LINEAR TECHNOLOGY CORPORATION LOTHAR MAIER EMPLOYMENT AGREEMENT
LINEAR
TECHNOLOGY CORPORATION
XXXXXX
XXXXX EMPLOYMENT AGREEMENT
This
Agreement is made by and between Linear Technology Corporation (the “Company”)
and Xxxxxx Xxxxx (“Executive”).
1. Duties and Scope of
Employment.
(a) Position; Agreement
Commencement Date; Duties. Executive’s coverage under this
Agreement shall commence upon the date this Agreement has been signed by both
parties hereto (the “Agreement Commencement Date”). Following the
Agreement Commencement Date, Executive shall continue to serve as the Company’s
Chief Executive Officer, reporting to the Board of Directors of the Company (the
“Board”). The period of Executive’s employment hereunder is referred
to herein as the “Employment Term.” During the Employment Term,
Executive shall render such business and professional services in the
performance of his duties, consistent with Executive’s position within the
Company, as shall reasonably be assigned to him by the Board.
(b) Obligations. During
the Employment Term, Executive shall devote his full business efforts and time
to the Company. Executive agrees, during the Employment Term, not to
actively engage in any other employment, occupation or consulting activity for
any direct or indirect remuneration without the prior approval of the Board;
provided, however, that Executive may serve in any capacity with any civic,
educational or charitable organization, or as a member of corporate Boards of
Directors or committees thereof, without the approval of the Board, unless such
service involves a conflict of interest with the Company’s
business.
2. At-Will
Employment. Executive and the Company understand and
acknowledge that Executive’s employment with the Company constitutes “at-will”
employment. Subject to the Company’s obligation to provide severance
benefits as specified herein, Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause, at the
option either of the Company or Executive.
3. Compensation.
(a) Base
Salary. While employed by the Company, the Company shall pay
the Executive as compensation for his services a base salary at the annualized
rate of $405,000 (the “Base Salary”). Such salary shall be paid
periodically in accordance with normal Company payroll practices and subject to
the usual, required withholding. Executive’s Base Salary shall be
reviewed annually by the Compensation Committee of the Board for possible
adjustments in light of Executive’s performance and competitive
data.
(b) Bonuses. Executive
shall be eligible to earn a target bonus under the Company’s 1996 Senior
Executive Bonus Plan as specified annually by the Compensation Committee of the
Board and will also be eligible to participate in the Key Employee Incentive
Bonus Plan (the target amounts under these plans together are referred to herein
as the “Target Bonus”).
(c) Employee
Benefits. During the Employment Term, Executive shall be
eligible to participate in the employee benefit plans maintained by the Company
that are applicable to other senior management to the full extent provided for
under those plans.
4. Severance
Benefits.
(a) Severance Prior to a Change
of Control. If, at any time prior to a Change of Control (as
defined herein), Executive’s employment with the Company terminates due to
(i)a
voluntary termination for “Good Reason” (as defined herein), or (ii) an
involuntary termination by the Company other than for “Cause” (as defined
herein), then, subject to Executive executing and not revoking a standard form
of mutual release of claims with the Company, and provided that such release of
claims becomes effective no later than sixty (60) days following the termination
date (such deadline, the “Release Deadline”), then subject to Section 4(g) and
subject to Executive not breaching the terms of Section 13 hereof, (i) all of
Executive’s Company stock options, restricted stock and other equity awards
shall immediately accelerate vesting as to 75% of the then unvested amount of
such awards; (ii) Executive shall receive continued payments of severance pay
for twelve (12) months following the date of such termination at a rate equal to
(A) Executive’s annual Base Salary rate as in effect on the date of such
termination, plus (B) the average bonus paid to Executive for the two (2)
twelve-month bonus periods prior to the date of such termination, less
applicable withholding, in accordance with the Company’s standard payroll
practices (the “Severance Payment”); and (iii) if Executive elects continuation
coverage pursuant to the Consolidated Budget Reconciliation Act of 1985, as
amended (“COBRA”) for Executive and Executive’s dependents, within the time
period prescribed pursuant to COBRA, the Company shall reimburse Executive for
the COBRA premiums for such coverage for Executive and his covered dependents
for the lesser of (A) eighteen (18) months from the date of Executive’s
termination of employment, or (B) the date upon which Executive and his covered
dependents are covered by similar plans of Executive’s new
employer. COBRA reimbursements shall be made by the Company to
Executive consistent with the Company’s normal expense reimbursement
policy.
