Exhibit 10.01
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of
February 27, 2006 (the "EFFECTIVE DATE") between Xxxx X. Xxxx (the "EXECUTIVE")
and Xxxxxxxxx Semiconductor Corporation (the "COMPANY"), a Delaware corporation.
For ease of reference, this Agreement is divided into the following
parts:
PART 1 -- DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
(Sections 1-4)
- Position and Duties
- Salary
- EFIP Bonus
- Equity Awards
- Other
PART 2 -- COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR CONSTRUCTIVE
TERMINATION (Sections 5-6)
- Termination
PART 3 -- COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
(Section 7)
PART 4 -- CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL
PROPERTY, NON-SOLICITATION, REMEDIES, SUCCESSORS,
MISCELLANEOUS PROVISIONS, SIGNATURE PAGE (Sections 8-14)
- Confidentiality and Non-Disclosure
- Forfeiture in Case of Certain Events
- Non-Solicitation
- Miscellaneous
TERMS
For good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Company and the Executive, intending to be legally
bound, agree as follows:
PART 1 DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
SECTION 1. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT
(a) Unless sooner terminated as provided in this Agreement, the term of this
Agreement will begin on the Effective Date and will end on the first
anniversary of the Start Date defined in Section 2(a) below (the "INITIAL
TERM"). At the end of the Initial Term or any Renewal Term, this Agreement
shall be automatically renewed for additional, successive terms of one
year (each a "RENEWAL TERM") unless either the Company or the Executive
gives the other written notice of non-renewal at least 180 days before the
end of the Initial Term or Renewal Term, as the case may be. Such notice
of non-renewal given by the Company shall be treated as a termination
without Cause hereunder effective as of the termination date specified by
the Company in such notice (or, if no date is specified, the date notice
is given), which date must be on or after the giving of such notice and on
or before the last day of the Term. The Initial Term and any Renewal Terms
are collectively referred to as the "TERM".
(b) Subject to the other terms of this Agreement, including those in Part 2,
on or following the Start Date either the Company or the Executive may
terminate the Executive's employment with the Company at any time and for
any reason or no reason upon written notice to the other party, with
effect as of a subsequent date specified in such notice. Prior to the
Start Date either the Company or the Executive may terminate this
Agreement for any reason or no reason upon written notice to the other
party, provided that any such termination shall be deemed a termination of
employment for all purposes under this Agreement, and will be subject to
the other terms of this Agreement, including those in Part 2.
SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT
(a) Position. Beginning on March 20, 2006, or such other date which is agreed
in writing by the Executive and the Company and which falls within 30 days
after the Effective Date (the "START DATE"), and for the remainder of the
Term, the Company will employ the Executive in the position of Executive
Vice President, Chief Financial Officer, based in the Company's San Jose,
California, office, reporting directly to the President and Chief
Executive Officer. For the avoidance of doubt, the parties agree that this
Agreement shall be effective as of and following the Effective Date, but
that the Executive will not become an employee of the Company until the
Start Date.
(b) Obligations. From and after the Start Date and while employed hereunder,
the Executive shall have such duties, responsibilities and authority as
customarily held or exercised by a chief financial officer of a public
corporation, including but not limited to general supervision over all of
the global finance organization of the Company. During the Term,
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the Executive shall devote the Executive's full business efforts and time
to the business and affairs of the Company as needed to carry out his
duties and responsibilities hereunder. The foregoing shall not preclude
the Executive from engaging in appropriate civic, charitable, religious or
other non-profit activities or from devoting a reasonable amount of time
to private investments or from serving on the boards of directors of other
entities, provided that those activities do not interfere or conflict with
the Executive's duties or responsibilities to the Company.
SECTION 3. BASE COMPENSATION
From and after the Start Date and while employed hereunder, the Company shall
pay the Executive, as compensation for services, a base salary of at least
$325,000 per year. Salary increases will be considered after the first
anniversary of the Effective Date, or sooner in the discretion of President and
CEO and consistent with Company policies.
