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EXHIBIT 10.70
EMPLOYMENT AGREMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of August
18, 1998, by and between Catalyst Semiconductor Inc., a Delaware corporation
("EMPLOYER"), and Xxxx Xxxxx ("EMPLOYEE").
RECITALS
WHEREAS, Employee is the President and Chief Executive Officer of Employer;
WHEREAS, Employer is in financial difficulties and the Board of Directors
of Employer has determined that it is vital to Employer's continued viability
and in the best interests of Employer's creditors and shareholders that
Employer's existing officers (including Employee) remain with Employer;
WHEREAS, Employee is entitled to severance from Employer under certain
circumstances; and
WHEREAS, in order to ensure that its existing management team (including
Employee) remain with Employer, Employer has decided to provide assurance of
payment of a portion of the severance which is payable to Employee.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:
1. Employment. Employer hereby employs Employee and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth, as the
President and Chief Executive Officer of Employer.
2. Term. The term of Employee's employment under this Agreement shall be
for a four (4) year period commencing on August 1, 1998 (the "EMPLOYMENT
TERM"), unless otherwise terminated pursuant to the terms hereof. The Employment
Term may be extended beyond the date specified above by mutual agreement of the
parties:
3. Duties:
(a) Employee shall exercise day to day supervision of all of
Employer's activities and shall perform such duties as are customarily
associated with his title, consistent with the Bylaws of Employer and as
required by Employer's Board of Directors (the "BOARD"). Employee shall
report to the Board
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(b) Employee agrees to serve Employer faithfully and to the best
of his ability; to devote his full-time efforts during normal business
hours to the business and affairs of Employer, except during reasonable
vacation periods and periods of illness and incapacity; and to perform such
duties as the Board may assign, such duties to be of a character and
dignity appropriate to the President and Chief Executive Officer.
4. Compensation. Subject to the provisions of Sections 6 and 7
herein, Employer agrees to provide as compensation to Employee the following
salary, bonus, and benefits in exchange for the services described in Section 3
of this Agreement:
(a) Salary. Employer shall pay Employee, or cause him to be
paid, a base salary of $225,000 per annum through the Employment Term or
such higher amount as the Board shall from time to time determine, such
salary to be paid in accordance with the usual manner of payment of
executive salaries by Employer. Notwithstanding the foregoing, Employee's
base salary may be reduced in proportion to any salary reduction program
approved by the Board which affects all officers of Employer.
(b) Bonus Compensation. In addition to Employee's base salary,
Employee shall participate in and, to the extent earned or otherwise
payable thereunder, receive periodic incentive cash bonuses pursuant to
any incentive bonus programs currently maintained or hereafter established
by Employer and applicable to an employee of Employee's position.
Employee's entitlement to incentive bonuses is discretionary and shall be
determined by the Board or its Compensation Committee in good faith based
upon the extent to which Employee's individual performance objectives and
Employer's profitability objectives and other financial and non-financial
objectives were achieved during the applicable bonus period. In the event
of Employee's death or disability during the Employment Term, Employer
shall pay to Employee's estate the bonus Employee would have earned during
the year in which death or disability occurred.
(c) Benefits. Employer shall provide Employee such employment
benefits as are generally available to similarly situated employees of
Employer, including without limitation expense reimbursement benefits,
coverage under medical, long-term disability and life insurance plans, and
rights and benefits for which Employee is eligible under Employer's 401(K)
retirement and profit sharing plan.
(d) Vacation and Sick Pay. Employee shall be eligible for
vacation and sick leave in accordance with the policies of Employer in
effect from time to time during the Employment Term. All accrued vacation
and sick pay shall be paid to Employee in a lump sum payment on the date of
retirement or termination of employment with Employer.
5. Stock Options. Employee shall be eligible for participation in
the Catalyst Semiconductor, Inc. Stock Option Plan ("Plan"). The parties agree
that any grant of
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stock options under the Plan or any similar plan is subject to the discretion
of the Board. All stock options granted to Employee shall immediately vest and
become exercisable in the event of a Change of Control, sale of Employer or its
assets, or Employee's death. The Employee shall have three (3) years from the
event of a Change of Control or sale of Employer or its assets in which to
exercise all vested options. The Employee's estate shall have three (3) years
from the Employee's death in which to exercise all vested options.
6. Severance Benefits For Termination Following A Change Of
Control. If Employee's employment with Employer is terminated at any time
following a Change of Control (as defined below), Employee shall be entitled
to receive severance benefits as follows:
(a) Voluntary Resignation. If Employee's employment terminates
by reason of Employee's voluntary resignation (and is not an Involuntary
Termination or a termination for Cause), then Employee shall receive no
severance payment. In addition, Employee shall not be entitled to receive
any other benefits except for those (if any) to which Employee may be
entitled under this Agreement or any separate agreement with Employer or as
may then be established under Employer's then existing benefit plans and
policies, other than severance plans, in effect at the time of such
termination.
