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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
(This Agreement supersedes any and all Employment Agreements which were executed
prior to May 22, 1997.)
This Agreement is made by and between Zilog, Inc., a Delaware corporation
(hereinafter "Zilog") and Xxxxxxx X. Xxxxx (hereinafter "Xxxxx"), whereby Zilog
and Xxxxx agree that Xxxxx accepts employment as Vice President, Worldwide
Technology of Zilog, under the following terms and conditions:
1. Term. Zilog and Xxxxx agree that Xxxxx will be Vice President,
Worldwide Technology of Zilog for a period of twenty four (24)
months, commencing on November 6, 1996 and ending November 5,
1998. This Agreement may be extended upon written agreement of
Zilog and Xxxxx. If during the term of this Agreement a "Change
in Control" of Zilog occurs, the term of this Agreement will be
extended for a period of twenty four (24) months commencing on
the earlier of the effective date of the Change in Control or
the date this Agreement would otherwise expire; provided,
however, in the case of a Change in Control that is subject to
an agreement that is executed before the date this Agreement
would otherwise expire but becomes effective on a closing date
that will occur after the date this Agreement would otherwise
expire, there will be no such automatic twenty four month
extension if the closing date does not occur within six (6)
months after the date this Agreement would otherwise expire.
Under these circumstances the term of this Agreement shall be
extended six (6) months from the date it would otherwise expire.
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For purposes of this Agreement, "Change in Control" shall mean the occurrence of
any of the following events:
(i) A change in the composition of the board of directors of Zilog, Inc., as
a result of which fewer than two-thirds of the incumbent directors are
directors who either:
(A) Had been directors of Zilog, Inc. twenty-four (24) months prior
to such change; or
(B) Were elected, or nominated for election, to the board of
directors of Zilog, Inc. with the affirmative votes of at least
a majority of the directors who had been directors of Zilog,
Inc. twenty-four (24) months prior to such change and who were
still in office at the time of the election or nomination;
(ii) Any "person" (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) other than Zilog, Inc. (or its designee), by the
acquisition or aggregation of securities is or becomes the beneficial
owner, directly or indirectly, of securities of Zilog, Inc. representing
twenty percent (20%) or more of the combined voting power of Zilog,
Inc.'s then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote at
elections of directors;
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(iii) the sale of all or substantially all of the assets of Zilog,
Inc. to a third party who is not an affiliate (including a
parent or subsidiary) of Zilog, Inc.; or
(iv) Any acquisition of stock, tender offer, merger, consolidation,
sale, reorganization, dissolution or other such event or series
of events, which in the opinion of a majority of the members of
the board of Zilog, Inc. (as reflected in a written resolution
of the board of Zilog, Inc.) has resulted in a change of control
of Zilog, Inc.
2. Extent of Services. Xxxxx shall devote his entire time, attention and
energies to his position as Vice President, Worldwide Technology of
Zilog and shall not, during the term of this Employment Agreement be
engaged in any other business activity whether or not such business
activity is pursued for gain, profit or other pecuniary advantage;
provided, that Xxxxx may engage in personal investment activities
consistent with Zilog's Conflict of Interest Policy.
3. Compensation.
A. Salary. For each month of employment, Zilog will pay, or cause
to be paid, to Xxxxx the sum of at least $17,917.00 as base
salary. Such sum will be paid in monthly installments or such
other normal periodic payment schedule
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as Zilog may establish for its executives. Xxxxx'x salary will
be reviewed periodically in accordance with established salary
review procedures and adjustments to his salary, if any, will be
based upon such reviews.
B. Employee Performance Incentive Plan and Executive Bonus Plan.
Xxxxx will be eligible to receive Awards and Payouts in
accordance with the terms of the Zilog Employee Performance
Incentive Plan (hereinafter "EPIP"), and the EPIP Executive
Bonus Plan (hereinafter "Executive Bonus") as such plans may be
modified from time to time and as modified by this Agreement.
C. Zilog Employee Stock Option Plan. Zilog has provided to Xxxxx
stock options under the 1990 Zilog Employee Stock Option Plan
(hereinafter "ZSOP") and the 1994 Long Term Incentive Plan
(hereinafter "LTIP"), copies of such plans being attached
hereto. Vesting will continue in accordance with the plan
provisions during the term of this Agreement.
4. Benefits. As an employee of Zilog, Xxxxx will be entitled to such
benefits as Zilog normally provides its employees. In addition, Zilog
will provide Xxxxx with Directors and Officers (D & O) insurance in an
amount deemed appropriate by the Company.
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5. Company Policies. Xxxxx agrees to be bound by all Zilog Company Policies
applicable to its employees including but not limited to Business
Ethics, Conflict of Interest, Proprietary Information and Antitrust
Compliance, and he agrees to sign any such documents as Zilog requests
evidencing such agreement.