SECTION 4. OTHER COMPENSATION
(a) EFIP. While employed hereunder, the Executive will be enrolled in the
Enhanced Fairchild Incentive Plan (EFIP), at a participation level of at
least 90%. By way of example only, if an EFIP bonus is paid at the 100%
target level, the Executive would receive a bonus equal to 90% of his
qualified earnings under EFIP during the measurement period. Payments are
subject to the terms and conditions of the EFIP.
(b) Equity Awards.
(1) Grants. The Executive shall receive a grant of 20,000 Xxxxxxxxx
Semiconductor International, Inc. ("FSII") restricted stock units
("RSUS"), a grant of 20,000 FSII performance units ("PERFORMANCE
UNITS") and a grant of options to purchase 75,000 shares of FSII
common stock ("OPTIONS"), subject to the following terms
(collectively, the "EQUITY GRANTS"). The Equity Grants will not be
made under any stock or option plan of the Company or FSII, but will
be granted, administered and interpreted as if such grants had been
made under, and subject to, the Xxxxxxxxx Semiconductor Stock Plan
and standard forms of executive agreements (the "EQUITY AWARD
AGREEMENTS") as in effect on the date hereof and as such plan may be
amended from time to time (the "PLAN"). The Plan and Equity Award
Agreements are hereby incorporated in this Agreement as if fully set
forth herein. The grant date for the Equity Grants will be the Start
Date. The RSUs and Options will vest in 25% increments on each of
the first four anniversaries of the grant date, if in each case the
Executive remains employed by the Company on such anniversary. The
actual number of shares of stock issued under the Performance Units,
and the vesting provisions relating to those units and shares
received thereunder, will be determined in accordance with the Plan
and terms generally applicable to 2006 performance unit grants to
executive officers of the Company. The Executive will be solely
responsible for any taxes associated with the receipt, vesting,
exercise or delivery of shares or cash under the Equity Grants, and
the Company will make appropriate withholdings from any
distributions of shares or cash thereunder.
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(2) No Eligibility for Other Grants in 2006. The Equity Grants are made
in lieu of any that would otherwise be made to the Executive as part
of the Company's annual grant program for 2006, and, accordingly,
the Executive shall not receive any grants of RSUs, performance
units or options under such program in 2006, other than the Equity
Grants. The Executive will be eligible to receive additional awards
that the Company may undertake under any other program, with respect
to the Executive or otherwise, in 2006.
(3) Additional Grants After 2006. So long as he is employed by the
Company after 2006, the Executive shall receive grants of stock
options, performance shares and other equity-based awards, subject
to the applicable Company plans governing such awards, and covering
a number of shares determined consistent with Company policies and
practices for executive officers. Since the Equity Grants are made
in connection with the Executive's recruitment, future annual awards
may be smaller than the Equity Grants.
(c) Recruitment Bonus. The Company will pay the Executive a one-time
recruitment bonus of $80,000, on a tax-assisted or fully grossed-up basis,
within 10 days after the Start Date. If the Executive terminates his
employment with the Company for any reason other than Good Reason (or his
death or disability) within one year after the Start Date, the Executive
will repay the foregoing recruitment bonus to the Company on a prorated
basis reflecting the portion of such one-year period that the Executive is
not employed by the Company. Such repayment will include amounts paid by
the Company in respect of tax assistance that are not recovered by the
Company as a result of such repayment.
(d) Tax and Financial Planning Assistance. The Executive will be entitled to
receive up to $8,000 per year in personal tax and financial planning
services at the Company's expense and on a tax-assisted (or "fully
grossed-up") basis.
(e) Other Benefits. While employed hereunder, the Executive will be entitled
to participate in Company-paid executive long-term disability insurance,
Company-paid executive long-term care insurance, and Company-paid basic
life insurance programs, and to participate in the Company's health
insurance, dental insurance, vision care, short-term disability and
personal savings (including 401(k) and 401(k) benefit restoration) plans,
as well as other benefit plans and fringe benefits and perquisites
available to senior executives of the Company.
(f) Paid Vacation. While employed hereunder, the Executive shall be entitled
to a minimum of four 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 Company policies and the proper
performance of the Executive's duties hereunder.
