Exhibit 10.27
EMPLOYMENT AGREEMENT
AGREEMENT, entered into as of the 11th day of March, 1997,
by and among XXXXXXXXX SEMICONDUCTOR CORPORATION, a Delaware
corporation (the "Company"), FSC SEMICONDUCTOR CORPORATION, a
Delaware corporation ("Holdings"), Sterling Holding Company, LLC,
a Delaware limited liability company ("Sterling"), and XXXX X.
XXXX (the "Executive").
WHEREAS, the Company and Holdings have been established to
acquire the Logic, Memory and Discrete Products divisions of
National Semiconductor Corporation ("NSC") and certain of its
affiliates (the "NSC Parties") through a series of
recapitalization transactions (the "Recapitalization"), pursuant
to that certain Recapitalization Agreement dated as of January
24, 1997 (the "Recapitalization Agreement") between NSC and
Sterling and that certain Asset Purchase Agreement, dated as of
March 11, 1997, between NSC and the Company;
WHEREAS, the Company, Holdings and Sterling desire to
engage the full-time services of the Executive and the Executive
desires to be so employed by the Company, Holdings and Sterling;
and
WHEREAS, the operations of the Company and its affiliates
are a complex matter requiring direction and leadership in a
variety of areas; and the Company, Holdings and Sterling desire
to be assured that the unique and expert services of the
Executive will be available solely to the Company, Holdings and
Sterling, and that the Executive is willing and able to render
such services on the terms and conditions hereinafter set forth;
and
WHEREAS, the Company, Holdings and Sterling desire to be
assured that the confidential information and goodwill of the
Company will be preserved for the exclusive benefit of the
Company.
NOW, THEREFORE, in consideration of such employment and the
mutual covenants and promises herein contained, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company, Holdings, Sterling
and the Executive agree as follows:
Section 1. EMPLOYMENT. Effective as of the Closing Date (as
defined in the Recapitalization Agreement), the Company, Holdings
and Sterling hereby employ the Executive and the Executive hereby
accepts such employment under and subject to the terms and
conditions hereinafter set forth. If the Recapitalization
Agreement shall be terminated pursuant to Section 9.1 thereof
prior to the Closing (as defined therein), this Agreement shall
terminate automatically and have no further force or effect.
Section 2. TERM. Unless sooner terminated as provided
herein, the term of employment under this Agreement shall begin
on the Closing Date and shall conclude on the third anniversary
thereof (the "Initial Term"). This Agreement shall be renewed
automatically for up to two (2) additional consecutive one year
terms (each a "Renewal Term") unless either the Company or the
Executive shall give to the other written notice not less than
ninety (90) days prior to the end of the Term or the first
Renewal Term that it or he does not wish to renew this Agreement.
The Initial Term and any Renewal Term are sometimes collectively
referred to herein as the "Term."
Section 3. DUTIES. During the Term, the Executive shall
serve as Chairman of the Boards of Directors and as Chief
Executive Officer of the Company and Holdings. The Executive
also agrees to serve, without further compensation, as a director
and/or officer of one or more of the Company's affiliates if so
elected or appointed from time to time. The Executive shall be
subject to the direction of the Boards of Directors of the
Company and Holdings (collectively, the "Board"), and shall be
the Chief Executive Officer of the Company and Holdings, with
authority and responsibility for the management of the business
and affairs of the Company and its affiliates, subject to the
customary role of the Board of Directors of the Company. Subject
to the foregoing, Executive's duties shall include, without
limitation, the authority to retain or terminate the employment
of all Company personnel and, subject to budgets or general
compensation policies approved by the Board, to establish from
time to time the compensation and other incentives and terms of
employment of all Company personnel to be at least generally
consistent and competitive with those offered by NSC and
semiconductor industry standards in general. The Executive
hereby agrees to devote his full business time and best efforts
to the faithful performance of such duties and to the advancement
of the business and affairs of the Company and its affiliates
during the Term. The Executive shall not engage in any other
business activity during the Term, except as may be expressly
approved by the Board in writing. The Executive may not be
required to relocate his residence or his principal office during
the Term.
