EXHIBIT 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into
as of December 1, 2004 between Xxxx Xxxxxxxx (the "EXECUTIVE") and Xxxxxxxxx
Semiconductor Corporation, a Delaware corporation (the "COMPANY").
For ease of reference, this Agreement is divided into the
following parts:
PART 1 -- TERM, DUTIES AND SCOPE, COMPENSATION AND BENEFITS
DURING EMPLOYMENT (Sections 1-4)
- Position and Duties
- Salary
- EFIP Bonus
- Equity Awards
- Other
PART 2 -- COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR
CONSTRUCTIVE TERMINATION (Sections 5-6)
- Termination
PART 3 -- COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN
CONTROL (Section 7)
PART 4 -- CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE,
INTELLECTUAL PROPERTY, NON-COMPETITION AND
NON-SOLICITATION, REMEDIES, SUCCESSORS, MISCELLANEOUS
PROVISIONS, SIGNATURE PAGE
(Sections 8-14)
- Confidentiality and Non-Disclosure
- Forfeiture in Case of Certain Events
- Non-Competition and Non-Solicitation
- Miscellaneous
TERMS
For good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, the Company and the Executive, intending to be legally
bound, agree as follows:
PART 1 TERM, DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
SECTION 1. TERM OF AGREEMENT
(a) Term. Unless sooner terminated as provided in this Agreement, the term
of this Agreement will begin on the date hereof (the "EFFECTIVE DATE")
and will end on the second anniversary of the Effective Date (the
"INITIAL TERM"). The term of this Agreement will be automatically
extended for one or more successive one-year periods (each a "RENEWAL
TERM") unless the Company or the Executive gives the other written
notice of non-renewal at least six months before the end of the Initial
Term or the applicable Renewal Term, as the case may be. The Initial
Term and any Renewal Term are collectively referred to as the "TERM."
(b) Termination or Resignation. Subject to the other terms of this
Agreement, including those in Part 2, either the Company or the
Executive may terminate the Executive's employment with the Company at
any time and for any reason or no reason upon written notice to the
other party, with effect as of the date specified in such notice.
SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT
(a) Position. The Company will employ the Executive during the Term in the
position of Executive Vice President, Manufacturing and Technology
Group, reporting to the Chief Executive Officer. The Executive will be
given duties, responsibilities and authorities that are appropriate to
this position. In the event the Company promotes the Executive to the
positions of President and Chief Executive Officer of the Company, the
Company and the Executive shall negotiate competitive compensation,
benefits and other employment terms and conditions to be set forth in a
written agreement to replace this Agreement in its entirety upon the
effectiveness of such a promotion.
(b) Obligations. During the term of employment under this Agreement, the
Executive shall devote the Executive's full business efforts and time
to the business and affairs of the Company as needed to carry out his
duties and responsibilities hereunder subject to the overall
supervision of the Chief Executive Officer. The foregoing shall not
preclude the Executive from engaging in appropriate civic, charitable,
religious or other non-profit activities or from devoting a reasonable
amount of time to private investments or from serving on the boards of
directors of other entities, provided that those activities do not
interfere or conflict with the Executive's duties or responsibilities
to the Company.
SECTION 3. BASE COMPENSATION
During the Term, the Company shall pay the Executive, as compensation for
services, a base salary of at least $500,000 per year. Salary increases will be
considered after the first anniversary
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of this Agreement, or sooner in the discretion of the Chief Executive Officer,
on a basis consistent with Company policies.