(b) Timing of
Payments.
(i) If the
release of claims does not become effective by the Release Deadline, Executive
shall forfeit any rights to severance or benefits under this
Agreement. In no event shall severance payments or benefits be paid
or provided until the release of claims actually becomes effective and
irrevocable. Any severance payments or benefits under this Agreement
that would be considered Deferred Compensation Separation Benefits (as defined
in Section 4(g)(i)) shall be paid on, or, in the case of installments, shall not
commence until, the sixtieth (60th) day
following Executive’s separation from service, or, if later, such time as
required by Section 4(g). Any
installment payments that would have been made to Executive during the sixty
(60) day period immediately following Executive’s separation from service but
for the preceding sentence shall be paid to Executive on the sixtieth
(60th) day following Executive’s separation from service and
the remaining payments shall be made as provided in this
Agreement.
(ii) Unless
otherwise required by Section 4(g), the Company shall pay any severance payments
in continuing payments following Executive’s termination date; provided,
however, that no severance or other benefits shall be paid or provided until the
release of claims discussed in Section 4(a) becomes effective, and any severance
amounts or benefits otherwise payable between Executive’s termination date and
the date such release becomes effective shall be paid on the effective date of
such release. If Executive should die before all of the severance
amounts have been paid, such unpaid amounts shall be paid in a lump-sum payment
promptly following such event to Executive’s designated beneficiary, if living,
or otherwise to the personal representative of Executive’s estate.
(c) Voluntary Termination Other
than for Good Reason; Involuntary Termination for Cause. In
the event that Executive terminates his employment voluntarily other than for
Good Reason or is involuntarily terminated by the Company for Cause, then all
vesting of Executive’s stock options, restricted stock and other equity awards
shall terminate immediately and all payments of compensation by the Company to
Executive hereunder shall immediately terminate (except as to amounts
already earned).
(d) Death. Upon
Executive’s death during the Employment Term, then
(i)
employment hereunder shall automatically terminate; (ii) all of Executive’s
Company stock options, restricted stock and other equity awards shall
immediately accelerate vesting as to 50% of the then unvested portion of such
awards, and all subsequent vesting of Executive’s stock options, restricted
stock and other equity awards shall terminate immediately; and (iii) all
payments of compensation by the Company to Executive hereunder shall immediately
terminate (except as to amounts already earned).
(e) Disability. Upon
Executive’s Disability during the Employment Term, then employment hereunder
shall automatically terminate and all payments of compensation by the Company to
Executive hereunder shall immediately terminate (except as to amounts already
earned), and all vesting of Executive’s stock options, restricted stock and
other equity awards shall terminate immediately.
(f) Mitigation. The
Executive shall not be required to mitigate the value of any severance benefits
contemplated by this Agreement, nor shall any such benefits be reduced by any
earnings or benefits that the Executive may receive from any other source;
provided, however, that if Executive receives severance benefits hereunder, he
expressly waives the right to receive severance benefits under any other
severance plan or policy of the Company.
(g) Section 409A.
(i) Notwithstanding
anything to the contrary in this Agreement, no severance payable to Executive,
if any, pursuant to this Agreement, when considered together with any other
severance payments or separation benefits that are considered deferred
compensation under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the final regulations and any guidance promulgated thereunder
(“Section 409A”) (together, the “Deferred Compensation Separation Benefits”)
shall be payable until Executive has a “separation from service” within the
meaning of Section 409A.
(ii) Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A at the time of Executive’s
termination (other than due to death), then the Deferred Compensation Separation
Benefits that are payable within the first six (6) months following Executive’s
separation from service shall become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
Executive’s separation from service. All subsequent Deferred
Compensation Separation Benefits, if any, shall be payable in accordance with
the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if
Executive dies following Executive’s separation from service but prior to the
six (6) month anniversary of the separation, then any payments delayed in
accordance with this paragraph shall be payable in a lump sum as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Compensation Separation Benefits shall be payable in accordance with
the payment schedule applicable to each payment or benefit. Each
payment and benefit payable under this Agreement is intended to constitute
separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.
(iii) Any
amount paid under this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations shall not constitute Deferred Compensation Separation Benefits for
purposes of clause (i) above.