Section 4. SALARY COMPENSATION. In consideration of the
services rendered by the Executive under this Agreement, the
Company shall pay the Executive during the Term a base salary at
the rate of not less than Four Hundred and Fifty Thousand Dollars
($450,000) per year. The base salary shall be paid in such
installments and at such times as the Company pays its regularly
salaried executive employees. The base salary will be subject to
additional increases from time to time by the Board, in its sole
discretion. Such base salary, as from time to time increased, is
hereinafter referred to as the "Base Salary." The Base Salary
shall be prorated for any period of service during the Term which
covers less than one full calendar year.
Section 5. EXECUTIVE OFFICER INCENTIVE COMPENSATION. During
the Term, the Company from time to time shall award the Executive
annual incentive compensation ("Incentive Compensation") based
upon a target (the "Target") which shall be seventy percent (70%)
of the Base Salary, with the actual annual incentive award
ranging from zero to two hundred percent (200%) at the best
expected level, in accordance with the achievement of financial
or other performance measures contained in the Company's 1997
Executive Officer Incentive Plan (the "Plan"), in which Executive
shall participate during the Initial Term and any Renewal Term.
Any compensation paid to the Executive as Incentive Compensation
shall be in addition to the Base Salary and in lieu of
participation in any other incentive, profit sharing or bonus
compensation program (other than pursuant to any stock option
plan described in Section 6.02) which the Company or Holdings
maintains; provided that, to the extent determined by the Board
from time to time, the Executive will be eligible to participate
in profit sharing, incentive compensation or bonus compensation
programs adopted in the future.
Section 6. STOCK SUBSCRIPTION; STOCK OPTIONS.
6.01. STOCK SUBSCRIPTION. Pursuant to a Securities Purchase
and Holders Agreement (the "Stockholders Agreement") to be
executed at the Closing, the Executive (or, at Executive's
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option, one or more trusts for the benefit of Executive's
children or a "rabbi" or other trust for the benefit of Executive
(an "Executive Trust"), or a combination thereof) shall purchase
from Holdings and Holdings shall sell to the Executive (or, at
Executive's option, one or more Executive Trusts, or a
combination thereof) shares of Holdings stock for an aggregate
purchase price as provided therein; such purchase and sale to be
for securities of the same class or classes sold in connection
with the Recapitalization to (and at per share prices equal to
those paid by) NSC for such shares in connection with the
Recapitalization.
6.02. STOCK OPTIONS. Holdings shall establish and adopt a
stock option plan in substantially the form attached hereto as
Exhibit A, which allows the Board (based upon Executive's
recommendations) to grant, in the aggregate, options to purchase
up to five percent (5%) of all outstanding Holdings Common Stock
to employees designated by the Board who are not parties to the
Stockholders Agreement (or beneficiaries of a trust that is a
party to such agreement) and at a price equal to that paid per
share of Common Stock pursuant to said Agreement. Executive
shall also have the right to participate in a stock option plan
to be developed immediately prior to or after any public offering
of Holdings stock, which shall provide for options with exercise
prices equal to the fair market value of such stock on the date
such options are granted.
Section 7. BENEFITS. In addition to the compensation
detailed in Sections 4, 5 and 6 of this Agreement, the Executive
shall be entitled to the following additional benefits:
7.01. FRINGE BENEFITS. During the Term and subject to any
contribution therefor generally required of executives of the
Company, the Executive shall be eligible to participate in all
employee fringe benefit programs as are made available from time
to time to the Company's executive employees. The Executive
shall be eligible to participate in the Company's 401(k) and
deferred compensation plans to be adopted by the Company
consistent with such plans offered by NSC and pursuant to which
employees covered thereby may defer receipt of all or any portion
of any bonus amounts payable to them until future periods. The
Company will provide to the Executive health benefits comparable
to the health benefits provided to the Executive by NSC prior to
the Closing Date. Such participation in fringe benefit and
option programs shall be subject to (i) the terms of the
applicable plan documents, and (ii) generally applicable Company
policies. In addition, during the Term, the Company will pay or
reimburse the Executive for reasonable medical examination costs
incurred as part of the Executive's routine annual physical
examination, and will pay the cost of maintaining the existing
life insurance policy provided by NSC to the Executive, and will
obtain and maintain in effect for Executive's benefit a
supplemental long-term disability insurance policy with coverage
of not less than eighty percent (80%) of Executive's base salary
for the duration of such disability.
7.02. PAID VACATION. The Executive shall be entitled to five
(5) weeks paid vacation per calendar year, such vacation to
extend for such periods and to be taken at such intervals as
shall be appropriate and consistent with the proper performance
of the Executive's duties hereunder. Any unused, accrued vacation
time may be accumulated from one calendar year to another,
provided that the Executive shall not be entitled to compensation
for vacation time not taken.