SECTION 4. OTHER COMPENSATION
(a) Recruitment Bonus. The Company shall pay the Executive a one-time
recruitment bonus equal to $200,000 on a tax-assisted basis (the
"RECRUITMENT BONUS"), provided, that, if (i) the Company terminates the
Executive's employment at any time for Cause, (ii) Executive breaches
Section 8 (other than a breach with no substantial impact on the
Company) following his termination of employment for any reason and, if
such breach is capable of cure, Executive has not cured such breach
within 30 days of written notice thereof, (iii) Executive breaches
Section 10 following his termination of employment for any reason, (iv)
there is a finding of the invalidity or unenforceability of Sections 8
or 10, as further provided in and in accordance with Section 11, or (v)
within two years after the Effective Date, the Executive terminates his
employment for any reason other than Good Reason or his death or
Disability, then the Executive shall repay (A) in the case of clauses
(i)-(iv), the entire amount of the Recruitment Bonus or (B) in the case
of clause (v), a pro rata share of the Recruitment Bonus reflecting the
portion of the two-year period he is not employed, to the Company
within 10 days after the effective date of such termination or other
event. Any such repayment shall include the amount of taxes paid by the
Company in respect of the Recruitment Bonus, net of any such taxes
recoverable by the Company as a result of such repayment. The
Recruitment Bonus will be paid to the Executive in two installments of
$100,000 each, the first within 10 days after the Effective Date and
the second before January 31, 2005.
(b) EFIP. During the Term the Executive will be enrolled in the Enhanced
Xxxxxxxxx Incentive Plan ("EFIP"), at a participation level of at least
80%. By way of example only, if an EFIP bonus is paid at the 100%
target level, the Executive would receive a bonus equal to 80% of his
earnings during the measurement period. For the 2004 measurement
period, if an EFIP bonus is paid at the 100% target level, the
Executive will receive a bonus payment reflecting 80% of actual 2004
earnings. For the 2005 measurement period only, the Company shall pay
the Executive an EFIP bonus at a minimum 100% target level, based on
the Executive's 2005 earnings and EFIP participation level in effect
for that year, whether or not such a bonus is paid at that or any other
level to any other EFIP participants for 2005. If EFIP bonuses are paid
above the 100% target level, the Executive will be eligible for
additional payments in accordance with the plan.
(c) Equity Awards.
(1) Deferred Stock Units and Stock Options. The Executive shall
receive a grant of 50,000 deferred stock units ("DSUS") and a
grant of options to purchase 200,000 shares of Xxxxxxxxx
Semiconductor International, Inc. ("FSII") common stock,
subject to the following terms. The foregoing grants will not
be made under any stock or option plan of the Company or FSII,
but will be granted, administered and interpreted as if such
grants had been made under, and subject to, the
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Xxxxxxxxx Semiconductor Stock Plan and standard forms of
executive agreements (the "EQUITY AWARD AGREEMENTS") as in
effect on the date hereof and as such plan may be amended from
time to time (the "PLAN"). The Plan and Equity Award
Agreements are hereby incorporated in this Agreement as if
fully set forth herein. The grant date for these grants will
be the Effective Date. These grants will vest in 25%
increments on each of the first four anniversaries of the
grant date, if in each case the Executive remains employed by
the Company on such anniversary. The Executive will be solely
responsible for any taxes associated with the receipt,
vesting, exercise or delivery of shares or cash under the
foregoing equity awards, and the Company will make appropriate
withholdings from any distributions of shares or cash
thereunder.
(2) No Eligibility for Grants in 2005. A portion of the foregoing
equity awards are made in lieu of any that would otherwise be
made to the Executive as part of the Company's annual grant
program for 2005, and, accordingly, the Executive shall not
receive any grants of DSUs or options under such program in
2005. The Executive will be eligible to receive additional
equity awards upon promotion or under any other grant or
program that the Company may undertake, with respect to the
Executive or otherwise, in 2005.
(3) Additional Grants After 2005. So long as he is employed by the
Company after 2005, the Executive shall receive grants of
stock options, DSUs or other equity-based awards, subject to
the applicable Company plans governing such awards, covering a
number of shares as recommended by independent compensation
consultants and determined by the compensation committee of
the Company's board of directors.
(d) Tax and Financial Planning Assistance. The Executive will be entitled
to receive up to $15,000 per year in personal tax and financial
planning services at the Company's expense on a tax-assisted basis.
