EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT is made as
of October 1, 2008 (the “ Agreement ”),
among Standard Microsystems Corporation, a Delaware corporation
(the “ Employer ” or “ SMSC
”), and Christine King (the “ Employee
”).
1. Employment, Duties and
Agreements .
(a) The Employer hereby agrees
to employ the Employee as its Chief Executive Officer, and the
Employee shall serve, subject to shareholder election after her
initial appointment, without additional compensation, as a member
of the Board of Directors of the Employer (the “ Board
”), subject to the By-laws of the Employer, as applicable,
and the Employee hereby accepts such positions and agrees to serve
the Employer in such capacities during the employment period fixed
by Section 3 hereof (the “ Employment Period
”). The Employee shall report to the Board and shall have
such duties, authority and responsibilities, and shall act in
accordance with all reasonable instructions and directions of the
Board and of the Employer, in each case, as are consistent with her
position as Chief Executive Officer of the Employer.
(b) During the Employment
Period, excluding any periods of vacation and sick leave to which
the Employee is entitled, the Employee shall devote her full
working time, energy and attention to the performance of her duties
and responsibilities hereunder and shall faithfully and diligently
endeavor to promote the business and best interests of the
Employer.
(c) During the Employment
Period, the Employee may not, without the prior written consent of
the Employer, operate, participate in the management, operations or
control of, or act as an employee, officer, consultant, agent or
representative of, any type of business or service (other than as
an employee and director of the Employer), provided that it shall
not be a violation of the foregoing or of Section 1(b) above for
the Employee to (i) act or serve as a director, trustee or
committee member of any civic or charitable organization,
(ii) manage her personal, financial and legal affairs, or
(iii) serve as a director of ON Semiconductor Corporation,
Atheros Communications, and Open Silicon Inc., so long as such
activities (described in clauses (i), (ii), and (iii)) do not
interfere with the performance of her duties and responsibilities
to the Employer as provided hereunder. Service on any other
entity’s board of directors must be approved by the
Board.
2. Compensation .
(a) As compensation for the
agreements made by the Employee herein and the performance by the
Employee of her obligations hereunder, during the Employment
Period, the Employer shall pay the Employee, pursuant to the
Employer’s normal and customary payroll procedures, a base
salary (the “ Base Salary ”) at the rate of
$625,000.00 per annum. The Board shall review the Employee’s
Base Salary annually and may (but is not required to) increase the
Base Salary in its sole discretion.
(b) (i) In addition to the
Base Salary, during the Employment Period the Employee shall have
an opportunity, subject to the terms and conditions of the
Employer’s annual incentive plan for executive officers (the
“ Management Incentive Plan or MIP ”), to earn
an annual bonus (the “ Bonus ”) with a target
amount of 150% of Base Salary (the “ Target Bonus
”) based on the achievement of annual performance objectives
which shall be established and approved by the Board or any
authorized committee thereof for the Employee and the other members
of the management team of the Employer. No less than one-half of
any bonus is paid in cash, with the balance paid as a restricted
stock award (“ RSA ”) vesting as follows: 25% on
each of the first and second anniversaries of the date of the
grant, and the remaining 50% on the third anniversary of the date
of the grant provided that the Employee continues to be employed by
the Employer through the applicable vesting date. The Employee will
also be eligible for an additional annual over-plan bonus amount,
to be paid in cash, consistent with the terms and conditions of the
then current Management Incentive Plan which for Employee shall not
be less than an additional maximum of 20% of Base Salary.
Notwithstanding anything in the Management Incentive Plan or this
Agreement to the contrary, in no event shall such Bonus (or any
other amount payable pursuant to this Section 2(b)(i)) be paid
later than the fifteenth (15) day of the third month following
the end of the fiscal year with respect to which such Bonus (or
such other amount) was earned, if at all.
(ii) Notwithstanding anything
in Section 2(b)(i) to the contrary, Employee shall not be
entitled to receive a Bonus in respect of fiscal year 2009 pursuant
to the Employer’s fiscal year 2009 MIP. In lieu of such
Bonus, the Employee shall receive a bonus in an amount equal to
$300,000 (the “ FY 09 Bonus ”). Half of the FY
09 Bonus ($150,000) will be paid to the Employee in a cash lump sum
on May 20, 2009 and the remaining half of the FY 09 Bonus
($150,000) will be paid in RSAs to the Employee on the same date
the full fiscal year 2009 RSAs are granted to participants in the
MIP with the same vesting schedule as set forth in
Section 2(b)(i) above, (provided that if no RSAs are granted
to participants in the MIP, then the RSAs shall be granted to the
Employee on the third business day following the Employer’s
release of its full fiscal year 2009 earnings), subject, in each
case, to the Employee continuing to be employed by the Employer on
the applicable payment date.