7.03. REIMBURSEMENT OF EXPENSES. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by
the Executive in connection with the business affairs of the
Company and the performance of his duties hereunder. The
Executive shall comply with such
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reasonable limitations and reporting requirements with respect to such
expenses as the Board may establish from time to time.
7.04. FINANCIAL PLANNING. During the Term, the Company will
reimburse the Executive for up to Six Thousand ($6,000) Dollars
per year in connection with tax planning, tax return preparation
and financial planning for the Executive.
7.05. SEVERANCE. In the event Executive's employment
hereunder is terminated by the Company pursuant to Section 8.04
or by the Executive pursuant to Section 8.05, the Company will
pay the Executive, his designated beneficiary or, if none, his
estate, monthly severance payments during the greater of
twenty-four (24) months and the remaining number of months in the
Initial Term, each to be payable on the last day of the month
commencing with the end of the month following the date of
termination, and shall continue throughout such period, at the
Company's expense, all of Executive's benefits then being made
available or to which Executive is entitled pursuant to Section 7
hereof. Each monthly severance payment shall be in an amount
equal to the sum of (a) one-twelfth (1/12) of the Base Salary in
effect at the time of such termination plus (b) one-twelfth
(1/12) of 100% of what the Executive's Target Award would have
been for the Company's fiscal year preceding the year in which
the termination occurs, irrespective of what the Executive's
actual award was under the Plan for such preceding fiscal year
(annualized in the event such prior fiscal year was a partial
year for purposes of the Plan). In addition, in the event of any
such termination, all options theretofore granted to Executive as
contemplated by Section 6.02 shall become fully and immediately
exercisable notwithstanding any limitations contained in the Plan
or any Stock Option Agreement.
Section 8. TERMINATION. Notwithstanding the provisions of
Section 2, this Agreement shall terminate prior to the expiration
of the Term under the following circumstances:
8.01. DEATH. In the event of the Executive's death during
the Term, the Executive's employment hereunder shall immediately
and automatically terminate and the Company shall pay to the
Executive's designated beneficiary or, if no beneficiary has been
designated by the Executive, to his estate (i) any Base Salary
earned but unpaid through the date of his death plus (ii) at the
times the Company pays its Incentive Compensation in accordance
with its general payroll policies, an amount equal to that
portion of the Incentive Compensation which but for his death
would have been earned by the Executive during the year of his
death (pro-rated based on the number of days during the year of
his death during which the Executive was employed by the Company
on an active status).
8.02. DISABILITY.
8.02.1 The Company may terminate the Executive's
employment hereunder, upon notice to the Executive, in the
event that the Executive becomes disabled during his
employment hereunder through any illness, injury, accident
or condition of either a physical or psychological nature
and, as a result, is unable to perform substantially all of
his duties and responsibilities hereunder for an aggregate
of one hundred eighty (180) days during any period of three
hundred and sixty (360) consecutive calendar days.
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8.02.2 The Board may designate another employee to act
in the Executive's place during any period of the
Executive's disability. Notwithstanding any such
designation, the Executive shall continue to receive the
Base Salary in accordance with Section 4 and to receive
benefits in accordance with Section 7.01, to the extent
permitted by the then-current terms of the applicable
benefit plans, until the Executive becomes eligible for
disability income benefits under any disability income plan
maintained by the Company or until the termination of his
employment, whichever shall first occur.
8.02.3 While receiving disability income payments
under any disability income plan maintained by the Company,
the Executive shall not be entitled to receive any Base
Salary under Section 4 or Incentive Compensation (except as
otherwise provided under the Plan), but shall continue to
participate in the Company's benefit plans in accordance
with Section 7.01 and the terms of such plans, until the
termination of his employment. In the event the Executive's
employment hereunder is terminated pursuant to Section
8.02.1, the Company shall pay or provide to the Executive,
at the times the Company pays its executives bonuses in
accordance with its general payroll policies, an amount
equal to that portion of the Incentive Compensation which
but for his disability would have been earned by the
Executive during the year in which his employment was
terminated under Section 8.02.1 (pro-rated based on the
number of days during which the Executive was employed by
the Company on an active status during the year of such
termination).