6. Termination of Employment. Zilog reserves the right to terminate the
employment of Xxxxx at any time during the term of this Agreement, for
any reason or for no reason, with or without cause, by giving Xxxxx at
least thirty (30) days written notice of such termination or
compensation in lieu of notice; and Xxxxx may terminate his employment
by giving at least thirty (30) days written notice to Zilog. Zilog
reserves the right to accelerate any deferred resignation date given it
by Xxxxx, and any such acceleration of such date will not alter the
character of such termination from voluntary to involuntary.
7. Payment upon Termination. Notwithstanding any other provisions of this
Agreement to the contrary, Zilog's obligations to Xxxxx, if his
employment with Zilog is terminated prior to the end of this Agreement,
shall be as follows:
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A. If Xxxxx voluntarily resigns his employment for 1) other than
Good Reason (as defined in Paragraph 7.B. below) or 2) other
than Retirement (as defined in Paragraph 7.C. below) or 3) other
than the sale, merger or change in ownership of Zilog (as
defined in Paragraph 7.G below) prior to the termination date of
this Agreement, he will be entitled to: (1) base salary then due
and owing for services previously performed, (2) Payouts under
EPIP which become payable to Xxxxx pursuant to the terms of EPIP
prior to the effective date of resignation, and (3) Payouts
under the Executive Bonus which become payable to Xxxxx pursuant
to the terms of the Executive Bonus prior to the effective date
of resignation. Upon payment of the foregoing items, Zilog will
have no further obligation to Xxxxx.
B. If Xxxxx voluntarily resigns his employment for Good Reason, as
defined herein, prior to the termination date of this Agreement,
he will be entitled to the benefits provided in Paragraph 7.D.
below. Good Reason, as used herein, shall mean:
(i) a reduction in Xxxxx'x authority, responsibility or
status as Vice President, Worldwide Technology such that
Xxxxx ceases to be an "officer" as that term is defined
in the regulations under Section 16 of the Securities
Exchange Act of 1934;
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(ii) a reduction in Xxxxx'x base salary other than in
connection with a general reduction applicable to the
Vice Presidents of Zilog who are members of the
Management Committee;
(iii) a reduction in form and effect or cessation of any
benefit or compensation plan, except EPIP, the Executive
Bonus, the Deferred Compensation Plan, or those that may
occur for the Zilog employee group in general in accord
with a general policy change;
(iv) a requirement to relocate, except for office relocations
that would not increase Xxxxx'x one-way commute distance
by more than 20 miles;
(v) any material breach of this Agreement on the part of
Zilog not fully remedied by Zilog within sixty (60) days
after written notice by Xxxxx of such breach.
C. If Xxxxx retires as defined in PM60-05 prior to the termination date of
this Agreement, he will be entitled to the following at the effective
date of retirement: (1) base salary then due and owing for services
previously performed, (2) Payouts under EPIP for Awards made prior to
the effective date of the retirement, and (3) Payouts under the
Executive Bonus for Awards made prior to the effective date
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of the retirement. EPIP and Executive Bonus Awards may also be granted
at Zilog's sole discretion for the year in which the retirement occurs,
prorated to the date of the retirement. Payouts for all Awards will be
made at the same time and on the same schedule as those for active
employees. Upon the payment of the foregoing items, Zilog will have no
further obligation to Xxxxx.
D. If Zilog terminates Xxxxx'x employment during the term of this Agreement
other than for Cause or Detrimental Activity as defined in 7.E. below,
he will be entitled to receive the following: (1) the then current base
salary for the period remaining in this Agreement, (2) Payouts under
EPIP for Awards made prior to the effective date of termination of
employment which Payouts are payable to Xxxxx pursuant to the terms of
EPIP prior to expiration of the term of this Agreement, and (3) Payouts
under the Executive Bonus for Awards made prior to the effective date of
termination of employment which Payouts are payable to Xxxxx pursuant to
the terms of the Executive Bonus prior to expiration of the term of this
Agreement. Xxxxx will not be eligible for Awards under EPIP or the
Executive Bonus made after the date on which his employment at Zilog
ceased or for Payouts made on any Awards after the
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expiration date of this Agreement. Vesting of common stock and stock
options granted under ZSOP and LTIP will continue for the period
remaining in this Agreement. Upon the payment of the foregoing items,
Zilog will have no further obligation to Xxxxx.