(g) Business Expenses and Travel. While employed hereunder, the Executive
shall be authorized to incur and shall be reimbursed for all necessary and
reasonable travel, entertainment and other business expenses in connection
with the Executive's duties hereunder.
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(h) Legal Fee Reimbursement. The Company agrees to directly pay Executive's
reasonable advisory and legal fees associated with entering into this
Agreement, up to $5,000, upon receiving invoices for such services. Such
amounts will be paid on a tax-assisted or "fully grossed-up" basis, to the
extent such payments are taxable to the Executive for U.S. federal or
state income tax purposes.
(i) Indemnification. Executive shall receive indemnification as a corporate
officer and director of the Company to the maximum extent extended to the
other officers and directors of the Company. Following the termination of
Executive's employment or directorship for any reason, the Company agrees
to honor the indemnification agreement previously entered into with
Executive.
PART 2 COMPENSATION AND BENEFITS IN CASE OF TERMINATION WITHOUT CAUSE OR FOR
GOOD REASON OUTSIDE OF A CHANGE OF CONTROL
SECTION 5. TERMINATIONS AND RELATED DEFINITIONS
Part 2 of the Agreement, consisting of Sections 5 and 6, describes the benefits
and compensation, if any, payable in case of certain terminations of employment
prior to six months before a Change in Control and more than twelve months after
a Change in Control.
In this Agreement,
(a) "CAUSE" means (1) a willful failure by the Executive to substantially
perform the Executive's duties under this Agreement, other than a failure
resulting from the Executive's complete or partial incapacity due to
physical or mental illness or impairment, (2) a willful act by the
Executive that constitutes gross misconduct and that is materially
injurious to the Company, (3) a willful breach by the Executive of a
material provision of this Agreement (including Sections 8 or 10) or (4) a
material and willful violation of a federal, state or foreign law or
regulation applicable to the business of the Company that is materially
and demonstrably injurious to the Company, provided that no act, or
failure to act, by the Executive shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act
or omission was in the Company's best interest; and provided, further,
that, if the failure, act, breach or other basis for finding Cause under
this Agreement is capable of being cured without material injury to the
Company, then no finding of Cause shall be made unless the Executive has
failed to cure such failure, act, breach or other basis within 30 days
after receiving written notice thereof from the Company, and
(b) "DISABILITY" means that the Executive, at the time the notice is given,
has been unable to perform the Executive's duties under this Agreement for
a period of not less than six consecutive months as a result of the
Executive's incapacity due to physical or mental illness, and
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(c) "GOOD REASON" means any of the following or as otherwise provided in this
Agreement: (1) a reduction in the Executive's base salary other than as
part of a broader executive pay reduction, (2) a reduction in the
Executive's incentive compensation (EFIP) participation level other than
as part of a broader executive reduction, (3) a material change in the
employment benefits available to the Executive, if such change does not
similarly affect all employees of the Company eligible for such benefits,
(4) a material reduction in Executive's duties, responsibilities or
authority as then in effect or (5) a requirement to relocate, except for
office relocations that would not increase the Executive's one-way
commuting distance by more than 35 miles.
SECTION 6. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON
(a) Severance. If, during the Term, the Company terminates the Executive's
employment for any reason other than Cause (including as a result of the
Executive's death or Disability), or if the Executive terminates his
employment for Good Reason, then, provided the Executive (or his legal
representative, if applicable) executes the release of claims described in
Section 6(b), and subject to Section 6(c), the Company will promptly pay
the Executive, in a lump sum, an amount equal to the sum of (i) the
Executive's base annual salary in effect on such termination date and (ii)
the amount of the bonus the Executive would receive under the Company's
Enhanced Fairchild Incentive Program (EFIP), assuming a 100% payout based
on the Executive's base salary and EFIP incentive level in effect
immediately prior to such termination (whether or not such a bonus has
been or is expected to be paid to other executives or employees of the
Company for the fiscal period in which such termination occurs). If EFIP
bonuses are later paid to EFIP participants at a level higher than 100% in
respect of the last fiscal period during which the Executive had been
employed by the Company, then the Company shall pay the Executive the
difference between the amount that would have been paid to the Executive
had the Executive remained employed by the Company, and been entitled to
receive such bonus, and the amount determined under clause (ii) above. If
at the time of such a termination the EFIP program has been discontinued
or replaced, then the amount payable under clause (ii) above shall be the
target or actual amount that the Executive is entitled to receive under
any incentive bonus program in which he is then participating. The
Executive will be responsible for all taxes relating to such payments and
the Company will make all required withholdings of all such taxes. At the
time of such termination, the Company shall pay the Executive in cash for
all accrued and unused vacation time.
