Exhibit 10.50
LINEAR TECHNOLOGY CORPORATION
XXXXXX X. XXXXXXX, XX.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Xxxxxx X. Xxxxxxx, Xx. Amended and Restated Employment Agreement (the
"Agreement") is entered into as of October 18, 2005 (the "Effective Date") by
and between Linear Technology Corporation (the "Company") and Xxxxxx X. Xxxxxxx,
Xx. ("Executive").
WHEREAS, Executive and the Company executed the Xxxxxx X. Xxxxxxx, Xx.
Employment Agreement in January 2002 (the "Initial Employment Agreement");
WHEREAS, Executive has since resigned from his employment as Chief
Executive Officer of the Company, but at the request of the Board of Directors
of the Company (the "Board") pursuant to Section 3(f) of the Initial Employment
Agreement, has agreed to remain Executive Chairman of the Board; and
WHEREAS, Executive and the Company desire to update the Initial Employment
Agreement to reflect Executive's current role with the Company and to clarify
certain provisions of the Initial Employment Agreement.
NOW, THEREFORE, in consideration of their mutual promises and intending to
be legally bound, the parties agree as follows:
1. Duties and Scope of Employment.
(a) Positions; Agreement Commencement Date; Duties. Following the
Effective Date, Executive shall continue to serve as Executive Chairman of
the Board, reporting to 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 business efforts and time to the Company one to two days per week.
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 approval of the Board that would result
in 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 $405,000 (the "Base
Salary"), divided by 365, and multiplied by each full day of service he
performs as Executive Chairman of the Board. 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 bonus under the
Company's 1996 Senior Executive Bonus Plan as specified by the Compensation
Committee of the Board and will also be eligible to participate in the Key
Employee Incentive Bonus Plan or any successor bonus plans to such plans
(collectively, the "Bonus Plans"). Executive's target bonus (the "Target
Bonus") for any six-month period will be his target bonus for the previous
six-month period increased or decreased by the same percentage the total
bonus pool for the Bonus Plans for the six-month period in question
increased or decreased compared to the previous six-month period. By way of
example only, if Executive's Target Bonus for the first six-month period of
a particular year is $1,000,000 and the total bonus pool for the Bonus
Plans for the second six-month period of such year increases by ten percent
(10%) over the total bonus pool for the Bonus Plans for the first six-month
period of such year, then Executive's Target Bonus for second six-month
period would be $1,100,000. Executive's actual bonus for any particular
period will equal the actual bonus to which he would have otherwise been
entitled for such period divided by 365, and multiplied by each full day of
service he performs for the Company as Executive Chairman of the Board
during such period, or alternatively in such amount as the Board deems
appropriate, but in no event more than 50% of the Target Bonus for any
relevant period.
(c) 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, including health and other welfare plan participation,
use of the Company airplane and pilot(s) as set forth in Section 3(d)
hereof, office space and secretary, but excluding participation in any
Company employee stock purchase plan intended to qualify under Section 423
of the Internal Revenue Code of 1986, as amended, and any Company 401(k)
plan and any benefits and perquisites where continuing Executive's
participation would be either (i) contrary to statute or regulation, or
(ii) highly impractical.
(d) Use of Company Airplane. During the Employment Term, Executive
shall be permitted to use, for personal purposes, the Company airplane and
pilot(s), for up to 35% of the available flight time in any year; provided,
however, that such use shall be subject to the Company's reasonable
policies and airplane usage requirements. Executive shall be fully
grossed-up for any imputed taxable income recognized by virtue of such use
so that the net effect to Executive is the same as if there was no imputed
income.
2
(e) Stock Options and Restricted Stock. Executive's stock options and
restricted stock that were unvested as of the date Executive transitioned
from Chief Executive Officer of the Company and Chairman of the Board to
only Executive Chairman of the Board (the "Transition Date") shall continue
to vest, subject to his continuing as Executive Chairman of the Board, at
twice the rate as if he had continued as Chief Executive Officer. For
example, if Executive has a stock option that is 25% unvested on the
Transition Date and the option is scheduled to vest as to 1/12 of the
unvested shares each month so as to be 100% vested on the one year
anniversary of the Transition Date, the vesting schedule shall be
accelerated so that the option shall vest at to 1/12 of the unvested shares
each half-month, so as to be 100% vested six months following the
Transition Date.
(f) Severance Prior to a Change of Control.