(b) Involuntary Termination.
(i) Change of Control Severance Payment. If Employee's
employment is terminated as a result of Involuntary Termination other than for
Cause following a Change of Control, Employee shall be entitled to receive the
Change of Control Severance Payment (as defined below). The Change in Control
Severance Payment shall be paid in four equal installments, payable every three
months, commencing three months after the date of termination of employment. For
purposes of this Section 6(b) and Section 7(b) of this Agreement, "Involuntary
Termination" means Employee's voluntary termination following (I) a reduction in
compensation which is not in proportion to any salary reduction program approved
by the Board which affects all officers of Employer; (II) a reduction in
material benefits, (III) a reduction in job responsibilities (if the Employee is
also removed from the position of President and CEO); or (IV) the relocation of
Employee's primary place of business without Employee's consent to a location
more than fifty (50) miles from Employee's primary place of business immediately
prior to such relocation.
(ii) Benefits Following Involuntary Termination Other Than
For Cause Following A Change of Control. Health insurance benefits
including the same coverages provided to Employee prior to termination
(e.g. medical, dental, optical, mental health) and in all other respects
significantly comparable to those in place immediately prior to the
termination will be provided at Employer's cost until the earlier of the
Benefits Termination Date (as defined below) and the date on which Employee
is provided with comparable benefits by a new employer. Life insurance
providing the same dollar amount of coverage and in all other respects
significantly
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comparable to that in place immediately prior to termination will be
provided at Employer's cost until the earlier of the Benefits Termination
Date and the date on which Employee is provided with comparable benefits by
a new employer, or as otherwise agreed to by Employee and Employer. In the
event of Involuntary Termination other than for Cause all stock options
granted to Employee shall immediately vest and become exercisable. The
Employee shall have three (3) years in which to exercise all vested
options.
(c) Involuntary Termination For Cause. If Employee's employment
is terminated for Cause following a Change in Control, then Employee shall
not be entitled to receive severance payments. In addition, Employee shall
not be entitled to receive any other benefits except for those to which
Employee is entitled under this Agreement or any separate agreement with
Employer or as may then be established under Employer's then existing
benefit plans and policies, other than severance plans, in effect at the
time of such termination. Any such benefits shall be provided until the
Benefits Termination Date.
7. Severance Benefits For Termination Apart From A Change Of
Control. If Employee's employment with Employer terminates for any reason prior
to the occurrence of a Change of Control, Employee shall be entitled to receive
severance benefits as follows:
(a) Voluntary Resignation. If Employee's employment terminates
by reason of Employee's voluntary resignation (and is not an Involuntary
Termination or a termination for Cause), then Employee shall receive no
severance payment. In addition, Employee shall not be entitled to receive
any other benefits except for those (if any) to which Employee may be
entitled under this Agreement or any separate agreement with Employer or as
may then be established under Employer's then existing benefit plans and
policies, other than severance plans, in effect at the time of such
termination.
(b) Involuntary Termination. If Employee's employment is
terminated as a result of Involuntary Termination other than for Cause,
Employee shall be entitled to receive a severance payment equal to one time
Employee's Current Compensation. Such payment shall be paid in four equal
installments, payable every three months, commencing three months after the
date of termination of employment. Health insurance benefits including the
same coverage provided to Employee prior to termination (e.g. medical,
dental, optical, mental health) and in all other respects significantly
comparable to those in place immediately prior to the termination will be
provided at Employer's cost until the earlier of the Benefits Termination
Date (as defined below) and the date on which Employee is provided with
comparable benefits by a new employer. Life insurance providing the same
dollar amount of coverage and in all other respects significantly
comparable to that in place immediately prior to the termination will be
provided at Employer's cost until the earlier of the Benefits Termination
Date (as defined below) and the date on which Employee is provided with
comparable benefits by a new employer. In the event of Involuntary
Termination other
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than for Cause all stock options granted to Employee shall immediately vest and
become exercisable. The Employee shall have three (3) years in which to
exercise all vested options:
(c) Involuntary Termination for Cause. If Employee's employment is
terminated for Cause, then Employee shall not be entitled to receive severance
payments. In addition, Employee shall not be entitled to receive any other
benefits except for those to which Employee is entitled under this Agreement or
any separate agreement with Employer or as may then be established under
Employer's then existing benefit plans and policies, other than severance
plans, in effect at the time of such termination. Any such benefits shall be
provided until the Benefits Termination Date.