(c) On or as soon as
practicable after the Effective Date (as defined below), the
Employer shall grant the Employee options (the “
Option ”) to purchase 300,000 shares of common stock
of the Employer at an exercise price equal to the fair market value
of a share of Employer common stock on the grant date. The Option
shall be subject to and governed by the terms and conditions of the
plan from which it is granted (the “ Option Plan
”) and shall be evidenced by a stock option grant agreement
as provided under the Option Plan. 25% of the Option will vest on
each of the first four anniversaries of the grant date of such
Option provided the Employee continues to remain employed by the
Employer on each such vesting date. In addition, the Employer shall
grant to the Employee 37,500 stock appreciation rights (“
SARS ”) on a quarterly basis on the same schedule as
such grants are made to the Directors of the Employer pursuant to
the terms and conditions of the plan from which such grants are
made. The first such SAR grant will be granted in April, 2009. In
addition, Employer shall grant to the Employee 18,750 SARS in
January, 2009 on the same schedule as such grants are made to the
Directors of the Employer pursuant to the terms and conditions of
the plan from which such grants are made. 33% of each such SAR
grant will vest on each of the first three anniversaries of the
grant date of such SAR provided the Employee continues to remain
employed by the Employer on each of the applicable vesting dates.
Notwithstanding anything herein to the contrary, from time to time
the Board or the Compensation Committee, in its sole discretion,
may modify the grant, (which may include a partial or total
substitution of an alternative equity based instruments, such as
without limitation, stock options), provided the result is an
equivalent equity based grant measured as of the Effective
Date.
(d) With respect to the sale of
Employee’s current personal residence in Pocatello, Idaho,
the Employee shall be eligible to sell such home through the
Employer’s relocation program with Paragon Relocation
Resources and shall also receive the following relocation benefits
pursuant to the Employer’s standard relocation policies for
executives (collectively the “ Relocation Program
” which is attached hereto as Exhibit A).
On the Effective Date, Employer
shall grant to the Employee RSAs with an intrinsic value,
calculated as of the date of grant, of $250,000, 25% of which will
vest on the second anniversary of the date of the grant, 25% of
which will vest on the third anniversary of the date of the grant
and 50% of which will vest on the fourth anniversary of the date of
the grant, provided, in each case, that the Employee remains
employed by the Employer through the applicable vesting date.
(e) On or as soon as
practicable after the Employee closes on the purchase of a primary
residence in the Hauppauge, New York area, (but in no event more
than thirty (30) days after closing), the Employer shall pay
to the Employee a lump-sum cash payment in an amount equal to the
difference between $2,100,000 and (1) the amount paid to the
Employee by Paragon Relocation Resources (“Paragon”)
for Employee’s current residence in Pocatello, Idaho pursuant
to its standard policies with Employer or (2) some higher
amount that Employee realizes in a direct sale of the property
without using Paragon, which will later be grossed up for
applicable taxes (the “ Gross-Up ”), to the
Employee (collectively the “ Cash Payment ”). In
the event the Employee voluntarily resigns from her employment with
the Employer prior to the second anniversary of the Effective Date,
then the Employee shall be obligated to repay no later than
30 days from the Date of Termination to the Employer an amount
equal to the product of (i) the Cash Payment and (ii) a
fraction, the numerator of which is 730 minus the number of days in
the period commencing on the Effective Date and ending on the date
of the Employee’s resignation and the denominator of which is
730. Notwithstanding the foregoing, the Gross-Up shall be paid to
the Employee on May 20, 2009. Notwithstanding anything herein
to the contrary, under no circumstances will the Cash Payment be
paid to the Employee before the Effective Date.
(f) During the Employment
Period: (i) the Employee shall be entitled to participate in
the following benefits on the terms and conditions generally in
effect for such plans, practices, policies and programs from time
to time for all employees: SMSC Flex Benefit Plan, including
medical, dental and vision coverage; health care and dependent care
reimbursement accounts; basic life/AD&D insurance; long term
disability insurance and 401(k) savings and retirement plan.
(g) During the Employment
Period, the Employee shall be entitled to take paid vacation of six
weeks per year; Employee shall comply with all other aspects of the
Employer’s vacation policy as may be in effect from time to
time.
(h) The Employer shall promptly
reimburse the Employee for all reasonable business expenses
incurred by the Employee in connection with the performance of her
duties and responsibilities hereunder upon the presentation of
statements of such expenses in accordance with the Employer’s
policies and procedures now in force or as such policies and
procedures may be modified from time to time; provided that in no
event shall such reimbursement be made later than the date that is
two and one-half months following the end of the taxable year
following the taxable year in which such expenses were
incurred.
(i) In addition to the
indemnification of the Employee as provided for under the
Employer’s certificates of incorporation and by-laws, the
Employer shall provide, at its expense, the Employee with coverage
under its directors’ and officers’ liability insurance
policy at the same level provided the other directors and officers
of the Employer, and the standard form indemnity agreement annexed
hereto as Exhibit B.
(j) For purposes of
clarification, nothing herein shall hinder or interfere with the
right of the Employer to amend, modify or terminate any plan,
practice, policy and program as it deems appropriate, from time to
time, in its sole discretion.
3. Employment Period
.