(b) Release of Claims. As a condition to the receipt of the payments described
in Section 6(a), the Executive (or his legal representative, if
applicable) shall be required to execute a release of all claims arising
out of the Executive's employment or the termination thereof, including
any claim of discrimination under U.S. state or federal law or any
non-U.S. law, but excluding claims for indemnification from the Company
under any indemnification agreement with the Company, its certificate of
incorporation or bylaws, claims under applicable directors' and officers'
insurance policies, or claims for indemnification under Section 2802 of
the California Labor Code or similar statutes.
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(c) Conditions to Receipt of Payments. Without limiting the Company's other
rights or remedies in the event of the Executive's breach of any provision
of this Agreement, the obligation of the Company to provide the payments
described in this Section 6 is subject to the Executive's continuing
compliance with Sections 8 and 10 during and after the Term, and also is
subject to the related provisions of Section 11.
(d) No Mitigation. The Executive shall not be required to mitigate the amount
of any payment or benefit contemplated by this Section 6, nor shall any
such payment or benefit be reduced by any earnings or benefits that the
Executive may receive from any other source.
PART 3 COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
SECTION 7. CHANGE IN CONTROL
(a) Payment; Vesting of Equity Awards. If the Executive's employment is
terminated by the Company other than for Cause (including as a result of
the Executive's death or Disability), or by the Executive for Good Reason,
in either case within the time period beginning six months before the
Change in Control and ending 12 months after the Change in Control, then
(1) the Company will promptly pay the Executive, in a lump sum, an
amount equal to the sum of (i) the Executive's base salary in effect
on such termination date and (ii) the amount of the bonus the
Executive would receive under the Company's Enhanced Fairchild
Incentive Program (EFIP), assuming a 100% payout based on the
Executive's base salary and EFIP incentive level in effect
immediately prior to such termination (whether or not such a bonus
has been or is expected to be paid to other executives or employees
of the Company for the fiscal period in which such termination
occurs). If EFIP bonuses are later paid to EFIP participants at a
level higher than 100% in respect of the last fiscal period during
which the Executive had been employed by the Company, then the
Company shall pay the Executive the difference between the amount
that would have been paid to the Executive had the Executive
remained employed by the Company, and been entitled to receive such
bonus, and the amount determined under clause (ii) above. If at the
time of such a termination the EFIP program has been discontinued or
replaced, then the amounts payable under clause (ii) above and the
preceding sentence shall be the maximum amounts that the Executive
is entitled to receive under any incentive bonus program in which he
is then participating; and
(2) any stock options and stock appreciation rights granted to the
Executive that are outstanding as of the date of such termination,
and which are not then vested, shall become fully vested, and all
stock options of the Executive shall remain vested and exercisable
for the full remaining term or terms thereof; and any restrictions
and deferral limitations applicable to any performance shares or
other restricted stock awards granted to the Executive that are
outstanding as of the date of such termination shall lapse, and such
awards shall become free of all
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restrictions and become fully vested and transferable; and all
deferred stock units granted to the Executive that are outstanding
as of the date such termination shall be considered to be earned and
payable in full, and any deferral or other restrictions shall lapse
and such deferred stock units shall be settled as promptly as is
practicable following such termination. The Executive will be
responsible for all taxes relating to such payments and vesting and
the Company will make all required withholdings of all such taxes.
