Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of November 14, 2005 (the "Effective
Date"), by and between Analog Devices, Inc., a Massachusetts corporation (the
"Corporation"), and Xxxxxx X. Xxxxxxx (the "Executive").
The Corporation, on behalf of itself and its shareholders, wishes to
continue to retain the Executive as an integral part of the management of the
Corporation.
IT IS, THEREFORE, AGREED:
1. Term of Agreement. The term of this Agreement shall commence as of the
Effective Date and, subject to Sections 4 and 9.9, expire on November 14, 2010;
provided that such initial term may be extended by mutual written agreement of
the Executive and the Company for successive one-year periods following the
expiration of the initial term or any extension thereof, as the case may be
(such term, as it may be extended, the "Employment Period").
2. Position and Duties.
2.1. The Corporation hereby agrees to continue to employ Executive as
President and Chief Executive Officer of the Corporation.
Executive shall report to the Board of Directors of the
Corporation (the "Board") and shall have such authority, duties
and responsibilities as shall be consistent with those of the
president and chief executive officer of a publicly traded
corporation.
2.2. Executive hereby accepts such continued employment and agrees to
continue to undertake the duties and responsibilities set forth
in Section 2.1. Executive shall devote his full business time and
attention to the business of the Corporation during the
Employment Period, provided, however, that Executive may (i)
serve on civic, educational, philanthropic or charitable boards
or committees, (ii) deliver lectures and fulfill speaking
engagements and (iii) serve on the boards and committees of other
companies with the prior approval of the Board.
3. Compensation.
3.1. Base Salary. During the Employment Period, the Corporation shall
pay to Executive a base salary at an annual rate equal to
$930,935 for each year of the Employment Period, as adjusted
below ("Base Salary"), payable in accordance with the regular pay
policy of the Corporation. During the Employment Period, Base
Salary may be increased, but not decreased, at the discretion of
the Board or the Compensation Committee thereof, provided that
the Board or Compensation Committee may decrease the Base Salary
to the extent such decrease is consistent with a salary reduction
generally applicable to the executive officers of the
Corporation.
3.2. Bonus. During the Employment Period, Executive shall be entitled
to an annual bonus of up to such amount, and based on such
performance objectives, as shall be established by the
Compensation Committee of the Board. The performance objectives
shall be reasonably achievable and shall be consistent with the
business objectives of the Corporation.
3.3. Welfare Benefit Plans, Etc. During the Employment Period,
Executive and/or Executive's family, as the case may be, shall be
eligible for participation in and shall receive benefits under
each welfare benefit, savings, retirement and similar plan of the
Corporation generally available to executives of the Corporation,
including, without limitation, all medical, prescription, dental,
disability, life, accidental death and travel accident insurance
plan and programs of the Corporation.
3.4. Expenses. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by Executive in the performance of his duties
hereunder, subject to the submission of such written
documentation as the Corporation may reasonably require in
accordance with its standard expense reimbursement practices and
policies.
3.5. Vacation. During the Employment Period, Executive shall be
entitled to five weeks per fiscal year of paid vacation.
3.6. Equity Incentives. For each fiscal year during the Employment
Period, the Executive shall be entitled to receive annual equity
awards under the Corporation's equity incentive program in
amounts and of a type to be determined by the Board or
Compensation Committee of the Board.
3.7. Long-Term Retention Arrangement. The Compensation Committee of
the Board and the Executive shall, as soon as practicable after
the Effective Date, seek to establish a long-term equity and/or
cash retention arrangement for Executive upon such terms as may
be agreed upon by the Executive and the Compensation Committee of
the Board.
3.8. Other. The Corporation shall reimburse Executive for up to
$50,000 of his documented expenses incurred each year for
financial, tax and estate planning services.