(e) Relocation and Other Benefits. The Executive will be entitled to
relocation benefits (including the payment of moving expenses, home
sale and home purchase assistance) in accordance with applicable
Company programs and policies. The Company will provide temporary
living arrangements in the Portland, Maine area for the Executive and
his family for up to one year at the Company's expense. The Executive
will be entitled to participate in Company-paid executive long-term
disability and long-term care insurance, and to participate in the
Company's health insurance, dental insurance, vision care, short-term
disability, basic and supplemental life insurance and personal savings
(including 401(k) and 401(k) benefit restoration) plans as well as
other benefit plans and fringe benefits and perquisites available to
other executives of the Company. To the extent any of the payments,
perquisites or benefits under this Section 6(e) are taxable to the
Executive, they will be provided on a tax-assisted basis.
(f) Paid Vacation. During the Term, the Executive shall be entitled to a
minimum of four weeks of paid vacation per calendar year, such vacation
to extend for such periods and to
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be taken at such intervals as shall be appropriate and consistent with
the proper performance of the Executive's duties hereunder.
(g) Business Expenses and Travel. During the Term, the Executive shall be
authorized to incur and shall be reimbursed for all necessary and
reasonable travel, entertainment and other business expenses in
connection with the Executive's duties hereunder.
(h) Legal Fee Reimbursement. In the event of one or more disputes regarding
this Agreement, or any other agreement relating to Executive's
employment with the Company or its successor, any of which disputes
arises on or after the occurrence of a Change in Control (as defined in
Section 7 hereof), the Company or its successor shall pay all of
Executive's legal fees and expenses associated with such disputes.
(i) Indemnification. Executive shall receive indemnification as a corporate
officer of the Company to the maximum extent extended to the other
officers of the Company. Following the termination of Executive's
employment for any reason, the Company agrees to honor the
indemnification agreement previously entered into with Executive to the
maximum extent permitted by applicable law.
PART 2 COMPENSATION AND BENEFITS IN CASE OF TERMINATION WITHOUT CAUSE OR FOR
GOOD REASON
SECTION 5. TERMINATIONS AND RELATED DEFINITIONS
Part 2 of the Agreement, consisting of Sections 5 and 6, describes the benefits
and compensation, if any, payable in case of certain terminations of employment.
In this Agreement,
(a) "CAUSE" means (1) a willful failure by the Executive to substantially
perform the Executive's duties under this Agreement, other than a
failure resulting from the Executive's complete or partial incapacity
due to physical or mental illness or impairment, (2) a willful act by
the Executive that constitutes gross misconduct and that is materially
injurious to the Company, (3) a willful breach by the Executive of a
material provision of this Agreement (including Sections 8 or 10) or
(4) a material and willful violation of a federal or state law or
regulation applicable to the business of the Company that is materially
and demonstrably injurious to the Company, provided that no act, or
failure to act, by the Executive shall be considered "willful" unless
committed without good faith and without a reasonable belief that the
act or omission was in the Company's best interest; and provided,
further, that, if the failure, act, breach or other basis for finding
Cause under this Agreement is capable of being cured, then no finding
of Cause shall be made unless the Executive has failed to cure such
failure, act, breach or other basis within 30 days after receiving
written notice thereof from the Company;
(b) "DISABILITY" means that the Executive, at the time the notice is given,
has been unable to perform the Executive's duties under this Agreement
for a period of not less than six consecutive months as a result of the
Executive's incapacity due to physical or mental illness; and
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(c) "GOOD REASON" means any of the following or as otherwise provided in
this Agreement: (1) a reduction in the Executive's base salary other
than as part of a broader executive pay reduction, (2) a reduction in
the Executive's EFIP participation level other than as part of a
broader executive reduction, (3) a material change in the employment
benefits available to the Executive, if such change does not similarly
affect all employees of the Company eligible for such benefits, (4) a
material reduction in the Executive's duties, responsibilities or
authority as then in effect, (5) a requirement to relocate, except for
office relocations that would not increase the Executive's one-way
commuting distance by more than 35 miles or (6) the Company's failure,
for any reason, to promote the Executive to the positions of President
and Chief Executive Officer and appoint him to the boards of directors
of FSII and the Company by the earlier of (i) 60 days after Xxxx X.
Xxxx ceases for any reason to serve in such positions or (ii) December
1, 2005, provided in each case the Executive remains employed by the
Company and is willing and available to serve in such capacities on the
date in question.