(b) Definition. A "CHANGE IN CONTROL" means the happening of any of the
following events (for purposes of this Section 7 only, the "COMPANY" means
FSII, and not any of its subsidiaries) in one or a series of related
transactions:
(1) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) (any of which, a
"PERSON") resulting in such Person having beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then-outstanding shares of
common stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK")
or (ii) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election
of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
excluding, however, the following: (A) Any acquisition directly from
the Company, other than an acquisition by virtue of the exercise of
a conversion privilege unless the security being so converted was
itself acquired directly from the Company, (B) Any acquisition by
the Company, (C) Any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any entity
controlled by the Company, or (D) Any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (ii) of
Section 7(b)(3); or
(2) A change in the composition of the board of directors of the Company
(the "BOARD") such that the individuals who, as of the Effective
Date, constitute the Board (such Board shall be hereinafter referred
to as the "INCUMBENT BOARD") cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of
this definition, that any individual who becomes a member of the
Board subsequent to the Effective Date, whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent
Board; but, provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered
as a member of the Incumbent Board; or
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(3) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the
Company or the acquisition of shares or assets of another company
("CORPORATE TRANSACTION"); excluding, however, such a Corporate
Transaction pursuant to which (i) all or substantially all of the
individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly,
more than 50% of, respectively, the outstanding shares of common
stock (or equity interests), and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors (or equivalent governing body, if applicable),
as the case may be, of the entity resulting from such Corporate
Transaction (including an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company
or such entity resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock (or equity
interests) of the entity resulting from such Corporate Transaction
or the combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors (or equivalent governing body, if applicable) except to
the extent that such ownership existed prior to the Corporate
Transaction, and (iii) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the
board of directors (or equivalent governing body, if applicable) of
the entity resulting from such Corporate Transaction; or
(4) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(d) Any obligation of the Company under this Section 7 will survive any
termination of this Agreement.
PART 4 CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL PROPERTY,
NON-SOLICITATION, REMEDIES, SUCCESSORS, MISCELLANEOUS PROVISIONS,
SIGNATURE PAGE
SECTION 8. CONFIDENTIAL INFORMATION
(a) Acknowledgement. The Company and the Executive acknowledge that the
services to be performed by the Executive under this Agreement are unique
and extraordinary and that, as a result of the Executive's employment, the
Executive will be in a relationship of
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confidence and trust with the Company and will come into possession of
Confidential Information (as defined below) that is (1) owned or
controlled by the Company, (2) in the possession of the Company and
belonging to third parties or (3) conceived, originated, discovered or
developed, in whole or in part, by the Executive. "CONFIDENTIAL
INFORMATION" means trade secrets and other confidential or proprietary
business, technical, personnel or financial information, whether or not
the Executive's work product, in written, graphic, oral or other tangible
or intangible forms, including specifications, samples, records, data,
computer programs, drawings, diagrams, models, customer names, ID's or
e-mail addresses, business or marketing plans, studies, analyses,
projections and reports, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials
prepared by attorneys or under their direction (including attorney work
product), and software systems and processes. Any Confidential Information
that is not readily available to the public shall be considered to be a
trade secret and confidential and proprietary, even if it is not
specifically marked as such, unless the Company advises the Executive
otherwise in writing.
(b) Nondisclosure. The Executive agrees that the Executive will not, without
the prior written consent of the Company, directly or indirectly, use or
disclose Confidential Information to any person, during or after the
Executive's employment, except as may be necessary in the ordinary course
of performing the Executive's duties under this Agreement. The Executive
will keep the Confidential Information in strictest confidence and trust.
This Section 8(b) shall apply indefinitely, both during and after the
Term.
