EXHIBIT 10.19
ZILOG
EMPLOYMENT AGREEMENT
This Agreement is made by and between Zilog, Inc., a Delaware corporation
(hereinafter "Zilog") and Xxxx Xxxxxx (hereinafter "Xxxxxx"), whereby
Zilog and Xxxxxx agree that Xxxxxx accepts employment as Senior Vice
President and Chief Financial Officer of Zilog, under the following terms
and conditions:
1. Term. Zilog and Xxxxxx agree that Xxxxxx will be Senior Vice President
and Chief Financial Officer of Zilog for a period of twenty-four (24)
months, commencing on 11-01-99 and ending 11-01-2001. 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) 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 and Chief Financial
Officer 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.
3. Compensation.
A. Salary. For each month of employment, Zilog will pay, or cause to be
paid, to Xxxxxx the sum of at least $18,750.00 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 "LTIP"), 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.
5. Company Policies. Xxxxxx agrees to be bound by all Zilog Company
Policies applicable to its employees including but not limited to Business
Ethics, Conflict of interest, Proprietary Information and Antitrust
Compliance, and he agrees to sign any such documents as Zilog requests
evidencing such agreement.
6. Termination of Employment. Zilog reserves the right to terminate the
employment of 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'' 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 and Chief Financial Officer 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 Council;
(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 (to) days after written notice by Xxxxxx of
such breach.
C. If Xxxxxx retires as defined in POL #054 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 of for payouts made on any Awards after the
expiration date of this Agreement. Vesting of stock options granted under
LTIP 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 LTIP
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 LTIP or otherwise will continue to vest for
the period of time remaining in the Agreement (the "Continuation Period").
Regardless of the provisions of LTIP or any other plans or agreements, the
Continuation Period shall be counted as employment with Zilog for purposes
of vesting under all options and for purposes of determining the
expiration date of any stock options held by 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 of a breach of any provision of
this Agreement by Xxxxxx shall not operate or be construed as a waiver of
any subsequent breach by Xxxxxx.
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. Employee Proprietary Rights and Non-Disclosure Agreement, attached as
Exhibit IV;
B. Conflict of Interest Statement, attached as Exhibit V;
C. Policy on Business Ethics, attached as Exhibit VII; and
D. POL #054, attached as Exhibit VIII.
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: November 1, 1999
(DATE)
By: /s/ Xxxx Patten__________ By: /s/ Xxxxxx. C. Mizell____
Dated _November 1, 1999________ Dated __November 1, 1999_____