SECTION 6. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON
(a) Severance. If, during the Term, the Company terminates the Executive's
employment for any reason other than Cause (including as a result of
the Executive's death or Disability), or if the Executive terminates
his employment for Good Reason, then, provided the Executive (or his
legal representative, if applicable) executes the release of claims
described in Section 6(b), and subject to Section 6(c), the Company
will pay the Executive, in a lump sum or, at the Company's or the
Executive's option, in installments over up to 12 months following the
effective date of such termination, an amount equal to two times the
sum of (i) the Executive's base salary in effect on such termination
date and (ii) the amount of the bonus the Executive would receive under
the Company's EFIP program, assuming a 100% payout based on the
Executive's base salary and EFIP incentive level in effect immediately
prior to such termination (whether or not such a bonus has been or is
expected to be paid to other executives or employees of the Company for
the fiscal period in which such termination occurs). If EFIP bonuses
are later paid to EFIP participants at a level higher than 100% in
respect of the last fiscal period during which the Executive had been
employed by the Company, then the Company shall pay the Executive two
times the difference between the amount that would have been paid to
the Executive had the Executive remained employed by the Company, and
been entitled to receive such bonus, and the amount determined under
clause (ii) above. If at the time of such a termination the EFIP
program has been discontinued or replaced, then the amount payable
under clause (ii) above shall be the maximum amount that the Executive
is entitled to receive under any incentive bonus program in which he is
then participating. The Executive will be responsible for all taxes
relating to such payments and the Company will make all required
withholdings of all such taxes. In addition, the Company shall continue
to provide medical benefits for the Executive and his eligible
dependents, under COBRA coverage, at the Company's expense for two
years following the effective date of such termination. At the time of
such termination, the Company shall pay the Executive in cash for all
accrued and unused vacation time.
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(b) Release of Claims. As a condition to the receipt of the payments and
benefits described in Section 6(a), the Executive (or his legal
representative, if applicable) shall be required to execute a release
of all claims arising out of the Executive's employment or the
termination thereof, including any claim of discrimination under U.S.
state or federal law or any non-U.S. law, but excluding claims for
indemnification from the Company under any indemnification agreement
with the Company, its certificate of incorporation or bylaws, or claims
under applicable directors' and officers' insurance policies. If the
Executive executes such a release, then the Company shall release the
Executive from all claims arising out of the Executive's employment
with the Company, other than any claims arising (before or after
termination) under Sections 8 or 10 of this Agreement.
(c) Conditions to Receipt of Payments. Without limiting the Company's other
rights or remedies in the even of the Executive's breach of any
provision of this Agreement, the obligation of the Company to provide
the payments described in this Section 6 is subject to the Executive's
continuing compliance with Sections 8 and 10 during and after the Term,
and also is subject to the related provisions of Section 11.
(d) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefit contemplated by this Section 6, nor
shall any such payment or benefit be reduced by any earnings or
benefits that the Executive may receive from any other source; provided
that if the Executive becomes employed by another employer following
termination of his employment by the Company and such employer provides
the Executive with comparable health plan coverage, the Company shall
no longer be obligated to provide the continued medical benefits
described in Section 6(a).
PART 3 COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
SECTION 7. CHANGE IN CONTROL
(a) Payment. In the event of a Change in Control, if the Executive's
employment is terminated by the Company other than for Cause (including
as a result of the Executive's death or Disability), or by the
Executive for Good Reason (any such termination by the Company or the
Executive, a "QUALIFYING TERMINATION"), in either case within the time
period beginning six months before the Change in Control and ending 12
months after the Change in Control, the cash payment under Section 6(a)
will be paid in a lump sum within 14 days after the date of such
termination. Any obligation of the Company under this Section 7 will
survive any termination of this Agreement. If the Executive is employed
by the Company at the time of a Change in Control or if his employment
was terminated in a Qualifying Termination no more than six months
before the Change in Control, the Executive's DSUs and stock options
shall vest upon a Change in Control unless the Change in Control is
initiated by the Company and the Executive continues in the same or
substantially similar position in the successor corporation. If a
Change in Control occurs within three months before or after the end of
the Term, the Term shall automatically be extended an additional 12
months from the expiration date of the prior Term.
