Exhibit 10.28
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
Xxxxxx X. Xxxxxx (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
Executive Vice President and Chief Financial Officer of the Company and
Holdings and shall be a member of the Boards of Directors 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 the Chief Executive Officer of the Company
and Holdings. The Executive shall be the Company's and Holdings' chief
financial officer, with authority and responsibility for all of the financial
aspects of the business and affairs of the Company and its affiliates,
subject to the customary roles of the Board of Directors and the President
and Chief Executive Officer of the Company. 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 Two
Hundred and Fifty Thousand Dollars ($250,000) 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 forty percent (40%) 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
2
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 a life insurance policy
substantially similar to the existing life insurance policy provided by the
Company to the President and Chief Executive Officer, 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.
3
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 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 Four Thousand ($4,000) 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
4
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.
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.
5
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
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.
6
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.
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.
7
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 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.
8
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.
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
9
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 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.
10
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:
To the Executive: Xxxxxx X. Xxxxxx
0 Xxxxxxxxx Xxxx
Xxxxxxxx, 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.
11
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.
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
12
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 this 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 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.
13
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:_______________________________
_____________________________________
Xxxxxx X. Xxxxxx
14