(iv) Any
amount paid under this Agreement that qualifies as a payment made as a result of
an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii)
of the Treasury Regulations that do not exceed the Section 409A Limit (as
defined below) shall not constitute Deferred Compensation Separation Benefits
for purposes of clause (i) above.
(v) The
foregoing provisions are intended to comply with the requirements of Section
409A so that none of the severance payments and benefits to be provided
hereunder shall be subject to the additional tax imposed under Section 409A, and
any ambiguities herein shall be interpreted to so comply. The Company
and Executive agree to work together in good faith to consider amendments to
this Agreement and to take such reasonable actions which are necessary,
appropriate or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to Executive under Section
409A.
5. Change of Control
Benefits. In the event of a “Change of Control” (as defined
herein), Executive shall receive the benefits specified in Section 4(a) above
(including 75% vesting acceleration); provided that the Severance Payment shall
be payable in a lump-sum within five (5) days following the Change of Control
and the COBRA coverage shall be extended
to Executive upon any subsequent termination of his employment, whether or not
for Cause or Good Reason. In the event Executive’s tenure as the
Company’s Chief Executive Officer terminates following a Change of Control, for
any or no reason, Executive shall not be entitled to any additional compensation
(except as to amounts already earned and payments and benefits due pursuant to
Section 4(a)).
6. Golden Parachute Excise
Taxes. In the event that the benefits provided for in this
Agreement or otherwise payable to Executive (i) constitute “parachute payments”
within the meaning of Section 280G of the Code and (ii) but for this Section 6,
would be subject to the excise tax imposed by Section 4999 of the Code, then
Executive’s benefits under Section 4 and Section 5 respectively shall be
either:
(a) delivered
in full, or
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(b)
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delivered
as to such lesser extent which would result in no portion of such benefits
being subject to excise tax under Section 4999 of the
Code,
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whichever
of the foregoing amounts, taking into account the applicable federal, state and
local income taxes and the excise tax imposed by Section 4999, results in the
receipt by Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. If a reduction in severance and other
benefits constituting “parachute payments” is necessary so that benefits are
delivered to a lesser extent, reduction shall occur in the following order::
reduction of cash payments; cancellation of awards granted “contingent on a
change in ownership or control” (within the meaning of Code Section 280G);
cancellation of accelerated vesting of equity awards; reduction of employee
benefits. In the event that acceleration of vesting of equity award
compensation is to be reduced, such acceleration of vesting shall be cancelled
in the reverse order of the date of grant of Executive’s equity
awards.
Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 6 shall be made in writing by the Company’s independent
auditors who are primarily used by the Company immediately prior to the Change
of Control (the “Accountants”). For purposes of making the
calculations required by this Section 6, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and Executive shall
furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
Section 6.
7. Definitions.
(a) Cause. For
purposes of this Agreement, “Cause” shall mean (i) an act of personal dishonesty
taken by Executive in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of Executive;
(ii)
Executive being convicted of, or plea of nolo contendere to, a felony; (iii) a
willful act by Executive which constitutes gross misconduct and which is
injurious to the Company; or (iv) following delivery to Executive of a written
demand for performance from the Company which describes the basis for the
Company’s reasonable belief that Executive has not substantially performed his
duties, continued violations by Executive of Executive’s obligations to the
Company which are demonstrably willful and deliberate on Executive’s
part.
(b) Change of
Control. For purposes of this Agreement, “Change of Control”
shall mean the occurrence of any of the following events:
(i) Change in Ownership of the
Company. A change in the ownership of the Company, which is
deemed to occur on the date that any one person, or more than one person acting
as a group (“Person”), acquires ownership of the stock of the Company that,
together with the stock held by such Person, constitutes more than 50% of the
total voting power of the stock of the Company; or
(ii) Change in Effective Control
of the
Company. A change in the effective control of the Company,
which is deemed to occur on the date that a majority of members of the Board is
replaced during any 12-month period by directors whose appointment or election
was not endorsed by a majority of the members of the Board prior to the date of
the appointment or election. For purposes of this clause (ii), if any
Person is considered to be in effective control of the Company, the acquisition
of additional control of the Company by the same Person will not be considered a
Change of Control; or
(iii) Change in Ownership of a
Substantial Portion of the Company’s
Assets. A change in the ownership of a substantial portion of
the Company’s assets, which is deemed to occur on the date that any Person
acquires (either is one transaction or in multiple transactions over the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total gross fair market value
equal to or more than 50% of the total gross fair market value of all of the
assets of the Company immediately prior to such acquisition or
acquisitions. For purposes of this subsection (iii), gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.