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(b) Definition. A "CHANGE IN CONTROL" means the happening of any of the
following events in one transaction or a series of related transactions
(for purposes of this Section 7 only, the "COMPANY" means Xxxxxxxxx
Semiconductor International, Inc., a Delaware corporation, and not any
of its subsidiaries):
(1) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) (any of
which, a "PERSON") resulting in such Person having beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (i) the
then-outstanding shares of common stock of the Company (the
"OUTSTANDING COMPANY COMMON STOCK") or (ii) the combined
voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
excluding, however, the following: (A) any acquisition
directly from the Company, other than an acquisition by virtue
of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the
Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity
controlled by the Company, or (D) any acquisition pursuant to
a transaction which complies with clauses (i), (ii) and (iii)
of Section 7(b)(3); or
(2) A change in the composition of the board of directors of the
Company (the "BOARD") such that the individuals who, as of the
Effective Date, constitute the Board (such Board shall be
hereinafter referred to as the "INCUMBENT BOARD") cease for
any reason to constitute at least a majority of the Board;
provided, however, for purposes of this definition, that any
individual who becomes a member of the Board subsequent to the
Effective Date, whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least
a majority of those individuals who are members of the Board
and who were also members of the Incumbent Board (or deemed to
be such pursuant to this proviso) shall be considered as
though such individual were a member of the Incumbent Board;
but, provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board;
or
(3) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of shares or assets
of another company ("CORPORATE TRANSACTION"); excluding,
however, such a Corporate Transaction pursuant to which (i)
all or substantially all of the individuals and entities who
are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of,
respectively, the
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outstanding shares of common stock (or equity interests), and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors (or equivalent governing body, if applicable), as
the case may be, of the entity resulting from such Corporate
Transaction (including an entity which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (other
than the Company, any employee benefit plan (or related trust)
of the Company or such entity resulting from such Corporate
Transaction) will beneficially own, directly or indirectly,
20% or more of, respectively, the outstanding shares of common
stock (or equity interests) of the entity resulting from such
Corporate Transaction or the combined voting power of the
outstanding voting securities of such corporation entitled to
vote generally in the election of directors (or equivalent
governing body, if applicable) except to the extent that such
ownership existed prior to the Corporate Transaction, and
(iii) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of
directors (or equivalent governing body, if applicable) of the
entity resulting from such Corporate Transaction; or
(4) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
PART 4 CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL PROPERTY,
NON-COMPETITION AND NON-SOLICITATION, REMEDIES, SUCCESSORS,
MISCELLANEOUS PROVISIONS, SIGNATURE PAGE
SECTION 8. CONFIDENTIAL INFORMATION
(a) Acknowledgement. The Company and the Executive acknowledge that the
services to be performed by the Executive under this Agreement are
unique and extraordinary and that, as a result of the Executive's
employment, the Executive will be in a relationship of confidence and
trust with the Company and will come into possession of Confidential
Information (as defined below) that is (1) owned or controlled by the
Company, (2) in the possession of the Company and belonging to third
parties or (3) conceived, originated, discovered or developed, in whole
or in part, by the Executive. "CONFIDENTIAL INFORMATION" means trade
secrets and other confidential or proprietary business, technical,
personnel or financial information, whether or not the Executive's work
product, in written, graphic, oral or other tangible or intangible
forms, including specifications, samples, records, data, computer
programs, drawings, diagrams, models, customer names, ID's or e-mail
addresses, business or marketing plans, studies, analyses, projections
and reports, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials
prepared by attorneys or under their direction (including attorney work
product), and software systems and processes.
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Any Confidential Information that is not readily available to the
public shall be considered to be a trade secret and confidential and
proprietary, even if it is not specifically marked as such, unless the
Company advises the Executive otherwise in writing.
(b) Nondisclosure. The Executive agrees that the Executive will not,
without the prior written consent of the Company, directly or
indirectly, use or disclose Confidential Information to any person,
during or after the Executive's employment, except as may be necessary
in the ordinary course of performing the Executive's duties under this
Agreement. The Executive will keep the Confidential Information in
strictest confidence and trust. This Section 8(b) shall apply
indefinitely, both during and after the Term.