(c) Surrender Upon Termination. The Executive agrees that in the event of the
termination of the Executive's employment for any reason, at any time, the
Executive will immediately deliver to the Company all property belonging
to the Company, including documents and materials of any nature pertaining
to the Executive's work with the Company, and will not take with the
Executive any documents or materials of any description, or any
reproduction thereof of any description, containing or pertaining to any
Confidential Information. It is understood that the Executive is free to
use information that is in the public domain, but not as a result of a
breach of this Agreement
(d) Forfeiture in Certain Events. The Company may, in its sole discretion, in
the event of (i) any termination of employment of the Executive for Cause,
(ii) any material breach by the Executive of Section 10 following his
termination of employment for any reason or (iii) following a material
breach of Section 10 and any finding of the invalidity or unenforceability
of Section 10 as further provided in Section 11, (A) cancel any
outstanding award of stock options, restricted stock, deferred stock units
or other award granted to the Executive under a Company plan or otherwise
(an "AWARD"), in whole or in part, whether or not vested or deferred, such
cancellation to be effective as of a date specified in written notice to
the Executive, which date shall be no earlier than the date such notice is
given, or (B) following the exercise or payment of an Award, the Company
may require the Executive to repay to the Company any gain realized or
payment received upon the exercise or payment of such Award (with such
gain or payment valued as of the date of exercise or payment). Such
repayment obligation shall be effective upon notice of demand thereof to
Executive, and repayment shall be due and payable to the
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Company as of a date which is at least 30 days after the Executive
receives such notice, which notice may provide for an offset to any future
payments owed by the Company or any subsidiary to the Executive if
necessary to satisfy the repayment obligation. Any determinations under
this paragraph will be made by the Company in good faith and in its sole
discretion. This Section 8(d) shall apply during and following the Term of
this Agreement, but shall have no application following a Change in
Control.
SECTION 9. ASSIGNMENT OF RIGHTS OF INTELLECTUAL PROPERTY
The Executive will 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 Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive will execute any and
all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including 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. "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 businesses
hours or on or off Company premises) during the Executive's employment with the
Company that relate to any business, venture or activity being conducted or
proposed to be conducted by the Company or its subsidiaries at any time during
the term of the Executive's employment with the Company.
SECTION 10. RESTRICTIONS ON ACTIVITIES OF THE EXECUTIVE
(a) Acknowledgments. The Executive agrees that he is being employed under this
Agreement 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 in this Agreement so as to protect
and preserve their legitimate business interests and goodwill.
(b) Agreement Not to Solicit.
(1) During the Non-Solicitation Period, the Executive will not, directly
or indirectly, through any other entity, solicit for employment,
hire or to provide services, any officer, director, consultant,
executive or employee of the Company or any of its affiliates during
his or her engagement with the Company or such affiliate.
(2) The "NON-SOLICITATION PERIOD" means the period during which
Executive is employed by the Company and the following 12 months.
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SECTION 11. REMEDIES
It is specifically understood and agreed that any breach of the provisions of
Section 8 or 10 of this Agreement would likely result in irreparable injury to
the Company and that the remedy at law alone would 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. Without limiting the generality of the
foregoing provisions of this Section 11, it is understood and agreed that the
Equity Grants under Section 4(b) and the Company's promise to provide the
severance payments described in Section 6(a) are made subject to the condition
that (i) the Executive's obligations under Section 10 are and will remain
specifically enforceable against the Executive in accordance with those sections
and (ii) if, in an action by the Company against the Executive for the breach or
alleged breach of Section 10, a court of competent jurisdiction finds that all
or any part of that section is invalid or unenforceable for any reason, then the
Company may, without limiting its other remedies at law or equity, enforce all
of the remedies available to it under this Agreement, including without
limitation the remedies described in Section 8(d).
SECTION 12. 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 of scope thereof, the parties hereby agree that
such 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 this Agreement in its reduced form shall be valid and
enforceable to the fullest extent permitted by law.
SECTION 13. SUCCESSORS
(a) Company's Successors. The Company will require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business or assets, by an agreement in substance and form satisfactory to
the Executive, to assume this Agreement and to agree expressly to perform
this Agreement in the same manner and to the same extent as the Company
would be required to perform it in the absence of a succession. The
Company's failure to obtain such agreement prior to the effectiveness of a
succession shall be a breach of this Agreement and shall entitle the
Executive to all of the compensation and benefits to which the Executive
would have been entitled under this Agreement if the Company had
terminated the Executive's employment for any reason other than Cause, on
the date when such succession becomes effective. For all purposes under
this Agreement, except as otherwise provided in this Agreement, the term
"Company" shall include any successor to the Company's business or assets
that executes and delivers the assumption agreement described in this
Section 13(a), or that becomes bound by this Agreement by operation of
law.
