EXHIBIT 10.2
FIRST AMENDED
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EXECUTIVE EMPLOYMENT AGREEMENT
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This First Amended Executive Employment Agreement (the "Agreement") is entered
into by and between IXYS Corporation (the "Company"), a Delaware corporation,
and Xxxxxx X. Xxxxxxxx ("Executive"), effective as of June 26, 1998 (the
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"Effective Date").
W I T N E S S E T H
WHEREAS, the Company and Executive are parties to that certain Executive
Employment Agreement effective as of January 1, 1995, which is modified and
superseded by this First Amended Executive Employment Agreement; and
WHEREAS, the Company intends to conclude a merger of Paradigm Enterprises, Inc.,
a wholly owned subsidiary of Paradigm Technology, Inc., with and into the
Company (the "Merger"), and desires thereafter 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 Financial 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").
2. COMPENSATION, VACATION AND BENEFITS.
2.1 The Company agrees to pay Executive an annual base salary in the amount
of $160,000, payable every two weeks. In addition, the Company agrees to pay
Executive an annual bonus equal to thirty percent (30%) of Executive's
annual base salary. The executive's performance, and his base salary and
bonus arrangement will be reviewed by the Board from time to time.
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; and
(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.
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; or
(b) the sale, exchange or other transfer (in one transaction or
a series of related transactions) to a third party not affiliated with
the Company of at least twenty percent (20%) of the voting stock of the
Company within a one-year period; 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 an Acquisition, or a Change in Control, other
than the Merger, during Executive's active employment hereunder, he shall be
entitled to receive a cash bonus equal to three times his then annual base
salary, payable immediately after the closing of the transaction or the
series of transactions effecting the Change of Control.
2.
5. TERMINATION OF EMPLOYMENT.
5.1 TERM. The initial term of this Agreement is from the date hereof until
January 31, 2004.
5.2 COMPANY INITIATED TERMINATION.
(a) In the event the Company terminates Executive's employment without
cause, 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, except as
expressly provided herein.
(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.
(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
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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(c) (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 other than the Merger, he shall be entitled to
receive a cash payment equal to three times his average total annual
cash compensation, including base salary and bonus, of the prior three
years. 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.
(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 other than the Merger, 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 other than the Merger, 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) The incentive bonus in Section 4.2, and the severance pay in
Section 5.2(a), and the Change of Control severance pay in Section
5.2(e) are intended to be cumulative. Executive may become entitled to
receive more than one such benefit based on the same or related events.
(i) Except as expressly provided herein, 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 Section 5.2(e) if applicable,
upon such voluntary termination.
4.
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 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: President
If to Executive:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, XX 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
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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 ("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.
6.
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 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 X. XXXXXXXX, IXYS CORPORATION,
An individual a California Corporation
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx, Chief Executive Officer
Date: June 26, 1998 Date: June 26, 1998
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7.
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 t 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).
8.
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.
9.