E. If Zilog terminates Xxxxx during the term of this Agreement for Cause,
or for Detrimental Activity as defined herein, Zilog will have no
further monetary obligation to Xxxxx other than: (1) any base salary
then due and owing for services previously performed, (2) Payouts under
EPIP which become payable to Xxxxx pursuant to the terms of EPIP prior
to the effective date of termination, and (3) Payouts under the
Executive Bonus which become payable to Xxxxx pursuant to the terms of
the Executive Bonus prior to the effective date of termination. Cause or
Detrimental Activity shall be a willful violation of a major company
policy, conviction of any criminal or civil law involving moral
turpitude, willful misconduct which results in a material reduction in
Xxxxx'x effectiveness in the performance of his duties, or willful and
reckless disregard for the best interests of the Company.
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F. If Xxxxx ceases to be an employee of Zilog during the term of this
Agreement because of total and permanent disability or death, Zilog's
obligations to Xxxxx or his beneficiaries will be limited solely to: (1)
any base salary then due and owing for services previously performed,
(2) Payouts in accordance with the terms of EPIP, (3) Payouts in
accordance with the terms of the Executive Bonus, and (4) any benefits
including ZSOP and LTIP benefits normally provided by Zilog to its
employees due to or on account of total and permanent disability or
death.
G. If Xxxxx leaves his employment, either voluntarily for Good Reason or
involuntarily for reasons other than for Cause or Detrimental Activity,
following the effective date of a Change in Control prior to the
termination date of this Agreement, he will be entitled to receive the
following: (1) the then current base salary for the period remaining in
this Agreement, payable in a cash lump sum not more than five (5)
business days following the date of leaving employment, (2) Payouts
under EPIP for Awards made prior to the effective date of termination of
employment, and (3) Payouts under the Executive Bonus for Awards made
prior to the effective date of termination of employment. EPIP and
Executive Bonuses shall also be awarded for the year in which the
termination of employment occurs and shall be
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calculated in accordance with the terms of such arrangements assuming
the date of Xxxxx'x termination is the last day of Zilog's fiscal year
and based on Zilog's financial performance for the portion of such
fiscal year that includes calculated financials for Zilog as a separate
entity. All of the above EPIP and Executive Bonus Awards shall be paid
in a cash lump sum within five (5) business days of the date of Xxxxx'x
termination of employment. All outstanding unvested stock options
whether granted under ZSOP and LTIP or otherwise will continue to vest
for the period of time remaining in the Agreement (the "Continuation
Period"). Regardless of the provisions of ZSOP, LTIP or any other plans
or agreements, the Continuation Period shall be counted as employment
with Zilog for purposes of vesting under all options and for purposes of
determining the expiration date of any stock options held by Xxxxx when
his employment terminates. During the remaining term of this Agreement
Xxxxx (and, where applicable, his dependents) shall be entitled to
continue participation in the group insurance plans maintained by Zilog,
including life, disability and health insurance programs, as if he were
still an employee of Zilog. To the extent that Zilog finds it impossible
to cover Xxxxx under its group insurance policies during such period,
Zilog shall provide Xxxxx with individual policies which offer at least
the same level
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of coverage and which impose not more than the same costs on him as if
he were still an employee of Zilog. The foregoing notwithstanding, in
the event that Xxxxx becomes eligible for comparable group insurance
coverage in connection with new employment, the coverage provided by
Zilog under this paragraph shall terminate immediately. Any group health
continuation coverage that Zilog is otherwise required to offer under
the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA")
shall be offered when coverage under this paragraph terminates.
Except as provided in the paragraph immediately following, upon payment
of the foregoing items, Zilog will have no further obligation to Xxxxx.
In the event that it is determined that any payment or distribution of
any type to or for the benefit of Xxxxx made by Zilog, by any of its
affiliates, by any person who acquires ownership or effective control of
Zilog or ownership of a substantial portion of Zilog's assets (within
the meaning of section 280G of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Code")) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Total Payments"), would be subject to the excise tax imposed by section
4999 of the Code or any interest or penalties with respect to
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such excise tax (such excise tax, together with any such interest or
penalties, are collectively referred to as the "Excise Tax"), then Xxxxx
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount that shall fund the payment by Xxxxx of any
Excise Tax on the Total Payments as well as all income taxes imposed on
the Gross-Up Payment, any Excise Tax imposed on the Gross-Up Payment and
any interest or penalties imposed with respect to taxes on the Gross-Up
Payment or any Excise Tax.