Section 8.03. BY THE COMPANY FOR CAUSE. The employment of
the Executive may be terminated at any time by the Company for
Cause (as defined below), effective immediately, in accordance
with the provisions of Section 8.03.2. For purposes hereof, the
term "Cause" shall mean the Board has determined, in its
reasonable judgment, that any one or more of the following has
occurred:
(i) The Executive shall have committed an act or acts
of dishonesty or criminality that, in the good faith
judgment of the Board of Directors of the Company, has had
or could have an adverse effect on the Company;
(ii) The Executive shall have committed any act of
fraud, embezzlement or misappropriation of funds; or
(iii) The Executive shall have breached, in any
material respect, any of the provisions of this Agreement.
Upon the effectiveness of the termination of the Executive's
termination for Cause, the Company, Holdings and Sterling shall
have no further obligation or liability to the Executive relating
to the Executive's employment hereunder, or the termination
thereof, other than for Base Salary earned but unpaid through the
date of termination.
Section 8.04. BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the Executive's employment at any time during the
Initial Term or any Renewal Term without Cause. In the event of
such termination, then the Company shall pay or provide the
Executive (i) Base Salary to the extent earned but unpaid through
the date of termination plus (ii) the amounts specified in
Section 7.05 plus (iii) at the times the Company pays its
executives incentive
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compensation in accordance with its general payroll policies, an amount
which, but for such termination, the Executive would have earned during the
year of such termination (pro-rated based on the number of days during the
year of such termination of employment for which the Executive was employed
by the Company on an active status). In addition, any options granted to the
Executive as contemplated by Section 6.02 shall become fully exercisable upon
any such termination, notwithstanding any limitations in the Plan or any
Stock Option Agreement. Any nonrenewal of this Agreement by the Company shall
in no event be deemed a termination for purposes of this Section 8.04.
Section 8.05. BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment at any time during the
Initial Term or any Renewal Term for Good Reason. In the event
of such termination, the Company shall pay or provide the
Executive (i) base salary to the extent earned but unpaid through
the date of termination plus (ii) the amount and benefits
specified in Section 7.05 plus (iii) at the times the Company
pays its executives incentive compensation in accordance with its
general payroll policies, an amount which, but for such
termination, the Executive would have earned during the year of
such termination (pro-rated based on the number of days during
the year of such termination of employment for which the
Executive was employed by the Company on an active status). In
addition, any options granted to the Executive as contemplated by
Section 6.02 shall become fully and immediately exercisable upon
any such termination, notwithstanding any limitations in the plan
or any stock option agreement. Any non-renewal of this Agreement
by the Company shall in no event be deemed a termination for
purposes of this Section 8.05. As used herein, "Good Reason"
means a resignation by the Executive within thirty (30) days
after (i) any demotion or similar change in his duties such that
the duties assigned to the Executive after such change represent
a substantial decrease in the Executive's duties,
responsibilities or status with the Company relative to such
duties, responsibilities or status as of the date hereof, (ii)
being required to relocate his principal place of employment
beyond a ten (10) mile radius of Portland, Maine or (iii) the
Company's failure to make any payment or to provide any benefit
due to the Executive hereunder when due; provided, however, that
the Executive shall have first given the Company written notice
of such failure to pay or provide and such failure to pay or
provide shall not have been cured within ten (10) days after the
receipt by the Company of such notice.
Section 8.06. BY THE EXECUTIVE WITHOUT GOOD REASON. The
Executive may terminate his employment hereunder at any time upon
ninety (90) days' notice to the Company. In the event of
termination of the Executive pursuant to this Section 8.06, the
Board may elect to waive the period of notice, or any portion
thereof, and, unless the Board so elects, the Company will pay
the Executive his Base Salary for the notice period. Upon
termination of the Executive's employment hereunder pursuant to
this Section 8.06, the Company shall have no further obligation
or liability to the Executive relating to the Executive's
employment hereunder, or the termination thereof, other than
payment to the Executive of his Base Salary for the period (or
portion of such period) indicated above.
Section 8.07. POST-AGREEMENT EMPLOYMENT. In the event the
Executive remains in the employ of the Company, Holdings,
Sterling or any of their affiliates following termination of this
Agreement, by the expiration of the Term or otherwise, then such
employment shall be at will, unless otherwise agreed in writing.