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(b) Executive's Successors. This Agreement and all rights of the Executive
under this Agreement shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
SECTION 14. GENERAL PROVISIONS
(a) Amendment; Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized
officer of the Company (other than the Executive). No waiver by either
party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any
other condition or provision or of the same condition or provision at
another time.
(b) Whole Agreement; Interpretation. No agreements, representations or
understandings (whether oral or written and whether express or implied)
that are not expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject matter hereof.
The reference table on the first page and the headings in this Agreement
are for convenience of reference only and will not affect the construction
or interpretation of this Agreement. The word "or" is used in its
non-exclusive sense. Unless otherwise stated, the word "including" should
be read to mean "including without limitation" and does not limit the
preceding words or terms. All references to "Sections" or other provisions
in this Agreement are to the corresponding Sections or provisions in this
Agreement. All words in this Agreement will be construed to be of such
gender or number as the circumstances require.
(c) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered, mailed by U.S. registered or certified mail,
return receipt requested, or sent by a documented overnight courier
service. In the case of the Executive, mailed notices shall be addressed
to the Executive at the home address maintained in the Company's records.
In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention
of the President and Chief Executive Officer, with a required copy to the
attention of the Corporate Secretary.
(d) Setoff. The Company may set off against any payments owed to the Executive
under this Agreement any debt or obligation of the Executive owed to the
Company.
(e) Choice of Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Maine,
irrespective of Maine's choice-of-law principles.
(f) Arbitration. Except as otherwise provided with respect to the enforcement
of Sections 8 and 10, any dispute or controversy arising out of the
Executive's employment or the termination thereof, including any claim of
discrimination under U.S. (state or federal) or non-U.S. law, shall be
settled exclusively by arbitration in Santa Xxxxx County, California, in
accordance with the rules of the American Arbitration Association then in
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effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
(g) No Assignment of Benefits. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation
of law, including bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Section 14(g) shall be void.
(h) Limitation of Remedies. If the Executive's employment terminates for any
reason, the Executive shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
including under the severance policies of the Company or any subsidiary.
(i) Taxes. Except where specified in this Agreement as "tax protected" or
subject to tax assistance or "gross-up", all payments made pursuant to
this Agreement shall be subject to withholding of applicable taxes. The
Company shall have the authority to delay the payment of any amount
payable under this Agreement to the extent it deems necessary or
appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating
to payments made to certain "key employees" of certain publicly-traded
companies) ("CODE SECTION 409A") or regulations promulgated thereunder and
in such event, any such amounts to which Executive would otherwise be
entitled during the six (6) month period immediately following Executive's
separation from service will be paid on the first business day following
the expiration of such six (6) month period. In the event that any
additional taxes or interest are due and payable from Executive to the
Internal Revenue Service under Code Section 409A as a result of any
payments or benefits payable hereunder, the Company shall provide
Executive with additional payments so that Executive is fully grossed-up
with the respect to the Code Section 409A payments.
(j) Discharge of Responsibility. The payments and other benefits under this
Agreement, when made in accordance with the terms of this Agreement, shall
fully discharge all responsibilities of the Company to the Executive that
existed at the time of termination of the Executive's employment.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company, by its duly authorized officer, as of the day and year
first above written. The Executive has consulted, or has had the opportunity to
consult, with counsel (who is other than the Company's counsel) prior to
execution of this Agreement.
EXECUTIVE
/s/ Xxxx X. Xxxx
--------------------------------------------
Xxxx X. Xxxx
XXXXXXXXX SEMICONDUCTOR CORPORATION
/s/ Xxxx X. Xxxxxxxx
--------------------------------------------
By: Xxxx X. Xxxxxxxx
President and Chief Executive Officer
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