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8. Severance Letter of Credit.
(a) Within five (5) days of the date hereof, Employer will provide
Employee with a letter of credit in form and substance reasonably satisfactory
to Employee, naming Employee as the beneficiary, in the maximum drawable amount
of One Hundred Twelve Thousand Five Hundred Dollars ($112,500.00) (the
"Severance Letter of Credit"). The Severance Letter of Credit shall provide
that it may be drawn at the time and for the purpose set forth in this Section
8. Employer shall have no right to prevent a draw by the Employee under the
Severance Letter of Credit provided said draw is made in accordance with
Section 8(b) or Section 8(c) hereof.
(b) In the event that (i) Employee is entitled to the payment of
severance hereunder, and (ii) Employer files for bankruptcy protection under the
Bankruptcy Code, then at any time after the date of Employer's bankruptcy
filing, Employee shall be entitled to draw against the Severance Letter of
Credit in an amount equal to the sum of One Hundred Twelve Thousand Five Hundred
Dollars ($112,500). Payment to Employee pursuant to the Severance Letter of
Credit and under the circumstances described in this Section 8(b) shall satisfy
Employer's obligation to pay severance to Employee pursuant to the terms of
Section 6 or 7.
(c) In the event that (i) Employee is entitled to the payment of
severance hereunder, and (ii) Employer fails to pay such severance in
accordance with the terms of Section 6 or 7 for any reason other than
Employer's filing for bankruptcy protection under the Bankruptcy Code, then
beginning on the tenth day after the three month anniversary of the date of
termination of Employee's employment, Employee shall be entitled to draw
against the Severance Letter of Credit in an amount equal to the sum of One
Hundred Twelve Thousand Five Hundred Dollars ($112,500). Employee shall also be
entitled to seek recovery from Employer of the remainder of the severance to
which he is entitled pursuant to the terms of Section 6 or 7 hereof.
9. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings.
(a) Benefits Termination Date. "Benefits Termination Date" shall
mean:
(i) If Employee is Involuntarily Terminated at any time during
the First Year, then the eighteen month anniversary of the date of
termination;
(ii) If Employee is Involuntarily Terminated at any time during
the Second Year, then the first anniversary of the date of termination;
(iii) If Employee is Involuntarily Terminated at any time during
the Third Year and Beyond, then the six month anniversary of the date of
termination.
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(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Ownership. Any "person" or "persons" (as "person" is
used in Section 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 Employer representing at
least fifty percent (50%) of the total voting power represented by Employer's
then outstanding voting securities; or
(ii) Merger. The stockholders of Employer approve a merger
or consolidation of Employer with any other corporation, other than a merger of
consolidation which would result in the voting securities of Employer
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty (50%) of the total voting power represented by
the voting securities of Employer or such surviving entity outstanding
immediately after such a merger or consolidation.
(iii) Sale of Assets. The stockholders of Employer approve a
plan of complete liquidation of Employer or an agreement for the sale or
disposition by Employer or all of substantially all of Employer's assets.
(c) Change of Control Severance Payment. "Change of Control
Severance Payment" shall mean:
(i) If Employee is Involuntarily Terminated at any time
during the First Year, then two times Employee's Current Compensation;
(ii) If Employee is Involuntarily Terminated at any time
during the Second Year, then one and one-half times Employee's Current
Compensation; and
(iii) If Employee is Involuntarily Terminated at any time
during the Third Year and Beyond, then one time Employee's Current Compensation.
(d) Cause. "Cause" shall mean (i) Employee's willful and
voluntary departure from or abandonment of his employment with Employer for a
period of 20 working days during any 12-month period, (ii) any willful and
material breach by Employee of his obligations pursuant to any written
agreement, including this Agreement, between Employer and Employee, (iii)
Employee's continuing or repeated failure or refusal to perform his material
duties hereunder, after Employee shall have received written notice from the
Board stating the nature of such failure or refusal and, if such failure or
refusal is curable, then after-Employee has been afforded at least 30 days in
which to cure such failure or refusal, (iv) any proven act by Employee of fraud
against Employer or theft, embezzlement or other misappropriation of the funds
or property of Employer, (v) the conviction of Employee for any felony under
the laws of the United States or any state thereof, or any subdivision of any
state thereof (excluding
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traffic related offenses) and (vi) the inability of Employee to render services
under this Agreement for any period in excess of 180 days out of any 12-month
period (whether due to ill health or otherwise).