4. Termination. This Agreement, and Executive's employment hereunder,
shall terminate under the following circumstances:
4.1. Death or Disability. This Agreement and the Employment Period
shall terminate automatically upon Executive's death. The
Corporation may terminate this Agreement, after having
established Executive's Disability, by giving to Executive
written notice of its intention to terminate Executive's
employment. In such a case, Executive's employment with the
Corporation shall terminate effective on the 180th day after
receipt of such notice (the "Disability Effective Date"),
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provided that, within 180 days after such receipt, Executive
shall not have returned to full performance of Executive's
duties. For purposes of this Agreement, "Disability" means
personal injury, illness or other cause which, after the
expiration of not less than 180 days after its commencement,
renders Executive unable to perform his duties with substantially
the same level of quality as immediately prior to such incident
and such disability is determined to be total and permanent by a
physician selected by the Corporation or its insurers and
acceptable to Executive or Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
4.2. With or Without Cause. The Corporation may terminate Executive's
employment with or without "Cause." The Employment Period shall
immediately end upon a termination by the Corporation with Cause.
For purposes of this Agreement, "Cause" means (i) the willful and
continued failure of Executive to perform substantially his
duties with the Corporation (other than any such failure
resulting from Executive's incapacity due to physical or mental
illness) after a written demand for substantial performance is
delivered to Executive by the Board which specifically identifies
the manner in which the Board believes that Executive has not
substantially performed Executive's duties, (ii) the willful
engaging by Executive in gross and reckless negligence which
materially and adversely affects the Corporation's business;
(iii) Executive's willful engaging in conduct that is materially
injurious to the Corporation; (iv) Executive's conviction (by a
court of competent jurisdiction, not subject to further appeal)
of, or pleading guilty to, a felony, or (v) a material breach of
any of Executive's obligations not to compete with the
Corporation or to maintain the confidentiality of its
confidential and proprietary information.
For purpose of this Section 4.2, no act or failure to act by
Executive shall be considered "willful" unless done or omitted to
be done by Executive in bad faith and without reasonable belief
that Executive's action or omission was in the best interests of
the Corporation. Any act, or failure to act, based upon authority
given pursuant to a resolution duty adopted by the Board or based
upon the advice of counsel for the Corporation shall be
conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the
Corporation. Cause shall not exist unless and until (a) in the
event of any Cause defined and clauses (i), (ii), (iii) and (v)
above, a written noticed has been provided to the Executive by
the Board specifically identifying the Cause that is the basis
for the Board's determination and Executive has failed to cure or
remedy the action or omission so identified within a period of 30
days after Executive's receipt of such notice (unless the action
or omission is of a nature that it cannot be cured or remedied),
and (b) the Corporation has delivered to Executive, along with
the Notice of Termination for Cause, a copy of a resolution duly
adopted by the Board (excluding Executive if Executive is a Board
member) at a meeting of the Board called and held for such
purpose (after reasonable notice to Executive and an opportunity
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for Executive, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an
event set forth in clauses (i) to (v) above has occurred and
specifying the particulars thereof in detail. If the Board does
not notify Executive that any occurrence or event shall
constitute "Cause" within sixty (60) days following the Board's
first knowledge of such occurrence or event, such occurrence or
event shall not constitute Cause under this Agreement. Any
events, facts or circumstances known to the Board that have
occurred prior to the Effective Date, and any consequences
thereof (whether before or after the Effective Date), shall not
constitute "Cause" under this Agreement.
4.3. With or Without Good Reason. Executive's employment may be
terminated by Executive with or without Good Reason. The
Employment Period shall immediately end upon a termination by
Executive without Good Reason. For purposes of this Agreement,
"Good Reason" means:
(i) (a) the assignment to Executive of any duties inconsistent
in any material respect with his position as Chief Executive
Officer of the Corporation or any other action by the
Corporation that results in a material diminution in his
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith that is remedied by the Corporation
properly after receipt of notice thereof given by Executive
to the Board, or (b) a material and adverse change in
Executive's titles or offices (including his position as
President and Chief Executive Officer) with the Corporation;
(ii) any failure by the Corporation to comply in any material
respect with any of the provisions of Section 3 of this
Agreement;
(iii) the Corporation requiring Executive to be based at any
office or location more than 50 miles from Norwood,
Massachusetts, or requiring Executive to travel in the
performance of his duties significantly more extensively
than the customary travel requirements of Executive as of
the Effective Date;
(iv) any purported termination by the Corporation of Executive's
employment otherwise than as permitted by this Agreement, it
being understood that any such purported termination shall
not be effective for any purpose of this Agreement; or
(v) any failure by the Corporation to comply with and satisfy
Section 8.3 of this Agreement by causing any successor to
the Corporation to expressly assume and agree to perform
this Agreement with Executive, to the full extent set forth
in said Section 8.3;
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Notwithstanding the foregoing, a termination by Executive with Good Reason shall
be effective only if, within 30 days following the delivery of a Notice of
Termination for Good Reason by Executive to the Corporation, the Corporation has
failed to cure the circumstances giving rise to Good Reason to the reasonable
satisfaction of Executive.