(i) Voluntary Termination for Good Reason; Involuntary
Termination Other Than for Cause. If, prior to a Change of Control (as
defined herein), Executive's tenure as Executive Chairman of the
Board, terminates due to (i) a voluntary termination for "Good Reason"
(as defined herein) where the grounds for the Good Reason are not
cured by the Company within thirty (30) days following receipt of
written notice specifying the grounds from Executive, 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 not
breaching the terms of Section 11 hereof, (i) all of Executive's
Company stock options (together with other rights to purchase or
receive Company common stock) and restricted stock (including
restricted stock units and similar awards) shall immediately
accelerate vesting as to 100% of the then unvested amount of such
award, (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) two (2) times the average of
his Target Bonus for the four (4) six-month bonus periods prior to the
date of such termination (which amount related to the average Target
Bonus will payable in equal installments over such twelve-month
period), in each case, as if Executive had performed services as
Executive Chairman of the Board on a full-time basis with no
limitation on the amount of his actual compensation (e.g., Executive's
bonus would not be limited to 50% of his Target Bonus for any
particular period)), less applicable withholding and payable in
accordance with the Company's standard payroll practices (the
"Severance Payment"), (iii) the Company shall pay the group health and
dental plan continuation coverage premiums for Executive and his
covered dependents under Title X of the Consolidated Budget
Reconciliation Act of 1985, as amended ("COBRA") 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
(the "COBRA Coverage").
For purposes of this Agreement, "Cause" shall mean (i) an act of personal
dishonesty taken by Executive in connection with his responsibilities hereunder
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
3
injurious to the Company, and (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.
For purposes of this Agreement, "Good Reason" means, without Executive's
express consent, (i) a material reduction of Executive's duties, title,
authority or responsibilities, relative to Executive's duties, title, authority
or responsibilities as in effect immediately prior to such reduction, or the
assignment to Executive of such reduced duties, title, authority or
responsibilities (ii) a material reduction, of the facilities and perquisites
(including office space and location) available to Executive immediately prior
to such reduction, other than a reduction generally applicable to all senior
management of the Company; (iii) a reduction by the Company in the Base Salary
of Executive as in effect immediately prior to such reduction; (iv) a material
reduction by the Company in the aggregate level of employee benefits, including
Target Bonuses, to which Executive was entitled immediately prior to such
reduction with the result that Executive's aggregate benefits package is
materially reduced (other than a reduction that generally applies to Company
employees); (v) the relocation of Executive to a facility or a location more
than thirty-five (35) miles from Executive's then present location; or (vi) any
act or set of facts or circumstances which would, under California case law or
statute constitute a constructive termination of Executive; provided, however,
that Executive agrees that Executive's transition from Chief Executive Officer
and Chairman of the Board to Chairman pursuant to Section 3(f) of the Initial
Employment Agreement and the related reductions in pay, responsibilities and the
like did not constitute Good Reason.
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.
(ii) Voluntary Termination Other than for Good Reason; Involuntary
Termination for Cause. Except as provided otherwise in Sections 3(f)
hereof, in the event 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 (together with other
rights to purchase or receive Company common stock) and restricted stock
(including restricted stock units and similar awards) shall terminate
immediately and all payments of compensation by the Company to Executive
hereunder shall immediately terminate (except as to amounts already
earned).
(g) Change of Control Benefits. In the event of a "Change of Control" (as
defined herein), Executive shall receive the benefits specified in Section
3(f)(i) above (including 100% vesting acceleration); provided that the Severance
Payment shall be payable in a lump-sum within five 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 Executive Chairman of the Board
terminates following a Change of Control, for any or no reason, including
pursuant to Sections 3(h) hereof, Executive shall not be entitled to any
additional compensation (excepts as to amounts already earned and payments and
benefits due pursuant to Section 3(f)).
4
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company's then outstanding voting
securities; or
(ii) The consummation of the sale or disposition by the Company of all
or substantially all the Company's assets; or
(iii) The consummation 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) at least 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; or
(iv) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date upon
which this Agreement was entered into, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any
transaction described in subsections (i), (ii), or (iii) above, or in
connection with an actual or threatened proxy contest relating to the
election of directors to the Company.
(h) Voluntary Termination when Executive is 65 or Older. In the event that
on or after his 65th birthday, Executive (i) voluntarily terminates as Executive
Chairman of the Board, and, (ii) if he is then employed by the Company,
voluntarily terminates such employment, then Executive shall receive the same
benefits as if such voluntary termination was a voluntary termination for Good
Reason, which will entitle him to severance benefits under Section 3(f)(i), and,
if applicable, paid and provided as set forth in Section 3(g).
4. Death or Total Disability of Executive.
(a) Death. Upon Executive's death while Executive is an employee or
consultant of the Company, then (i) employment hereunder shall
automatically terminate, (ii) all of Executive's Company stock options
(together with other rights to purchase or receive Company common stock)
and restricted stock (including restricted stock units and similar awards)
shall immediately accelerate vesting as to 50% of the then unvested amount
of such award, and all subsequent vesting of Executive's stock options
(together with other rights to purchase or receive Company common stock)
and restricted stock (including restricted stock units and similar 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).