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Section 8.08. MITIGATION. Any amounts payable to the
Executive hereunder pursuant to Section 7.05, 8.04 or 8.05 shall
not be reduced by any amounts earned by the Executive from any
other employer or source following termination of the Executive's
employment with the Company, Holdings and Sterling, except in the
event of a violation of Section 11 hereof; provided, however,
that the amounts payable to Executive pursuant to clause (b) of
Section 7.05 hereof shall be subject to prospective (and not
retrospective) offset to the extent of any cash compensation
actually received by Executive from any other employer during the
period in which such amounts would otherwise be payable to
Executive. Notwithstanding the foregoing, the Executive shall be
under no obligation to take or refrain from taking any action to
mitigate the Company's potential liability to make such severance
payments.
Section 9. EFFECT OF TERMINATION. The provisions of this
Section 9 shall apply in the event of termination of employment
whether due to the expiration of the Term, pursuant to Section 8
or otherwise.
Section 9.01. PAYMENT IN FULL. Payment by the Company of any
Base Salary and other amounts and contributions to the cost of
the Executive's continued receipt of benefits that may be due the
Executive under the applicable termination provision of Section 8
shall constitute the entire obligation of the Company to the
Executive. Acceptance by the Executive of performance by the
Company shall constitute full settlement of any claim that the
Executive might otherwise assert against the Company, its
affiliates or any of their respective shareholders, partners,
directors, officers, employees or agents relating to such
termination.
Section 9.02. SURVIVAL OF CERTAIN PROVISIONS. Provisions of
this Agreement shall survive any termination of employment if so
provided herein or if necessary or desirable fully to accomplish
the purposes of such provision, including, without limitation,
the obligations of the Executive under Sections 10 and 11 hereof.
The obligation of the Company to make payments to or on behalf of
the Executive under Sections 7.05, 8.04 or 8.05 hereof is
expressly conditioned upon the Executive's continued full
performance of obligations under Section 10 and 11 hereof. The
Executive recognizes that, except as expressly provided in
Section 7.05, 8.04 or 8.05, no compensation is earned after
termination of employment.
Section 9.03. PUBLIC STATEMENT OF TERMINATION. In the event
the Executive's employment terminates for any reason, the Company
and the Executive shall agree upon a public statement pertaining
to the Executive's termination of employment, and the terms of
said statement shall not be subject to subsequent modification by
either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith
to agree on such a statement, the Company may make public
statements as are necessary to comply with the law.
Section 10. PROPRIETARY INFORMATION; INVENTIONS IN THE FIELD.
Section 10.01. PROPRIETARY INFORMATION. In the course of his
service to the Company (and to its predecessor, NSC), the
Executive has had and will continue to have access to
confidential specifications, know-how, strategic or technical
data, marketing research data, product research and development
data, manufacturing techniques, financial performance,
confidential customer lists, costs, sources of supply and trade
secrets, names and addresses of the people and organizations with
whom the Company and its affiliates have business relationships
and such
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relationships, and special needs of customers of the Company and its
affiliates, all of which are confidential and may be proprietary and are
owned or used by the Company or its affiliates. Such information shall
hereinafter be called "Proprietary Information" and shall include any and all
items enumerated in the preceding sentence and coming within the scope of the
business of the Company or its affiliates as to which the Executive may have
had or may in the future have access, whether conceived or developed by
others or by the Executive alone or with others during the period of his
service to the Company or its affiliates (or to NSC and its affiliates),
whether or not conceived or developed during regular working hours. The term
"Proprietary Information" also shall be deemed to include comparable
information that the Company or any of its affiliates (or NSC or any of its
affiliates) have received belonging to others or which was received by the
Company or any of its affiliates (or NSC or any of its affiliates) with any
understanding that it would not be disclosed. Proprietary Information shall
not include any records, data or information which are in the public domain
during the period of service by the Executive provided the same are not in
the public domain as a consequence of disclosure, directly or indirectly by
the Executive in violation of this Agreement.
Section 10.02. FIDUCIARY OBLIGATIONS. The Executive agrees
that Proprietary Information is of critical importance to the
Company and its affiliates, and that a violation of this Section
10.02 or Section 10.03 would seriously and irreparably impair and
damage the Company's business. The Executive agrees that he shall
keep all Proprietary Information in a fiduciary capacity for the
sole benefit of the Company.