4.4. Expiration of the Employment Period. This Agreement shall
terminate upon the expiration of the Employment Period.
4.5. Notice of Termination. Any termination by the Corporation with or
without Cause or by Executive with or without Good Reason shall
be communicated by Notice of Termination to the other party
hereto given in accordance with Section 9.6 of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of Executive's employment under the
provision so indicated and (iii) if the termination date is other
than the date of receipt of such notice, specifies the proposed
termination date.
5. Obligations of the Corporation Upon Termination.
5.1. Death. If Executive's employment is terminated by reason of
Executive's death, the Corporation shall:
a. pay Executive's estate, to the extent not previously paid,
Executive's Base Salary, and accrued vacation pay, through
the date of termination; and
b. provide those death benefits to which Executive is entitled
at the date of Executive's death under any death benefit
plans, policies or arrangements of the Corporation.
5.2. Disability. If Executive's employment is terminated by reason of
Executive's disability, the Corporation shall: a. pay to
Executive, to the extent not previously paid, Executive's Base
Salary, and accrued vacation pay, through the date of
termination; and
b. provide those benefits to which Executive is then entitled
under any disability plan, policies or arrangements of the
Corporation.
5.3. Cause or Without Good Reason. If Executive's employment shall be
terminated (i) by the Corporation with Cause, or (ii) by
Executive without Good Reason, the Corporation shall pay
Executive his Base Salary through the date of termination and any
accrued vacation pay, and shall have no further obligations to
Executive under this Agreement.
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5.4. Without Cause or With Good Reason. If Executive's employment
shall be terminated (i) by the Corporation without Cause, or (ii)
by Executive with Good Reason, the Corporation shall:
a. pay to Executive, to the extent not previously paid,
Executive's Base Salary, and accrued vacation pay, through
the date of termination;
b. pay Executive, in a lump sum in cash, within thirty (30)
days after the date of termination, an amount equal to (i)
his Base Salary at the time of termination plus his Target
annual bonus (i.e., the agreed upon percentage of his Base
Salary) for the fiscal year in which termination occurs,
multiplied by (ii) a number equal to the lesser of (A) three
(3) and (B) the number of full years (plus a fraction
representing any partial year) remaining in the Employment
Period immediately prior to such termination.
c. provide to Executive the medical and dental benefits, or
payment in lieu of such benefits, available to Executive
immediately prior to such termination, for the remainder of
the Employment Period (notwithstanding the termination
thereof by reason of this Section 5).
In addition, upon any termination of Executive's employment
during the Employment Period in accordance with this Section 5.4,
all then unvested outstanding stock options to purchase common
stock of the Corporation held by Executive shall become fully
vested and exercisable in full.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive (whether cash or equity based, or otherwise) or other plan or program
provided by the Corporation or any of its affiliated companies and for which
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any stock option or other agreements with the
Corporation. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the date on which Executive's
employment is terminated shall be payable in accordance with such plan or
program. Anything herein to the contrary notwithstanding, if Executive becomes
entitled to payments pursuant to Section 5 hereof, the Executive agrees to waive
payments under any severance plan or program of the Corporation.