(c) Surrender Upon Termination. The Executive agrees that in the event of
the termination of the Executive's employment for any reason, whether
before or after the Term, the Executive will immediately deliver to the
Company all property belonging to the Company, including documents and
materials of any nature pertaining to the Executive's work with the
Company, and will not take with the Executive any documents or
materials of any description, or any reproduction thereof of any
description, containing or pertaining to any Confidential Information.
It is understood that the Executive is free to use information that is
in the public domain, but not as a result of a breach of this
Agreement.
(d) Forfeiture in Certain Events. The Company may, in its sole discretion,
in the event of (i) any termination of employment of the Executive for
Cause, (ii) any breach by the Executive of Sections 8 (other than a
breach with no substantial impact on the Company) following his
termination of employment for any reason, which breach, if capable of
cure, is not cured within 30 days of written notice thereof, (iii) any
breach by the Executive of Section 10 following his termination of
employment for any reason or (iv) any finding of the invalidity or
unenforceability of Sections 8 or 10 as further provided in Section 11,
(A) cancel any outstanding award of stock options, restricted stock,
deferred stock units or other award granted to the Executive under a
Company plan or otherwise (an "AWARD"), in whole or in part, whether or
not vested or deferred, such cancellation to be effective as of a date
specified in written notice to the Executive, which date shall be no
earlier than the date such notice is given, or (B) following the
exercise or payment of an Award, the Company may require the Executive
to repay to the Company any gain realized or payment received upon the
exercise or payment of such Award (with such gain or payment valued as
of the date of exercise or payment). Such repayment obligation shall be
effective upon notice of demand thereof to Executive, and repayment
shall be due and payable to the Company as of a date which is at least
30 days after the Executive receives such notice, which notice may
provide for an offset to any future payments owed by the Company or any
subsidiary to the Executive if necessary to satisfy the repayment
obligation. Any determinations under this paragraph will be made by the
Company in good faith and in its sole discretion. This Section 8(d)
shall apply during and following the Term of this Agreement, but shall
have no application following a Change in Control.
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SECTION 9. ASSIGNMENT OF RIGHTS OF INTELLECTUAL PROPERTY
The Executive will promptly and fully disclose all Intellectual Property to the
Company. The Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive will execute any and
all applications for domestic and foreign patents, copyrights or other
proprietary rights and do such other acts (including the execution and delivery
of instruments of further assurance or confirmation) requested by the Company to
assign the Intellectual Property to the Company and to permit the Company and
its affiliates to enforce any patents, copyrights or other proprietary rights to
the Intellectual Property. "INTELLECTUAL PROPERTY" means inventions,
discoveries, developments, methods, processes, compositions, works, concepts and
ideas (whether or not patentable or copyrightable or constituting trade secrets)
conceived, made, created, developed or reduced to practice by the Executive
(whether alone or with others, whether or not during normal businesses hours or
on or off Company premises) during the Executive's employment with the Company
that relate to any business, venture or activity being conducted or proposed to
be conducted by the Company or its subsidiaries at any time during the term of
the Executive's employment with the Company.
SECTION 10. RESTRICTIONS ON ACTIVITIES OF THE EXECUTIVE
(a) Acknowledgments. The Executive agrees that he is being employed under
this Agreement in a key management capacity with the Company, that the
Company is engaged in a highly competitive business and that the
success of the Company's business in the marketplace depends upon its
goodwill and reputation for quality and dependability. The Executive
further agrees that reasonable limits may be placed on his ability to
compete against the Company and its affiliates as provided in this
Agreement so as to protect and preserve their legitimate business
interests and goodwill.
(b) Agreement Not to Compete or Solicit.
(1) During the Non-Competition Period (as defined below), the
Executive will not engage or participate in, directly or
indirectly, as principal, agent, employee, corporation,
consultant, investor or partner, or assist in the management
of, any business which is Competitive with the Company (as
defined below).