Section 10.03. NON-USE AND NON-DISCLOSURE. The Executive
shall not during the Term or at any time thereafter, regardless
of the reason for termination of the Executive's employment (a)
disclose, directly or indirectly, any Proprietary Information to
any person other than the Company or authorized employees thereof
at the time of such disclosure, or such other persons to whom the
Executive has been specifically instructed to make disclosure by
the Board and in all such cases only to the extent required in
the course of the Executive's service to the Company or (b) use
any Proprietary Information, directly or indirectly, for his own
benefit or for the benefit of any other person or entity. The
parties agree and acknowledge that nothing contained in this
Section 10.03 is intended to preclude the Executive from
utilizing general or industry-specific business skills developed
by him over his career, or to effectively extend the restrictions
contained in Section 11 hereof beyond the Non-Competition Period
(as defined therein), and that this Section 10.03 shall be
applicable only to specific, demonstrable instances of improper
disclosure or use by the Executive of Proprietary Information.
The Company shall have the burden of establishing that Executive
has violated Section 10.03 and shall not be entitled to withhold
or recover any amounts or benefits payable or to be provided to
Executive hereunder until and unless there has been a final
adjudication that Executive has breached this Section 10.03.
Section 10.04. RETURN OF DOCUMENTS. All notes, letters,
documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of
the Company or its affiliates and any copies, in whole or in
part, thereof (collectively, the "Documents"), whether or not
prepared by the Executive, shall be the sole and exclusive
property of the Company. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his
employment terminates, or at such earlier time or times as the
Board or its designee may specify, all Documents then in the
Executive's possession or control.
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Section 10.05. ASSIGNMENT OF RIGHTS TO INTELLECTUAL
PROPERTY. The Executive shall promptly and fully disclose all
Intellectual Property to the Company. The Executive hereby
assigns and agrees to assign to the Company (or as otherwise
directed by the Board) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive
agrees to execute any and all applications for domestic and
foreign patents, copyrights or other proprietary rights and to do
such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to
the Company and to permit the Company and its affiliates to
enforce any patents, copyrights or other proprietary rights to
the Intellectual Property. For purposes of this Section 10.05,
"Intellectual Property" means inventions, discoveries,
developments, methods, processes, compositions, works, concepts
and ideas (whether or not patentable or copyrightable or
constituting trade secrets) conceived, made, created, developed
or reduced to practice by the Executive (whether alone or with
others, whether or not during normal business hours or on or off
Company premises) during the Executive's employment that relate
to either any business, venture or activity being conducted or
proposed to be conducted by the Company or its affiliates at any
time during the term of this Agreement.
Section 11. RESTRICTIONS ON ACTIVITIES OF THE EXECUTIVE.
Section 11.01. ACKNOWLEDGMENTS. The Executive agrees that he
is being employed hereunder in a key management capacity with the
Company, that the Company is engaged in a highly competitive
business and that the success of the Company's business in the
marketplace depends upon its goodwill and reputation for quality
and dependability. The Executive further agrees that reasonable
limits may be placed on his ability to compete against the
Company and its affiliates as provided herein so as to protect
and preserve their legitimate business interests and goodwill.
Section 11.02. AGREEMENT NOT TO COMPETE OR SOLICIT.
11.02.1 During the Non-Competition Period (as defined
below), the Executive will not engage or participate in,
directly or indirectly, as principal, agent, employee,
employer, consultant, investor or partner, or assist in the
management of, any business which is Competitive with the
Company (as defined below).
11.02.2 During the Non-Competition Period, the
Executive will not, directly or indirectly through any other
entity, hire or attempt to hire, any officer, director,
consultant, executive or employee of the Company or any of
its affiliates during his or her engagement with the Company
or such affiliate. During the Non-Competition Period, the
Executive will not call upon, solicit, divert or attempt to
solicit or divert from the Company or any of its affiliates
any of their customers or suppliers or potential customers
or suppliers of whose names he was aware during the Term
(other than customers or suppliers or potential customers or
suppliers contacted by the Executive solely in connection
with a business that is not Competitive with the Company).
11.02.3 The "Non-Competition Period" shall mean the
Term and a period consisting of the greater of (a)
twenty-four (24) consecutive months or (b) the remaining
number of months in the Initial Term after (x) the
Executive's employment terminates
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under any circumstances whatsoever, or (y) any expiration or nonrenewal
of this Agreement.