Anything to the contrary in this Section 9(d) notwithstanding,
Employee shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to Employee a copy of a resolution duly adopted
by the Board, after reasonable notice to Employee and an opportunity for
Employee, together with Employee's counsel, to be heard before the Board,
finding that in the good faith opinion of the Board, Employee has engaged in the
conduct described in Section 9(d).
(e) Current Compensation. "Current Compensation" shall mean an amount
equal to the greater of (A) Employee's highest annual base salary for the year
in which the termination occurs plus the amount of any bonus payable to Employee
during that year, (B) Employee's annual base salary at any time during the year
in which the termination occurs plus the amount of any bonus payable to Employee
during that year, and (C) Employee's annual base salary on the date of
termination plus the amount of any bonus payable to Employee during that year.
(f) First Year. "First Year" shall mean the period commencing with
the date hereof and ending on that date which is one year from the date hereof.
(g) Second Year. "Second Year" shall mean the period commencing
after that date which is one year from the date hereof and ending on that date
which is two years from the date hereof.
(h) Third Year and Beyond. "Third Year and Beyond" shall mean any
time after that date which is two years from the date hereof.
10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective legal representatives, and to
any successor of Employer which successor shall be deemed substituted for
Employer under the terms of this Agreement. As used in this Agreement, the term
"successor" shall include any person, firm, corporation or other business entity
which at any time, whether by merger, purchase, consolidation, or otherwise,
acquired all or substantially all of the assets or business of Employer. This
Agreement shall be deemed to be willfully breached by Employer if any such
successor does not absolutely and unconditionally assume all of Employer's
obligations under this Agreement and agree expressly to perform the obligations
in the same manner and to the same extent as Employer would be required to
perform such obligations in the absence of the succession. Employee may not
assign any of his duties hereunder and he may not assign any of his rights
hereunder without the written consent of Employer, which shall not be
unreasonably withheld.
11. Notices. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and
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postage prepaid. Mailed notices to Employee shall be addressed to Employee at
the home address from which Employee most recently communicated to Employer in
writing. In the case of Employer, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
the Chairman of the Board.
12. Entire Agreement. This Agreement contains the entire agreement of the
parties and supersedes and replaces all prior agreements relating to the subject
matter hereof (including without limitation the Employment Agreement between
Employer and Employee dated as of October 14, 1995, as subsequently amended).
This Agreement may not be amended except in a written instrument signed by all
parties hereto.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
14. Arbitration. Any controversy or claim arising out of or relating to
this Agreement shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect. The
controversy or claim shall be submitted to three arbitrators, one of whom shall
be chosen by Employer, one of whom shall be chosen by Employee, and the third of
whom shall be chosen by the two arbitrators so selected. The party desiring
arbitration shall give written notice to the other party of its desire to
arbitrate the particular matter in question, naming the arbitrator selected by
it. If the other party shall fail within a period of 15 days after such notice
shall have been given to reply in writing naming the arbitrator selected by it,
then the party not in default may apply to the American Arbitration Association
for the appointment of the second arbitrator. If the two arbitrators chosen as
above shall fail within 15 days after their selection to agree upon a third
arbitrator, then either party may apply to the American Arbitration Association
for the appointment of an arbitrator to fill the place so remaining vacant. The
decision of any two of the arbitrators shall be final and binding upon the
parties hereto and shall be delivered in writing signed in triplicate by the
concurring arbitrators to each of the parties hereto. Each party shall pay the
fees of the arbitrator he or it selects and, subject to Section 15, other
expenses connected with presenting his or its case. Judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction.
15. Legal Fees And Expenses. In the event an action is brought to enforce
any provision of this Agreement, Employee's legal fees and expenses shall be
paid by Employer as incurred by the Employee, unless Employee brings a claim
which is determined by the arbitrator to be frivolous, in which case, Employee
shall repay to Employer all amounts advanced by Employer to Employee in
connection with such claim within thirty days of such determination.
16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
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reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
17. Amendments and Waivers. This Agreement may be modified only by a
written instrument duly executed by each party hereto. No breach of any
covenant, agreement, warranty or representation shall be deemed waived unless
expressly waived in writing by the party who might assert such breach. No
waiver of any right hereunder shall operate as a waiver of any other right or
of the same or a similar right on another occasion.
18. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
19. Section Headings. The headings of each Section, subsection or other
subdivision of this Agreement are for reference only and shall not limit or
control the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"Employer"
CATALYST SEMICONDUCTOR, INC.
By: /s/ HIDE TANIGAMI
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Name: HIDE TANIGAMI
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Title: Chairman of the Board
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"Employee"
/s/ XXXX XXXXX
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XXXX XXXXX
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