(2) During the Non-Competition Period, the Executive will not,
directly or indirectly, through any other entity, hire or
attempt to hire, any officer, director, consultant, executive
or employee of the Company or any of its affiliates during his
or her engagement with the Company or such affiliate. During
the Non-Competition Period, the Executive will not call upon,
solicit, divert or attempt to solicit or divert from the
Company or any of its affiliates any of their customers or
suppliers or potential customers or suppliers of whose names
he was aware during his term of employment (other than
customers or suppliers or potential customers or suppliers
contacted by the Executive solely in connection with a
business that is not Competitive with the Company).
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(3) The "NON-COMPETITION PERIOD" means the period during which Executive is
employed by the Company and the following 12 months.
(4) A business shall be considered "COMPETITIVE WITH THE COMPANY" if it is
engaged in any business, venture or activity in the Restricted Area (as
defined below) which competes or plans to compete with any business,
venture or activity being conducted or actively and specifically
planned to be conducted within the Non-Competition Period (as evidence
by the Company's internal written business plans or memoranda) by the
Company, or any group, division or affiliate of the Company, at the
date the Executive's employment under this Agreement is terminated.
(5) The "RESTRICTED AREA" means the United States of America and any other
country where the Company, or any group, division or affiliate of the
Company, is conducting, or has proposed to conduct within the
Non-Competition Period (as evidenced by the Company's internal written
business plans or memoranda), any business, venture or activity, at the
date the Executive's employment under this Agreement is terminated.
(6) Notwithstanding the provisions of this Section 10, the parties agree
that (A) ownership of not more than three percent (3%) of the voting
stock of any publicly held corporation, or ownership of not more than
one percent (1%) of a privately held entity, shall not, in and of
themselves, constitute violations of this Section 10 and (B) working as
an employee of an entity that has a stand-alone division or business
unit which is Competitive with the Company shall not, of itself,
constitute a violation of this Section 10 if the Executive is not, in
any way (directly or indirectly, as principal, agent, employee,
corporation, consultant, advisor, investor or partner), responsible
for, compensated with respect to, or involved in the activities of such
stand-alone division or business unit and does not (directly or
indirectly) provide information or assistance to such stand-alone
division or business unit.
SECTION 11. REMEDIES
It is specifically understood and agreed that any breach of the provisions of
Section 8 or 10 of this Agreement would likely result in irreparable injury to
the Company and that the remedy at law alone would be an inadequate remedy for
such breach, and that in addition to any other remedy it may have, the Company
shall be entitled to enforce the specific performance of this Agreement by the
Executive and to obtain both temporary and permanent injunctive relief without
the necessity of proving actual damages. Without limiting the generality of the
foregoing provisions of this Section 11, it is understood and agreed that the
payment of the Recruitment Bonus under Section 4(a), the grants of equity awards
under Section 4(c) and the Company's promise to provide the severance payments
and other benefits described in Section 6(a) are made subject to the condition
that (i) the Executive's obligations under Sections 8 and 10 are and will remain
specifically enforceable against the Executive in accordance with those sections
and (ii) if, in an action by the Company against the Executive for the breach or
alleged breach of such sections, a court of competent jurisdiction finds that
all or any part of those sections is invalid or
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unenforceable for any reason, then the Company may, without limiting its other
remedies at law or equity, enforce all of the remedies available to it under
this Agreement, including without limitation the remedies described in Section
8(d).
SECTION 12. SEVERABLE PROVISIONS
The provisions of this Agreement are severable and the invalidity of any one or
more provisions shall not affect the validity of any other provision. In the
event that a court of competent jurisdiction shall determine that any provision
of this Agreement or the application thereof is unenforceable in whole or in
part because of the duration of scope thereof, the parties hereby agree that
such court, in making such determination, shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable and that this Agreement in its reduced form shall be valid and
enforceable to the fullest extent permitted by law.
SECTION 13. SUCCESSORS
(a) Company's Successors. The Company will require any successor (whether
direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of
the Company's business or assets, by an agreement in substance and form
satisfactory to the Executive, to assume this Agreement and to agree
expressly to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of
a succession. The Company's failure to obtain such agreement prior to
the effectiveness of a succession shall be a breach of this Agreement
and shall entitle the Executive to all of the compensation and benefits
to which the Executive would have been entitled under this Agreement if
the Company had terminated the Executive's employment for any reason
other than Cause, on the date when such succession becomes effective.
