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EXHIBIT 10.44
LSI LOGIC CORPORATION
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered into
effective as of November 20, 1998 (the "Effective Date"), by and between XXXXXXX
X. XXXXXXXX (the "Employee") and LSI Logic Corporation a Delaware corporation
(the "Company"). Certain capitalized terms used in this Agreement are defined in
Section 1 below.
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the
"Board") recognizes that such consideration can be a distraction to the Employee
and can cause the Employee to consider alternative employment opportunities.
B. The Board believes that it is in the best interests of the Company and
its shareholders to provide the Employee with an incentive to continue his
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Employee with certain benefits upon a Change of Control.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as follows:
1. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean the occurrence
of any of the following events:
(i) the consummation of the Company of a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;
(ii) the approval by the shareholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly
or indirectly, of securities of the Company representing 50% or more of
the total voting power represented by the Company's then outstanding
voting securities.
(b) Termination Date. "Termination Date" shall mean the effective date
of any notice of termination of employment delivered by one party to the
other hereunder.
2. Term of Agreement. This Agreement shall terminate upon the date that is
five (5) years following the Effective Date unless within such term a Change of
Control has occurred, in which case this Agreement
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shall terminate upon the date that all obligations of the parties hereto under
this Agreement have been satisfied.
3. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company's then existing employee benefit plans or policies
at the time of termination.
4. Benefits.
(a) Change of Control.
(i) Option Acceleration. Upon a Change of Control, then, as to the
unvested portion of each option to purchase shares of the Company"s
equity securities that was granted to the Employee by the Company at
least six (6) months prior to the Change of Control (the "Options"), the
vesting and exercisability of each of the Options shall be automatically
accelerated and shall be fully vested and exercisable as at the date of
Change of Control.
(ii) Other Benefits. Upon a Change of Control, the Employee, within
seven (7) days thereof, shall be paid a lump sum that shall be equal to
the sum of: (i) thirty-six (36) months of the Employee's base salary (as
in effect immediately prior to the Change of Control), plus (ii) 300% of
the Employee's target bonus for the year in which the Change of Control
occurs. In addition, the Company shall provide the Employee with (x)
health, dental and vision coverage benefits during the period of
twenty-four (24) months following the date of Termination, provided,
however, that the Employee elects continuation coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), within the time period prescribed pursuant to COBRA and (y)
life insurance benefits during the period of eighteen (18) months
following the date of Involuntary Termination, at the same level as each
of such benefits were in effect for the Employee on the day immediately
preceding the day of the Employee's termination of employment.
(b) Accrued Wages and Vacation; Expenses. In addition: (i) the Company
shall pay the Employee any unpaid base salary due for periods prior to the
Termination Date; (ii) the Company shall pay the Employee all of the
Employee's accrued and unused vacation through the Termination Date; and
(iii) following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date. These payments shall be made
promptly upon termination and within the period of time mandated by law.
5. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and/or assets shall assume the Company's obligations under this
Agreement and agree expressly to perform the Company's obligations under
this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term "Company" shall
include any successor to the Company's business and/or assets which
executes and delivers the assumption agreement described in this subsection
(a) or which becomes bound by the terms of this Agreement by operation of
law.
(b) Employee's Successors. Without the written consent of the Company,
Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights
of Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
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6. Limitation on Payments.
(a) In the event that the benefits provided for in this Agreement or
otherwise payable to the Employee (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") and (ii) but for this Section 6 would be subject to
the excise tax imposed by Section 4999 of the Code, then the Employee's
benefits under Section 4 shall be payable either (i) in full, or (ii) as to
such lesser amount which would result in no portion of such benefits being
subject to excise tax under Section 4999 of the Code, 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 the Employee on an after-tax basis, of the greatest amount
of benefits under this Agreement, notwithstanding that all or some portion
of such benefits may be taxable under Section 4999 of the Code.
(b) If a reduction in the payments and benefits that would otherwise
be paid or provided to the Employee under the terms of this Agreement is
necessary to comply with the provisions of Section 6(a), the Employee shall
be entitled to select which payments or benefits will be reduced and the
manner and method of any such reduction of such payments or benefits
(including but not limited to the number of options that would vest under
Sections 4(a)(i)(A)) subject to reasonable limitations (including, for
example, express provisions under the Company's benefit plans) (so long as
the requirements of Section 6(a) are met). Within thirty (30) days after
the amount of any required reduction in payments and benefits is finally
determined in accordance with the provisions of Section 6(c), the Employee
shall notify the Company in writing regarding which payments or benefits
are to be reduced. If no notification is given by the Employee, the Company
will determine which amounts to reduce. If, as a result of any reduction
required by Section 6(a), amounts previously paid to the Employee exceed
the amount to which the Employee is entitled, the Employee will promptly
return the excess amount to the Company.
(c) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 6 shall be made in writing by
the Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the
Company for all purposes. 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 the Employee 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. Notices.
General. 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 or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. 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 its Secretary.
8. Arbitration.
(a) Any dispute or controversy arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach, or termination thereof, shall be settled by binding
arbitration to be held in Santa Xxxxx County, California, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
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(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to conflicts of law rules. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. Employee hereby consents to the
personal jurisdiction of the state and federal courts located in California for
any action or proceeding arising from or relating to this Agreement or relating
to any arbitration in which the parties are participants.
(c) The Company and Employee shall each pay one-half of the costs and
expenses of such arbitration, and each shall separately pay its counsel fees and
expenses.
(d) Employee understands that nothing in this Section modifies Employee's
at-will employment status. Either Employee or the Company can terminate the
employment relationship at any time, with or without cause.
(e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF,
RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH
AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL
INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE
FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT,
AND LABOR CODE SECTION 201, et seq;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Employee may receive from any other source.
(b) Waiver. No provision of this Agreement may be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). 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.
(c) Integration. This Agreement and the stock option agreements
representing the Options represent the entire agreement and understanding
between the parties as to the subject matter herein and supersede all prior or
contemporaneous agreements, whether written or oral.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.
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(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(f) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
(g) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
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.
EMPLOYEE LSI LOGIC CORPORATION
/s/ By: /s/
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(Xxxxxxx X. Xxxxxxxx)
Title:
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