LINEAR TECHNOLOGY CORPORATION
XXXXX X. XXXXXX EMPLOYMENT AGREEMENT
This Agreement is made by and between Linear Technology Corporation
(the "Company") and Xxxxx X. Xxxxxx ("Executive").
1. Duties and Scope of Employment.
(a) Position; Agreement Commencement Date; Duties. Executive's
coverage under this Agreement shall commence upon the date this Agreement has
been signed by both parties hereto (the "Agreement Commencement Date").
Following the Agreement Commencement Date, Executive shall continue to serve as
President of the Company, reporting to the Chief Executive Officer. 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 Chief Executive Officer.
(b) Obligations. During the Employment Term, Executive shall
devote his full business efforts and time to the Company. 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 prior approval of the Board of Directors of the Company (the
"Board"); provided, however, that Executive may serve in any capacity with any
civic, educational or charitable organization, or as a member of corporate
Boards of Directors or committees thereof, without the approval of the Board,
unless such service involves a conflict of interest with the Company's business.
(c) Employee 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.
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 a base salary at the
annualized rate of $305,000 (the "Base Salary"). 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 target
bonus under the Company's 1996 Senior Executive Bonus Plan as specified annually
by the Compensation Committee of the Board and will also be eligible to
participate in the Key Employee Incentive Bonus Plan (the target amounts under
these plans, added together, are referred to herein as the "Target Bonus").
(c) Severance Prior to a Change of Control. If, at any time
prior to a Change of Control (as defined herein), Executive's employment with
the Company 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 90 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 and restricted stock shall immediately accelerate vesting as to
the amount of shares as would have vested had Executive remained employed by the
Company an additional six months, (ii) Executive shall receive continued
payments of six month's Base Salary plus 50% of his Target Bonus, less
applicable withholding, 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) six (6) 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
as an employee 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 injurious to the Company, (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 (other than a
reduction that generally applies to Company employees); (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
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(vi) any act or set of facts or circumstances which would, under California case
law or statute constitute a constructive termination of Executive.
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any of the following events in either a single transaction or a
series of related transactions:
(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.
(d) The Executive shall not be required to mitigate the value of any
severance benefits contemplated by this section, 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.
(e) Severance on or Following a Change of Control. If, on or after a
Change of Control (as defined herein), Executive's employment with the Company
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 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 and restricted stock shall immediately accelerate vesting as to 50% of
the then unvested shares, (ii) Executive shall receive continued payments of one
year's Base Salary plus 50% of his Target Bonus, less applicable withholding, in
accordance with the Company's standard payroll practices (the "Severance
Payment"), (iii) the Company shall pay
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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) twelve
(12) 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").
The Executive shall not be required to mitigate the value of
any severance benefits contemplated by this section, 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.
(f) Voluntary Termination Other than for Good Reason;
Involuntary Termination for Cause. In the event that 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 and
restricted stock shall terminate immediately and all payments of compensation by
the Company to Executive hereunder shall immediately terminate (except as to
amounts already earned).
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 and
restricted stock shall immediately accelerate vesting as to 50% of the then
unvested shares, and all subsequent vesting of Executive's stock options and
restricted stock shall terminate immediately, and (iii) all payments of
compensation by the Company to Executive hereunder shall immediately terminate
(except as to amounts already earned).
(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 or
consultant 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 and restricted stock shall terminate
immediately.
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5. Golden Parachute Excise Taxes.
(a) Parachute Payments of Less than 3.59 x Base Amount. In the
event that the benefits provided for in this agreement or otherwise payable to
Executive (a) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), (b) would be
subject to the excise tax imposed by Section 4999 of the Code, and (c) the
aggregate value of such parachute payments, as determined in accordance with
Section 280G of the Code and the proposed Treasury Regulations thereunder (or
the final Treasury Regulations, if they have then been adopted) is less than the
product obtained by multiplying 3.59 by Executive's "base amount" within the
meaning of Code Section 280G(b)(3), then such benefits shall be reduced to the
extent necessary (but only to that extent) so that no portion of such benefits
will be subject to excise tax under Section 4999 of the Code.
(b) Parachute Payments Equal to or Greater than 3.59 x Base
Amount. In the event that the benefits provided for in this agreement or
otherwise payable to Executive (a) constitute "parachute payments" within the
meaning of Section 280G of the Code, (b) would be subject to the excise tax
imposed by Section 4999 of the Code, and (c) the aggregate value of such
parachute payments, as determined in accordance with Section 280G of the Code
and the proposed Treasury Regulations thereunder (or the final Treasury
Regulations, if they have then been adopted) is equal to or greater than the
product obtained by multiplying 3.59 by Executive's "base amount" within the
meaning of Code Section 280G(b)(3), then the 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 Executive pursuant to this sentence.
(c) 280G Determinations. 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 or reduced 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 the 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
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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.
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: Xxxxx X. Xxxxxx
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
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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.
(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. If and only if Executive receives
severance benefits under either Section 3(c) or 3(d) hereof, then Executive
agrees that, until the end of the six or twelve month severance benefits period,
as applicable, 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. If and only if Executive receives
severance benefits under either Section 3(c) or 3(d) hereof, then Executive
agrees that he will not, at any time during the six or twelve month severance
benefits period, as applicable, 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.
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(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.
(e) Reasonableness of Covenants. Executive 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.
(f) Remedy for Breach by Executive. In the event Executive
breaches his obligations under this Section 11, the sole remedy shall be that
the Company may thereafter discontinue providing the severance benefits under
Section 3(c) or 3(d) hereof that Executive would otherwise receive.
12. No Oral Modification, Cancellation or Discharge. This Agreement may
only be amended, canceled or discharged in writing signed by Executive and the
Chairman 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.
15. Effective Date. This Agreement is effective upon the date it has
been executed by both parties.
16. 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.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement:
LINEAR TECHNOLOGY CORPORATION
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Xxxxxx Xxxxx
EXECUTIVE
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Xxxxx X. Xxxxxx
Date:__________________, 2001