For all purposes under this Agreement, except as otherwise provided in
this Agreement, the term "Company" shall include any successor to the
Company's business or assets that executes and delivers the assumption
agreement described in this Section 13(a), or that becomes bound by
this Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of the Executive
under this Agreement shall inure to the benefit of, and be enforceable
by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
SECTION 14. GENERAL PROVISIONS
(a) Amendment, Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized
officer of the Company (other than the Executive). This Agreement and
any payments, awards and benefits hereunder are subject to modification
in accordance with Section 409A of the Internal Revenue Code of 1986,
as amended, as added by the American Jobs Creation Act of 2004, and any
rules and regulations relating to such section, as necessary, but only
as necessary, to comply with
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the terms of such section, rules and regulations and to avoid adverse
tax effects on either the Company, Executive, or both. No waiver by
either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a
waiver of any other condition or provision or of the same condition or
provision at another time.
(b) Whole Agreement; Interpretation. No agreements, representations or
understandings (whether oral or written and whether express or implied)
that are not expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject matter hereof.
The reference table on the first page and the headings in this
Agreement are for convenience of reference only and will not affect the
construction or interpretation of this Agreement. The word "or" is used
in its non-exclusive sense. Unless otherwise stated, the word
"including" should be read to mean "including without limitation" and
does not limit the preceding words or terms. All references to
"Sections" or other provisions in this Agreement are to the
corresponding Sections or provisions in this Agreement. All words in
this Agreement will be construed to be of such gender or number as the
circumstances require.
(c) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, mailed by U.S. registered or certified
mail, return receipt requested, or sent by a documented overnight
courier service. In the case of the Executive, mailed notices shall be
addressed to the Executive at the home address maintained in the
Company's records. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be
directed to the attention of the Chairman of the Board of Directors,
with a required copy to the attention of the Corporate Secretary.
(d) Setoff. The Company may set off against any payments owed to the
Executive under this Agreement any debt or obligation of the Executive
owed to the Company.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Maine, irrespective of Maine's choice-of-law principles.
(f) Arbitration. Except as otherwise provided with respect to the
enforcement of Sections 8 and 10, any dispute or controversy arising
out of the Executive's employment or the termination thereof, including
any claim of discrimination under U.S. (state or federal) or non-U.S.
law, shall be settled exclusively by arbitration in Portland, Maine, in
accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator's award in any
court having jurisdiction.
(g) No Assignment of Benefits. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including bankruptcy, garnishment, attachment or
other creditor's process, and any action in violation of this Section
14(g) shall be void.
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(h) Limitation of Remedies. If the Executive's employment terminates for
any reason, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by
this Agreement, including under the severance policies of the Company
or any subsidiary.
(i) Taxes. Except where specified in this Agreement as "tax assisted", any
payment made to the Executive under this Agreement shall be inclusive
of any and all federal, state, local and foreign income, Social
Security, Medicare, other payroll or any other taxes paid or payable at
any time by the Executive as a result of such payment ("TAXES"), and
subject to applicable withholding. If in this Agreement an amount is
specified as "tax-assisted", then the referenced amount is exclusive of
any and all Taxes paid or payable by the Executive as a result of such
payment, and all such Taxes (and Taxes on such Tax-reimbursement
payments) shall be paid by the Company.
(j) Discharge of Responsibility. The payments and other benefits under this
Agreement, when made in accordance with the terms of this Agreement,
shall fully discharge all responsibilities of the Company to the
Executive that existed at the time of termination of the Executive's
employment.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written. The Executive has consulted, or has had the opportunity to
consult, with counsel (who is other than the Company's counsel) prior to
execution of this Agreement.
EXECUTIVE
/s/ Xxxx Xxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxx
XXXXXXXXX SEMICONDUCTOR CORPORATION
By /s/ Xxxx X. Xxxx
----------------------------------------
Its Chairman, CEO & President
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