7. Noncompetition; Nondisclosure; Nonsolicitation.
7.1. Executive hereby covenants and agrees that, during the period of
Executive's employment with the Corporation and for two years
thereafter (the "Covenant Period"), he shall not, without the
prior written consent of the Corporation, engage in Competition
(as defined below) with the Corporation. For purposes of this
Agreement, if Executive takes any of the following actions he
shall be engaged in "Competition": engaging in or carrying on,
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directly or indirectly, any enterprise, whether as an advisor,
principal, agent, partner, officer, director, employee,
stockholder, associate or consultant to any person, partnership,
corporation or any other business entity, that is principally
engaged in any business operating within the United States of
America, which is involved in business activities which are the
same as, similar to or in competition with the principal business
activities carried on by the Corporation, or being definitely
planned by the Corporation, at the time of the termination of the
Executive's employment; provided,, however, that "Competition"
shall not include (i) the passive ownership of securities in any
public enterprise and exercise of rights related thereto, so long
as such securities represent no more than five percent of the
voting power of all securities of such enterprise or (ii) the
indirect ownership of securities through ownership of shares in a
registered investment company.
7.2. Executive shall not, without the Corporation's prior written
consent, disclose or use any non-public confidential information
of or relating to the Corporation, whether disclosed to or
learned by Executive during the course of his employment or
otherwise, so long as such information is not publicly known or
available, except for such disclosures as are required by law or
in connection with Executive's performance of services to the
Corporation hereunder. Executive further agrees that he shall not
make any statements at any time that disparage the reputation of
the Corporation or any of its affiliates. For purposes of this
Section 7, the term "affiliate" of the Corporation means the
Board, any and all Committees of the Board (the "Committees") and
any and all individual members of either the Board or any of the
Committees, in their capacity as such, and any employee or
officer of the Corporation.
7.3. Executive hereby covenants and agrees that, during the Covenant
Period, he shall not: (A) attempt to influence, persuade or
induce, or assist any other person in so influencing, persuading
or inducing, (i) any customer of the Corporation to give up, or
to not commence, a business relationship with the Corporation and
(ii) any employee of the Corporation to cease such employment, or
(B) hire, or assist any other person in hiring, any person who
voluntarily ceased being an employee of the Company within six
months prior to such hiring.
7.4. Executive agrees that all processes, technologies, designs and
inventions ("Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not,
conceived, developed, invented or made by him during the
Employment Period shall belong to the Corporation, provided that
such Inventions grew out of Executive's work for the Corporation,
are related in any manner to the business (commercial or
experimental) of the Corporation or are conceived or made on the
Corporation's time or with the use of the Corporation's
facilities or materials. Executive shall further: (a) promptly
disclose such Inventions to the Corporation; (b) assign to the
Corporation, without additional compensation, all patent and
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other rights to such Inventions for the United States and foreign
countries; (c) sign all papers necessary to carry out the
foregoing; and (d) give testimony in support of the status of
Executive as the inventor of such Inventions. Executive agrees
mat he will not assert any rights to any Invention as having been
made or acquired by him prior to the Effective Date, except for
Inventions, if any, disclosed to the Corporation in writing prior
to the Effective Date.
7.5. Executive acknowledges and agrees that the remedy at law
available to the Corporation for breach of any of his obligations
under Section 7 of this Agreement would be inadequate, and that
damages flowing from such a breach may not readily be susceptible
to being measured in monetary terms. Accordingly, Executive
acknowledges, consents and agrees that, in addition to any other
rights or remedies which the Corporation may have at law, in
equity or under this Agreement, upon adequate proof of his
violation of any provision of Section 7 of this Agreement, the
Corporation shall be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or
further breach, without the necessity of proof of actual damage.
7.6. Executive acknowledges and agrees that the covenants set forth in
Section 7 of this Agreement are reasonable and valid in
geographical and temporal scope and in all other respects. If any
of such covenants or such other provisions of this Agreement are
found to be invalid or unenforceable by a final determination of
a court of competent jurisdiction (i) the remaining terms and
provisions hereof shall be unimpaired and (ii) the invalid or
unenforceable term or provision shall be deemed replaced by a
term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or
unenforceable term or provision.