For
purposes of the above sections, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.
Notwithstanding
the foregoing provisions of this definition, a transaction will not be deemed a
Change of Control unless the transaction qualifies as a “change in control
event” within the meaning of Section 409A.
(c) Disability. For
purposes of this Agreement, “Disability” means that Executive is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months.
(d) Good
Reason. For purposes of this Agreement, “Good Reason” means
Executive’s termination of employment within ninety (90) days following the
expiration of any cure period (as discussed below) following the occurrence of
one or more of the following, without Executive’s express consent, (i)
the assignment to Executive of any duties,
authority or responsibilities, or the reduction of Executive’s duties, authority
or responsibilities, either of which results in a material reduction of
Executive’s duties, authority or responsibilities,
relative to Executive’s duties, authority or responsibilities as in effect
immediately prior to such reduction; (ii) a material reduction by the Company in
the base compensation of Executive as in effect immediately prior to such
reduction (other than a reduction that generally applies to Company employees);
(iii) a material change in the geographic location at which Executive must
perform services (in other words, the relocation of Executive to a facility or a
location more than thirty-five (35) miles from Executive’s then present
location); or (iv) any other action or inaction that constitutes a material
breach of the terms of the Agreement.
Executive
shall not resign for Good Reason without first providing the Company with
written notice within ninety (90) days of the event that Executive believe
constitutes “Good Reason” specifically identifying the acts or omissions
constituting the grounds for Good Reason and a reasonable cure period of not
less than ninety (90) days.
(e) Section 409A
Limit. “Section 409A Limit” shall mean the lesser of two (2)
times: (i) Executive’s annualized compensation based upon the annual rate of pay
paid to Executive during Executive’s taxable year preceding Executive’s taxable
year of Executive’s termination of employment as determined under, and with such
adjustments as are set forth in, Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1)
and any Internal Revenue Service guidance issued with respect thereto; or (ii)
the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Code for the year in which Executive’s
employment is terminated.
8. Assignment. This
Agreement shall be binding upon and inure to the benefit of (a) the heirs,
beneficiaries, executors and legal representatives of Executive upon Executive’s
death and (b) any successor of the Company. Any such successor of the
Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, “successor” shall include
any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of
the rights of Executive to receive any form of compensation payable pursuant to
this Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Executive. Any attempted assignment, transfer, conveyance or other
disposition (other than as aforesaid) of any interest in the rights of Executive
to receive any form of compensation hereunder shall be null and
void.
9. Notices. All
notices, requests, demands and other communications called for hereunder shall
be in writing and shall be deemed given if (i)
delivered personally or by facsimile; (ii) one (1) day after being
sent by Federal Express or a similar commercial overnight service; or (iii)
three (3) days after being mailed by registered or certified mail, return
receipt requested, prepaid and addressed to the parties or their successors in
interest at the following addresses, or at such other addresses as the parties
may designate by written notice in the manner aforesaid:
If to the
Company:
Linear Technology Corporation
0000
XxXxxxxx Xxxx.
Xxxxxxxx,
XX 00000
Attn:
General Counsel
If to
Executive: Xxxxxx
Xxxxx
at the
last residential address known by the Company.
10. Severability. In
the event that any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision.
11. Entire
Agreement. This Agreement, the Confidential Information and
Invention Assignment Agreement previously entered into by and between the
Company and Executive and the indemnification agreement previously entered into
by and between the Company and Executive represent the entire agreement and
understanding between the Company and Executive concerning Executive’s
employment relationship with the Company, and supersede and replace any and all
prior agreements and understandings concerning Executive’s employment
relationship with the Company.
12. Arbitration.
(a) The
Company and Executive each agree that any and all disputes arising out of the
terms of this Agreement, Executive’s employment by the Company, Executive’s
service as an officer or director of the Company, or Executive’s compensation
and benefits, their interpretation and any of the matters herein released, shall
be subject to binding arbitration under the arbitration rules set forth in
California Code of Civil Procedure Sections 1280 through 1294.2, including
Section 1281.8 (the “Act”), and pursuant to California law. Disputes
that the Company and Executive agree to arbitrate, and thereby agree to waive
any right to a trial by jury, include any statutory claims under local, state,
or federal law, including, but not limited to, claims under Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the Xxxxxxxx-Xxxxx Act, the Worker Adjustment and Retraining Notification
Act, the California Fair Employment and Housing Act, the Family and Medical
Leave Act, the California Family Rights Act, the California Labor Code, claims
of harassment, discrimination, and wrongful termination, and any statutory or
common law claims. The Company and Executive further understand that
this agreement to arbitrate also applies to any disputes that the Company may
have with Executive.