All mathematical determinations and all determinations of whether any of
the Total Payments are "parachute payments" (within the meaning of
section 280G of the Code) that are required to be made hereunder,
including all determinations of whether a Gross-Up Payment is required
and of the amount of such Gross-Up Payment, shall be made by the
independent auditors retained by Zilog most recently prior to the Change
in Control (the "Auditors"), who shall provide their determination (the
"Determination"), together with detailed supporting calculations
regarding the amount of any Gross-Up Payment and any other relevant
matters, both to Zilog and to Xxxxx within seven (7) business days of
Xxxxx'x termination date, if applicable, or such earlier time as is
requested by Zilog or by Xxxxx (if Xxxxx reasonably believes that any of
the Total Payments may be subject to the Excise Tax). If the Auditors
determine that no Excise Tax is payable by Xxxxx, it shall furnish Xxxxx
with a written statement
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that such Auditors have concluded that no Excise Tax is payable
(including the reasons therefor) and that Xxxxx has substantial
authority not to report any Excise Tax on his federal income tax return.
If a Gross-Up Payment is determined to be payable, it shall be paid to
Xxxxx within five (5) business days after the Determination is delivered
to Zilog or Xxxxx. Any determination by the Auditors shall be binding
upon Zilog and Xxxxx, absent manifest error.
As a result of uncertainty in the application of section 4999 of the
Code at the time of the initial determination by the Auditors hereunder,
it is possible that Gross-Up Payments not made by Zilog should have been
made ("Underpayments") or that Gross-Up Payments will have been made by
Zilog which should not have been made ("Overpayments"). In either event,
the Auditors shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment, the
amount of such Underpayment shall promptly be paid by Zilog to or for
the benefit of Xxxxx. In the case of an Overpayment, the Employee shall,
at the direction and expense of Zilog, take such steps as are reasonably
necessary (including the filing of returns and claims for refund),
follow reasonable instructions from, and procedures established by,
Zilog and otherwise reasonably cooperate with Zilog to correct such
Overpayment; provided, however, that (a.) Xxxxx shall in no event be
obligated to return to Zilog an amount greater than
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the not after-tax portion of the Overpayment that Xxxxx has retained or
has recovered as a refund from the applicable taxing authorities and
(b.) this provision shall be interpreted in a manner consistent with the
intent of this excise tax restoration provision which is to make Xxxxx
whole, on an after-tax basis, for the application of the Excise Tax, it
being understood that the correction of an Overpayment may result in
Xxxxx'x repaying to Zilog an amount which is less than the Overpayment.
8. Xxxxx Representations. Xxxxx represents to Zilog that to the best of his
knowledge he is under no obligation to any employer or third party which
would preclude his full, complete and unfettered discharge of his duties
under this Agreement.
9. Notices. Any notices required to be given hereunder shall be in
writing, and if by Zilog shall be addressed to Xxxxx as indicated in
Zilog's personnel records or such other address as Xxxxx shall specify
in writing and if by Xxxxx to Zilog at:
Zilog, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Vice President, Human Resources and
Administration
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Such addresses may be changed by written notice from either Zilog or
Xxxxx, to the other.
10. Amendment. This Agreement may be amended only in writing, signed by both
parties hereto.
11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon Zilog, its successors and assigns. Xxxxx may not
assign, transfer, pledge or hypothecate any of his rights or obligations
hereunder, Awards or Payouts under EPIP or the Executive Bonus or other
compensation to which he may be entitled hereunder. Zilog will require
any successor (whether direct or indirect, by purchase, merger,
consolidation, liquidation or otherwise) to all or substantially all of
the business and/or assets of Zilog to assume expressly and agree, in
substance and form satisfactory to Xxxxx, to perform this Agreement in
the same manner and to the same extent Zilog would be required to
perform it if no succession had taken place.
12. Waiver of Breach. The waiver by Zilog of a breach of any provision of
this Agreement by Xxxxx shall not operate or be construed as a waiver of
any subsequent breach by Xxxxx.
13. Severability. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision hereof.
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14. Entire Agreement. This entire Agreement consists of this document,
together with the following documents:
A. EPIP, attached as Exhibit I;
B. Executive Bonus, attached as Exhibit II;
C. Zilog Employee Stock Option Plan, attached as Exhibit III;
D. Zilog 1994 Long Term Incentive Plan, attached an Exhibit IV;
E. Employee Proprietary Rights and Non-Disclosure Agreement,
attached as Exhibit V;
F. Conflict of Interest Statement, attached as Exhibit VI;
G. Statement addressed to "Human Resources," attached as Exhibit
VII;
H. Policy on Business Ethics, attached as Exhibit VIII; and
I. PM60-05, attached as Exhibit IX.
15. Governing Law. This Employment Agreement shall be governed by the laws
of the State of California, without regard to conflict of laws
principles.
Executed effective May 22, 1997
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By /s/ XXXXXXX X. XXXXX By /s/ X. X. XXXX
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Xxxxxxx X. Xxxxx X. X. Xxxx, President and CEO
Dated 5/22/97 Dated: 5-22-97
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