be the period two (2) months prior
to
and twelve (12) months following a Change in Control.
8. Limitation
on Payments. In the event that the Company's tax counsel or certified
public accounting professional confirms in writing to the Company and Executive
that payments under this Agreement, together with any other payments to
Executive from the Company that are "parachute payments" within the meaning
of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
("Potential Parachute Payments") would otherwise equal or exceed three (3)
times
the Executive's "Base Amount" as defined in Section 280G of the Code, then
notwithstanding anything to the contrary in this Agreement, the payments
under
this Agreement shall be reduced to an amount such that the Potential Parachute
Payments do not exceed 2.99 times the Executive's Base Amount. Any
reduction in payments required by this Section 8 shall be applied to such
payments and benefits under this Agreement as the Company in its sole discretion
deems necessary, shall be communicated to Executive in writing prior to the
date
the first reduced payment or benefit would otherwise be due and shall be
accompanied by written documentation from the Company's tax counsel or certified
public accounting professional evidencing that the reduction is the minimum
amount required to comply with this Section 8.
9. No
Right to Continued Employment. Nothing in this Agreement shall
guarantee the right of Executive to continued employment by the Company and
the
Company retains all rights to terminate Executive's employment at any time
for
any reason or for no reason and with or without prior notice.
10. Binding
Agreement. This Agreement is a personal contract and the rights and
interests of Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him. This Agreement shall be
binding upon and shall inure to the benefit of the Company's successors and
assigns.
11. Tax
Withholding. The Company may withhold from any amounts payable under
this Agreement any taxes that are required to be withheld pursuant to any
applicable law or regulation.
12. Entire
Agreement. This Agreement contains all the understandings between the
Parties hereto pertaining to the matters referred to herein and supersedes
all
undertakings and agreements, whether oral or in writing, previously entered
into
by them with respect thereto, provided that it shall not supersede that certain
Offer Letter, dated as of December 21, 2006, by and between the Parties,
which
shall remain in effect until December 21, 2007. For avoidance of
doubt, Executive shall not receive payments under Section 3 of this
Agreement. Executive represents that, in executing this Agreement, he
does not rely and has not relied upon any representation or statement not
set
forth herein made by the Company with regard to the subject matter of this
Agreement or otherwise.
13. Amendment
or Modification. No provision of this Agreement may be amended or
waived unless such amendment or waiver is agreed to in writing, signed by
Executive and by a duly authorized officer of the Company.
4
14. Notices. Any
notice to be given hereunder shall be in writing and shall be deemed given
when
delivered personally, sent by courier or fax or registered or certified mail,
postage prepaid, return receipt requested, addressed to the party concerned
at
the address indicated below or to such other address as such party may
subsequently give notice of hereunder in writing:
To
Executive at:
0000
Xxxxx Xxxxxx Xxxxxxxxx
Xxx
Xxxx,
XX 00000
To
the
Company at:
ZiLOG,
Inc.
U.S.
Headquarters
0000
Xxxxx Xxxxxx Xxxxxxxxx
Xxx
Xxxx,
XX 00000
Attn: Legal
Department
Any
notice delivered personally or by courier under this Section 13 shall be
deemed
given on the date delivered and any notice sent by telecopy or registered
or
certified mail, postage prepaid, return receipt requested, shall be deemed
given
on the date telecopied or mailed.
15. Waiver
of Other Severance Rights. To the extent that Change in Control
Payments are made to Executive pursuant to this Agreement, Executive hereby
expressly waives the right to receive severance payments or severance benefits
under any other plan or agreement of the Company.
16. Each
Party the Drafter. This Agreement and the provisions contained in it
shall not be construed or interpreted for or against any party to this Agreement
because that party drafted or caused that party's legal representative to
draft
any of its provisions.
17. Governing
Law. This Agreement will be governed by and construed in accordance
with the laws of the State of California, without regard to its conflicts
of
laws principles.
18. Headings. All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed
by
reference to the heading of any section or paragraph.
19. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one and the same
instrument.
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IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first written above.
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ZiLOG,
INC.
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EXECUTIVE
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By:
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/s/
Xxx Xxxxxxxx
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/s/
Xxxxx X. Xxxxxxxxxx
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Xxx
Xxxxxxxx (authorized officer)
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Xxxxx
X. Xxxxxxxxxx
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