Exhibit No. 10.14
ZILOG
EMPLOYMENT AGREEMENT
This Agreement is made by and between ZiLOG, Inc., a Delaware corporation
(hereinafter "ZiLOG") and Xxxxxx Xxxxxx (hereinafter "Xxxxxx"), whereby
ZiLOG and Xxxxxx agree that Xxxxxx accepts employment as Senior Vice
President of Human Resources of ZiLOG, under the following terms and
conditions:
1. Term. ZiLOG and Xxxxxx agree that Xxxxxx will be Senior Vice
President of Human Resources of ZiLOG for a period of twenty-four
(24) months, commencing on your date of hire. This Agreement may be
extended upon written agreement of ZiLOG and Xxxxxx. 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.
For the 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;
(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. Xxxxxx shall devote his entire time, attention
and energies to his position as Senior Vice President Human
Resources of ZiLOG and shall not, during the term of this Employment
Agreement, be engaged in any other business activity, except as set
forth below, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage; provided, that Xxxxxx may
engage in: 1) personal investment activities: or 2) service on
Boards of Directors of other companies; consistent with ZiLOG's
Conflict of Interest policy; or 3) advisory and community activities
that do not affect his time commitment to ZiLOG.
3. Compensation.
A. Salary. For each month of employment, ZiLOG will pay, or
cause to be paid, to Xxxxxx the sum of at least $16,667.00 as
base salary. Such sum will be paid in monthly installments or
such other normal periodic payment schedule as ZiLOG may
establish for its executives. Xxxxxx'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.
Xxxxxx 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
Xxxxxx stock options under the 1998 Long Term Incentive Plan
(hereinafter "EOSIP"), a copy of such plan 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, Xxxxxx will be entitled to such
benefits as ZiLOG normally provides its executives. In addition,
ZiLOG will provide Xxxxxx with Directors and officers (D&O)
insurance in an amount deemed appropriate by the Company for his
level of responsibility.
5. Company Policies. Xxxxxx agrees to be bound by all ZiLOG published
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
reasonable documents as ZiLOG requests evidencing such agreement.
6. Termination of Employment. ZiLOG reserves the right to terminate
the employment of Xxxxxx at any time during the term of this
Agreement, for any reason or for no reason, with or without cause,
by giving Xxxxxx at least thirty (30) days written notice of such
termination or compensation in lieu of notice; and Xxxxxx 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 Xxxxxx, 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 Xxxxxx, if
his employment with ZiLOG is terminated prior to the end of this
Agreement, shall be as follows:
A. If Xxxxxx 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 Xxxxxx pursuant
to the terms of EPIP prior to the effective date of
resignation, and (3)
payouts under the Executive Bonus which become payable to
Xxxxxx 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
Xxxxxx.
B. If Xxxxxx 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 Xxxxxx'x authority, responsibility or
status as Senior Vice President Human Resources such
that Xxxxxx ceases to be an "officer" as that term is
defined in the regulations under Section 16 of the
Securities Exchange Act of 1934;
(ii) a reduction in Xxxxxx'x base salary other than in
connection with a general reduction applicable to the
Senior Vice Presidents of ZiLOG who are members of the
Executive 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 the office
relocations that would not increase Xxxxxx'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 Xxxxxx of such breach.
C. If Xxxxxx 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 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 Xxxxxx.
D. If ZiLOG terminates Xxxxxx'x employment during the term of
this Agreement other than for 1) Cause or Detrimental Activity
as defined in 7.E. below, or 2) the sale, merger or change in
ownership of ZiLOG (as defined in paragraph 7.G. 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 Xxxxxx 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 Xxxxxx pursuant to the terms of the Executive Bonus
prior to expiration of the term of this Agreement. Xxxxxx
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 expiration
date of this Agreement. Vesting of stock options granted
under EOSIP will continue for the period remaining in the
Agreement. Upon the payment of the foregoing items, ZiLOG
will have no further obligation to Xxxxxx.