7.7. Executive understands that the provisions of Section 7 of this
Agreement may limit his ability to earn a livelihood in a
business similar to the business of the Corporation but he
nevertheless agrees and hereby acknowledges that (i) such
provisions do not impose a greater restraint than is necessary to
protect the goodwill or other business interests of the
Corporation, (ii) such provisions contain reasonable limitations
as to time and scope of activity to be restrained, (iii) such
provisions are not harmful to the general public, (iv) such
provisions are not unduly burdensome to Executive, and (v) the
consideration provided hereunder is sufficient to compensate
Executive for the restrictions contained in Section 7 of this
Agreement. In consideration of the foregoing and in light of
Executive's education, skills and abilities, Executive agrees
that he shall not assert that, and it should not be considered
that, any provisions of Section 7 otherwise are void, voidable or
unenforceable or should be voided or held unenforceable.
7.8. If Executive violates any of the restrictions contained in
Section 7 of this Agreement, the restrictive period shall not run
in favor of the Executive from the time of the commencement of
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any such violation until such time as such violation shall be
cured by the Executive to the satisfaction of the Corporation.
8. Successors.
8.1. This Agreement is personal to Executive and without the prior
written consent of the Corporation shall not be assignable by
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive's legal representatives.
8.2. This Agreement shall inure to the benefit of and be binding upon
the Corporation and its successors.
8.3. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
9. Miscellaneous.
9.1. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without
reference to principles of conflict of laws. The parties hereto
agree that exclusive jurisdiction of any dispute regarding this
Agreement shall be the state or federal courts located in Boston,
Massachusetts.
9.2. In the event of any termination of Executive's employment
hereunder, Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the
Corporation under this Agreement, and there shall be no offset
against amounts due Executive under this Agreement on account of
amounts purportedly owing by Executive to the Corporation. Any
amounts due to Executive under this Agreement upon termination of
employment are considered to be reasonable by the Corporation and
are not in the nature of a penalty.
9.3. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
9.4. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
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9.5. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested,
postage prepaid, or by facsimile or nationally recognized
overnight courier service, addressed as follows:
If to Executive:
----------------
Xxxxxx X. Xxxxxxx
c/o Analog Devices, Inc.
Xxx Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
If to the Corporation:
----------------------
Analog Devices, Inc.
Xxx Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
9.6. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
9.7. The Corporation may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation. To
the extent that any amount subject to Section 409A of the
Internal Revenue Code is to be paid or provided to Executive in
connection with a separation from service at a time when
Executive is considered a specified employee within the terms of
said Section 409A, then such payment shall not be made until the
date (the "Payment Date") that is six months and one day after
such separation from service (the "Six Month Period"). All
amounts which would have been paid during such Six Month Period
will be paid in a lump sum on such Payment Date.
9.8. This Agreement contains the entire understanding of the
Corporation and Executive with respect to the subject matter
hereof and supercedes all prior agreements or commitments
relating thereto, including without limitations the letter
agreement dated June 21, 2000 between Executive and the
Corporation, but excluding the Employee Retention Agreement dated
January 16, 1989 (the "Retention Agreement"), which shall remain
in full force and effect.
9.9. The Retention Agreement shall remain in full force and effect,
subject to the following: (a) in the event of any termination of
employment of the Executive following a Change in Control (as
defined in the Retention Agreement) that gives rise to any
payments under Section 5(c) of the Retention Agreement that are
greater than the payments provided for in this Agreement, the
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provisions of Sections 5(c) and 5(d) of the Retention Agreement
shall supercede the provisions of Section 5.4 hereof (other than
the last sentence of Section 5.4), and (b) in the event of any
termination of employment of the Executive following a Change of
Control that gives rise to any payments under Section 5(c) of the
Retention Agreement that are less than the payments provided for
in this Agreement, the provisions of this Agreement shall
supersede Section 5(c) of the Retention Agreement and such
payments under this Agreement shall be considered "Severance
Payments" for purposes of Section 5(d) of the Retention
Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Executive has hereunto set his hand and the Corporation
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxx
ANALOG DEVICES, INC.
By: /s/ Xxx Xxxxx
---------------------------------------------
Title: Chairman of the Board
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