(b) Procedure. The
Company and Executive agree that any arbitration shall be administered by
Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its
Employment Arbitration Rules & Procedures (the “JAMS Rules”). The
Arbitrator shall have the power to decide any motions brought by any party to
the arbitration, including motions for summary judgment and/or adjudication,
motions to dismiss and demurrers, and motions for class certification, prior to
any arbitration hearing. The Arbitrator shall have the power to award
any remedies available under applicable law, and the Arbitrator shall award
attorneys’ fees and costs to the prevailing party, except as prohibited by
law. The Company shall pay for any administrative or hearing fees
charged by the Arbitrator or JAMS except that Executive shall pay any filing
fees associated with any arbitration that Executive initiates, but only so much
of the filing fees as Executive would have instead paid had he filed a complaint
in a court of law. The Arbitrator shall administer and conduct any
arbitration in accordance with California law, including the California Code of
Civil Procedure, and the Arbitrator shall apply substantive and procedural
California law to any dispute or claim, without reference to rules of conflict
of law. To the extent that the JAMS Rules conflict with California
law, California law shall take precedence. The decision of the
Arbitrator shall be in writing. Any arbitration under this Agreement
shall be conducted in Santa Xxxxx County, California.
(c) Remedy. Except
as provided by the Act and this Agreement, arbitration shall be the sole,
exclusive, and final remedy for any dispute between Executive and the
Company. Accordingly, except as provided for by the Act and this
Agreement, neither Executive nor the Company shall be permitted to pursue court
action regarding claims that are subject to arbitration.
(d) Administrative
Relief. Executive understand that this Agreement does not
prohibit him from pursuing any administrative claim with a local, state, or
federal administrative body or government agency that is authorized to enforce
or administer laws related to employment, including, but not limited to, the
Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission, the National Labor Relations Board, or the Workers’ Compensation
Board. This Agreement does, however, preclude Executive from pursuing
court action regarding any such claim, except as permitted
by law.
(e) Voluntary Nature of
Agreement. Each of the Company and Executive acknowledges and
agrees that such party is executing this Agreement voluntarily and without any
duress or undue influence by anyone. Executive further acknowledges
and agrees that he or she has carefully read this Agreement and has asked any
questions needed for him to understand the terms, consequences, and binding
effect of this Agreement and fully understand it, including that Executive is
waiving his or her right to a jury trial. Finally, Executive agrees
that he or she has been provided an opportunity to seek the advice of an
attorney of his or her choice before signing this Agreement.
13. Covenant Not to
Solicit. Executive’s receipt of any payments or benefits under
this Agreement shall be subject to Executive continuing to comply with the terms
of the Confidential Information and Invention Assignment Agreement executed by
Executive in favor of the Company and the provisions of the
Agreement. In addition, as an express condition to Executive’s right
to receive any payments or benefits under this Agreement, Executive agrees that
he will not, at any time during twelve (12) month period following his
termination date, directly or indirectly solicit any individuals to leave the
Company’s employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company and its
current or prospective employees.
14. No Oral Modification,
Cancellation or Discharge. This Agreement may only be amended,
canceled or discharged in writing signed by Executive and the Chairman of the
Board.
15. Withholding. The
Company shall be entitled to withhold, or cause to be withheld, from payment any
amount of withholding taxes required by law with respect to payments made to
Executive in connection with his employment hereunder.
16. Governing
Law. This Agreement shall be governed by the laws of the State
of California.
17. Effective
Date. This Agreement is effective upon the date it has been
executed by both parties.
18. Acknowledgment. Executive
acknowledges that he has had the opportunity to discuss this matter with and
obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and
is knowingly and voluntarily entering into this Agreement.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement:
LINEAR
TECHNOLOGY CORPORATION
/s/ Xxxxxx X. Xxxxxxx,
Xx.________________
Xxxxxx X.
Xxxxxxx, Xx.
Date: August
11, 2009
EXECUTIVE
/s/ Lothar
Maier________________________
Xxxxxx
Xxxxx
Date: August
11, 2009