11.02.4. A business shall be considered "Competitive
with the Company" if it is engaged in any business, venture
or activity in the Restricted Area (as defined below) which
competes or plans to compete with any business, venture or
activity being conducted or actively and specifically
planned to be conducted within the Non-Competition Period
(as evidenced by the Company's internal written business
plans or memoranda) by the Company, or any group, division
or affiliate of the Company, at the date the Executive's
employment hereunder is terminated.
11.02.5. The "Restricted Area" shall mean the United
States of America and any other country where the Company,
or any group, division or affiliate of the Company, is
conducting, or has proposed to conduct within the
Non-Competition Period (as evidenced by the Company's
internal written business plans or memoranda), any business,
venture or activity, at the date the Executive's employment
hereunder is terminated.
11.02.6. Notwithstanding the provisions of this
Section 11.02, the parties agree that (i) ownership of not
more than three percent (3%) of the voting stock of any
publicly held corporation shall not, of itself, constitute a
violation of this Section 11.02 and (ii) working as an
employee of an entity that has a stand-alone division or
business unit which is Competitive with the Company shall
not, of itself, constitute a violation of this Section 11.02
if the Executive is not, in any way (directly or indirectly,
as principal, agent, employee, employer, consultant,
advisor, investor or partner), responsible for, compensated
with respect to, or involved in the activities of such
stand-alone division or business unit and does not (directly
or indirectly) provide information or assistance to such
stand-alone division or business unit.
Section 12. REMEDIES. It is specifically understood and
agreed that any breach of the provisions of Section 10 or 11 of
this Agreement is likely to result in irreparable injury to the
Company and that the remedy at law alone will be an inadequate
remedy for such breach, and that in addition to any other remedy
it may have, the Company shall be entitled to enforce the
specific performance of this Agreement by the Executive and to
obtain both temporary and permanent injunctive relief without the
necessity of proving actual damages.
Section 13. SEVERABLE PROVISIONS. The provisions of this
Agreement are severable and the invalidity of any one or more
provisions shall not affect the validity of any other provision.
In the event that a court of competent jurisdiction shall
determine that any provision of this Agreement or the application
thereof is unenforceable in whole or in part because of the
duration or scope thereof, the parties hereto agree that said
court in making such determination shall have the power to reduce
the duration and scope of such provision to the extent necessary
to make it enforceable, and that the Agreement in its reduced
form shall be valid and enforceable to the full extent permitted
by law.
Section 14. NOTICES. All notices hereunder, to be effective,
shall be in writing and shall be delivered by hand or mailed by
certified mail, postage and fees prepaid, as follows:
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To the Executive: Xxxx X. Xxxx
0 Xxxxxx Xxxx
Xxxx Xxxxxxxxx, Xxxxx 00000
To Holdings, Xxxxxxxx Xxxxxxxxx Semiconductor Corporation
or the Company: 000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other address as a party may notify the other pursuant
to a notice given in accordance with this Section 14.
Section 15. MISCELLANEOUS.
Section 15.01. NO OTHER BENEFITS. Except as specifically
provided in this Agreement, the Executive shall not be entitled
to any compensation, severance or other benefits from the
Company, Holdings or any of their affiliates, whether during the
Term or upon the termination of this Agreement for any reason
whatsoever.
Section 15.02. MODIFICATION: WAIVER. This Agreement
constitutes the entire Agreement between the parties hereto with
regard to the subject matter hereof, superseding all prior
understandings and agreements, whether written or oral. This
Agreement may not be amended or revised except by a writing
signed by the parties. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party.
The failure of any party to require the performance of any term
or obligation of this Agreement, or the waiver by any party of
any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of
any subsequent breach.
Section 15.03. WITHHOLDING OF TAXES. The Company may
withhold from any amounts payable under this Agreement any local,
state or federal taxes as shall be required pursuant to any
applicable law.
Section 15.04. ASSIGNMENT AND TRANSFER. This Agreement shall
not be terminated by the merger or consolidation of the Company
with any corporate or other entity or by the transfer of all or
substantially all of the assets of the Company to any other
person, corporation, firm or entity, and the consent of the
Executive shall not be required in connection with the assignment
of the rights and obligations of the Company, Holdings and
Sterling pursuant to any such transaction. The Company shall use
its commercially reasonable efforts to cause the successor to its
business (as a result of a merger, consolidation or transfer of
all or substantially all of its assets), to assume the
obligations of the Company hereunder. Neither this Agreement nor
any of the rights, duties or obligations of the Executive shall
be assignable by the Executive, nor shall any of the payments
required or permitted to be made to the Executive by this
Agreement be encumbered, transferred or in any way anticipated.