E. If ZiLOG terminates Xxxxxx during the term of this Agreement
for Cause, or for Detrimental Activity as defined herein,
ZiLOG will have no further monetary obligation to Xxxxxx other
than: (1) any base salary then due and owing for services
previously performed, 2) payouts under EPIP which become
payable to Xxxxxx pursuant to the terms of EPIP prior to the
effective date of termination, and (3) payouts under the
Executive Bonus which become payable to Xxxxxx 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 Xxxxxx'x
effectiveness in the performance of his duties, or willful and
reckless disregard for the best interests of the Company.
F. If Xxxxxx 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 Xxxxxx 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
EOSIP benefits normally provided by ZiLOG it its employees due
to or on account of total and permanent disability or death.
G. If Xxxxxx 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 calculated in accordance with
the terms of such arrangements assuming the date of Xxxxxx'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 Xxxxxx'x termination of
employment. All outstanding unvested stock options whether
granted under EOSIP or otherwise will continue to vest for the
period of time remaining in the Agreement (the "Continuation
Period"). Regardless of the provisions of EOSIP 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 Xxxxxx when his employment
terminates. During the remaining term of this Agreement
Xxxxxx (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 extend that ZiLOG finds it impossible to cover
Xxxxxx under its group insurance policies during such period,
H. ZiLOG shall provide Xxxxxx with individual policies which
offer at least the same level 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 Xxxxxx 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 Xxxxxx.
In the event that it is determined that any payment or
distribution of any type to or for the benefit of Xxxxxx made
by ZiLOG, 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 such excise tax
(such excise tax, together with any such interest or
penalties, are collectively referred to as the "Excise
Tax"), then Xxxxxx shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount that shall fund
the payment by Xxxxxx 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
Xxxxxx within seven (7) business days of Xxxxxx'x termination
date, if applicable, or such earlier time as is requested by
ZiLOG or by Xxxxxx (if Xxxxxx 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 Xxxxxx, it
shall furnish Xxxxxx with a written statement that such
Auditors have concluded that no Excise Tax is payable
(including the reasons therefor) and that Xxxxxx 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 Xxxxxx within
five (5) business days after the Determination is delivered to
ZiLOG or Xxxxxx. Any determination by the Auditors shall be
binding upon ZiLOG and Xxxxxx, 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 or Xxxxxx. 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) Xxxxxx shall in no event be obligated to
return to ZiLOG an amount greater than the net after-tax
portion of the Overpayment that Xxxxxx 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 Xxxxxx 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
Xxxxxx'x repaying to ZiLOG an amount which is less than the
Overpayment.
8. Xxxxxx Representations. Xxxxxx 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 Xxxxxx as indicated
in ZiLOG's personnel records or such other address as Xxxxxx shall
specify in writing, and if by Xxxxxx to ZiLOG at:
ZiLOG, Inc.
Xxxxx 000
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
ATTENTION: Senior Vice President, Human Resources
Such addresses may be changed by written notice from either ZiLOG or
Xxxxxx, 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. Xxxxxx
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 Xxxxxx,
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 or by Xxxxxx of a breach of
any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other
party.
13. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any
other provision hereof.
14. Entire Agreement. This entire Agreement consists of this document,
together with the following documents:
A. EPIP, to be attached as Exhibit I when finalized;
B. Executive Bonus, to be attached as Exhibit II when finalized;
C. ZiLOG 1998 Executive Officer Stock Incentive Plan, attached as
Exhibit III
D. Employee Proprietary Rights and Non-Disclosure Agreement,
attached as Exhibit IV;
E. Conflict of Interest Statement, attached as Exhibit V;
F. Policy on Business Ethics, attached as Exhibit VI; and
G. PM60-05, attached as Exhibit VII.
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 October 16, 1998
(DATE)
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
Dated: October 16, 1998 Dated: October 16, 1998