5
(b) Disability. Upon Executive's becoming permanently and totally
disabled (as defined in accordance with Internal Revenue Code Section
22(e)(3) or its successor provision) while Executive is an employee of the
Company, 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 (together with other rights to
purchase or receive Company common stock) and restricted stock (including
restricted stock units and similar awards) shall terminate immediately.
5. Golden Parachute Excise Tax Full Gross-Up. In the event that the
benefits provided for in this Agreement or otherwise payable to Executive
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and will be subject to
the excise tax imposed by Section 4999 of the Code, then Executive shall receive
(i) a payment from the Company sufficient to pay such excise tax, plus (ii) an
additional payment from the Company sufficient to pay the excise tax and federal
and state income and employment taxes arising from the payments made by the
Company to Employee pursuant to this sentence. Unless the Company and the
Executive otherwise agree in writing, the determination of Executive's excise
tax liability and the amount required to be paid under this Section 5 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 5, 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 5.
6. 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.
6
7. 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
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
If to Executive: Xxxxxx X. Xxxxxxx, Xx.
at the last residential address
known by the Company.
8. 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.
9. 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.
10. Dispute Resolution.
(a) The parties shall first meet to settle any dispute through good
faith negotiation or non-binding mediation. If not settled by good faith
negotiation or non-binding mediation between the parties within 30 days
from the date one party requests in writing to meet the other party, then
to the extent permitted by law, 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 finally 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
confidential, final, conclusive and binding on the parties to the
arbitration. Judgment may be entered under a protective order on the
arbitrator's decision in any court having jurisdiction. The Company shall
pay all costs of any mediation or arbitration; provided, however, that each
party shall pay its own attorney and advisor fees.
(b) The arbitrator shall apply California law to the merits of any
dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. Executive hereby
expressly 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 and/or relating to any arbitration in which the
parties are participants.
(c) Executive understands that nothing in Section 10 modifies
Executive's at-will status. Either the Company or Executive can terminate
the employment relationship at any time, with or without cause.
7
(d) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 10, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE
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, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP.
11. Covenants Not to Compete and Not to Solicit.
(a) Covenant Not to Compete. In consideration for the benefits
Executive is to receive herein Executive agrees that, until the end of the
twelve month period following the date of his termination of employment
with the Company for any reason or no reason, Executive will not directly
engage in (whether as an employee, consultant, proprietor, partner,
director or otherwise), or have any ownership interest in, or participate
in the financing, operation, management or control of, any person, firm,
corporation or business that engages or participates anywhere in the world
in providing goods and services similar to those provided by the Company
upon the date of Executive's termination of employment. Ownership of less
than 3% of the outstanding voting stock of a corporation or other entity
will not constitute a violation of this provision. The Company agrees not
to unreasonably withhold consent from Executive to engage in any activity
that is not competitive with the Company.
(b) Covenant Not to Solicit. In consideration for the benefits
Executive is to receive herein Executive agrees that he will not, at any
time during the twelve 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.
(c) Representations. The parties intend that the covenants contained
in Section 11(a) and (b) shall be construed as a series of separate
covenants, one for each county, city and state (or analogous entity) and
country of the world. If, in any judicial proceeding, a court shall refuse
to enforce any of the separate covenants, or any part thereof, then such
unenforceable covenant, or such part thereof, shall be deemed eliminated
from this Agreement for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants, or portions thereof,
to be enforced.
(d) Reformation. In the event that the provisions of this Section 11
should ever be deemed to exceed the time or geographic limitations, or
scope of this covenant, permitted by applicable law, then such provisions
shall be reformed to the maximum time or geographic limitations, as the
case may be, permitted by applicable laws.
8
(e) Reasonableness of Covenants. Employee represents that he (i) is
familiar with the covenants not to compete and solicit, and (ii) is fully
aware of his obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of
these covenants.
12. No Oral Modification, Cancellation or Discharge. This Agreement may
only be amended, canceled or discharged in writing signed by Executive and the
Company's then existing Chief Executive Officer, subject to prior approval of
the Board.
13. 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.
14. Governing Law. This Agreement shall be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).
15. 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.
9
IN WITNESS WHEREOF, the undersigned have executed this Agreement:
LINEAR TECHNOLOGY CORPORATION
/s/ Xxxxxx Xxxxx
----------------------------------
Xxxxxx Xxxxx
Chairman of the Audit Committee
of the Board of Directors
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxx, Xx.
---------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Date: October 18, 2005
10