This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors,
executors, administrators, heirs-and permitted assigns.
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Section 15.05. AFFILIATES. For purposes of this Agreement,
an "affiliate" of the Company or Holdings shall mean all persons
and entities directly or indirectly controlling, controlled by or
under common control with the Company, Holdings or Sterling, as
the case may be.
Section 15.06. GOVERNING LAW. This Agreement shall be
construed under and enforced in accordance with the laws of the
State of Maine, other than conflict of laws principles.
Section 15.07. CONSENT TO JURISDICTION. Each of the Company,
Holdings, Sterling and the Executive, by its or his execution
hereof, (i) subject to the provisions of Section 15.08 hereof,
hereby irrevocably submits to the exclusive jurisdiction of the
state courts of the State of Maine for the purpose of any claim
or action arising out of or based upon this Agreement or relating
to the subject matter hereof, and (ii) hereby waives any right to
trial by jury. Each of the Company, Holdings, Sterling and the
Executive hereby consents to service of process in any such
proceeding in any manner permitted by Maine law, and agrees that
service of process by registered or certified mail, return
receipt requested, at its address specified pursuant to Section
14 hereof is reasonably calculated to give actual notice.
Section 15.08. ARBITRATION. The parties agree and
acknowledge that (other than actions for injunctive relief
pursuant to Section 12 hereof) any and all disputes arising out
of or in connection with this Agreement shall be resolved by
binding arbitration pursuant to the Commercial Arbitration Rules
of the American Arbitration Association ("AAA") before a single
arbitrator selected by AAA. Such arbitration shall be held in
Portland, Maine.
Section 15.09. DISCLAIMER OF DAMAGES. The maximum
liability of the Company on account of this Agreement (or any
breach of this Agreement) shall under no circumstances exceed the
amount of salary, benefits and other compensation (including
severance) required to be paid hereunder. Without limiting the
generality of the foregoing, Executive hereby acknowledges that
the Company and Holdings, acting through the Board, shall have
the right and power to remove Executive from office and terminate
his employment at any time and for any reason whatsoever without
incurring liability to Executive other than the payment of such
salary, benefits and other compensation (including severance) as
may be required under this Agreement, including without
limitation liability in connection with claims by the Executive
that such termination, in and of itself, has damaged the
Executive's career or prospects for securing other employment, or
that such termination has impaired the value of the Executive's
investment in Holdings. The parties agree that no party to this
Agreement (or any of its affiliates) shall be liable to any other
party hereto for any incidental, consequential, special,
exemplary or punitive damages based on any claim arising out of
this Agreement; provided, however, that the foregoing limitation
shall not apply to claims arising out of any breach by the
Executive of Sections 10 or 11 of the Agreement, and that such
limitation, and (in the case of claims by the Executive) the
limitation contained in the first sentence of this Section 15.09,
shall not apply to any defamation, slander, libel or similar
claim by the Company or the Executive. In the event that
Executive's employment hereunder terminates, whether pursuant to
Section 8.06 hereof or otherwise, neither the Company nor
Holdings shall be entitled to recover from the Executive any
costs of identifying, engaging or retaining any successor to the
Executive.
Section 15.10. COSTS OF ENFORCEMENT. The parties agree and
acknowledge that the prevailing party in any proceeding arising
under this Agreement shall be entitled to receive, in
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addition to any amounts or benefits to which he or it is entitled hereunder,
all costs (including reasonable attorneys' fees) incurred by him or it in
enforcing or collecting upon any obligation of any other party under this
Agreement.
Section 15.11. DRAFTING. The parties agree and acknowledge
that this Agreement is the product of arms' length negotiation
among the parties, who have been represented by counsel
throughout, and that, accordingly, no party shall be deemed to be
the drafter of this Agreement and no presumptions as to the
construction of any provisions hereof shall be applicable as a
consequence of any party's role in the drafting hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as a sealed instrument as of the day and year
first above written.
XXXXXXXXX SEMICONDUCTOR CORPORATION
By:__________________________________
Name ________________________________
Title:_______________________________
FSC SEMICONDUCTOR CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
STERLING HOLDING COMPANY, LLC
By:__________________________________
Name:________________________________
Title:_______________________________
_____________________________________
Xxxx X. Xxxx
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