The Employment Period shall commence
on October 20, 2008 (the “ Effective Date
”) and shall continue for an initial term of four
(4) years. Thereafter, the Employment Period shall
automatically renew for one (1) year terms unless the Employer
provides a Notice of Non-Renewal of the Agreement at least one
hundred eighty (180) days prior to the expiration of the
Employment Period. Notwithstanding the foregoing, the
Employee’s employment hereunder may be terminated during the
Employment Period upon the earliest to occur of the following
events (at which time the Employment Period shall be terminated in
accordance with Section 4).
(a) Death. The Employee’s
employment hereunder shall terminate upon her death.
(b) Disability. The Employer
shall be entitled to terminate the Employee’s employment
hereunder for “ Disability ” as a result of
(i) the inability of the Employee to engage in any substantial
gainful activity or (ii) the receipt by the Employee of income
replacement benefits for a period of not less than 3 months
under an accident and health plan covering employees of the
Employer, in each case by reason of any medically determinable
physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months, as determined by the Employer.
(c) Cause. The Employer may
terminate the Employee’s employment hereunder for Cause. For
purposes of this Agreement, the term “ Cause ”
shall mean the Employee’s (A) gross negligence or
willful misconduct in the performance of the Employee’s
duties for the Employer (other than due to the Employee’s
physical or mental incapacity), (B) breach or violation, in
any material respect, of any written agreement between the Employee
and the Employer or any material policy of the Employer, as may be
in effect from time to time (including, without limitation, the
Employer’s code of conduct or similar employee conduct
policy), (C) commission of a non-de minimis act of dishonesty
or breach of trust with regard to the Employer, any of its
subsidiaries or affiliates, or (D) commission of a felony or
other crime of moral turpitude.
(d) Without Cause; for Good
Reason; and Non-Renewal by Employer. The Employer may terminate the
Employee’s employment hereunder during the Employment Period
without Cause, and the Employee may terminate her employment
hereunder during the Employment Period for Good Reason. In
addition, the Employer may terminate the Employee’s
employment pursuant to a Notice of Non-Renewal given by the
Employer. For purposes of this Agreement, the term “ Good
Reason ” shall mean the occurrence of any of the
following events, without the Employee’s prior written
consent: (i) any materially adverse change to the
Employee’s then base salary and bonus opportunity,
responsibilities, duties, authority or status or any material
adverse change in the Employee’s then positions, titles or
reporting responsibilities; provided, that, the Employer ceasing to
be or becoming a publicly traded company shall not be deemed a
material adverse change; (ii) a relocation of the
Employee’s principal business location to an area outside a
50 mile radius of her principal business location as of the
Effective Date; or (iii) a material breach by the Employer of
this Agreement; provided, that, within sixty (60) days
following the occurrence of any of the events set forth therein,
the Employee has delivered written notice to the Employer of the
Employee’s intention to terminate the Employee’s
employment for Good Reason, and the Employer shall not have cured
such circumstances (if susceptible to cure) within thirty
(30) days following receipt of such notice (or, in the event
that such grounds cannot be corrected within such thirty
(30) day period, the Employer has not taken reasonable steps
within such thirty (30) day period to correct such grounds as
promptly as practicable thereafter).
(e) Voluntarily. The Employee
may voluntarily terminate her employment hereunder, provided that
the Employee provides the Employer with written notice of her
intent to terminate her employment at least one hundred eighty
(180) days in advance of the Date of Termination (as defined
in Section 4 below).
4. Termination
Procedure .
(a) Notice of Termination. Any
termination of the Employee’s employment by the Employer or
by the Employee during the Employment Period (other than
termination pursuant to Section 3(a)) shall be communicated by
written “ Notice of Termination ” to the other
party hereto in accordance with Section 8(a).
(b) Date of Termination.
“ Date of Termination ” shall mean (i) if
the Employee’s employment is terminated by her death, the
date of her death, (ii) if the Employee’s employment is
terminated pursuant to Section 3(b), thirty (30) days
after Notice of Termination, (iii) if the Employee voluntarily
terminates her employment, the date specified in the notice given
pursuant to Section 3(e) herein which shall not be less than one
hundred eighty (180) days after the Notice of Termination
(iv) if the Employee’s employment is terminated in
connection with the Employer’s delivery of a Notice of
Non-Renewal, the expiration of the then current Employment Period,
and (v) if the Employee’s employment is terminated for any
other reason, the date on which a Notice of Termination is given or
any later date set forth in such Notice of Termination.
(c) Board/Committee
Resignation. Upon termination of Employee’s employment with
the Employer for any reason, Employee agrees to resign, as of the
Date of Termination and to the extent applicable, all positions and
titles with the Employer, including as a member of the Board (and
any committee thereof) and all positions and titles, including
service as a member of the Board of Directors (and any committee
thereof), of any of the Employer’s affiliates.
5. Termination Payments
.
(a) Without Cause and for Good
Reason. In the event of the termination of the Employee’s
employment during the Employment Period by the Employer without
Cause the Employer shall pay to the Employee (i) within thirty
(30) days following the Date of Termination,
(A) Employee’s accrued but unused vacation,
(B) Employee’s Base Salary through the Date of
Termination (to the extent not theretofore paid), (C) any
unreimbursed business expenses properly incurred by Employee in
accordance with Section 2(i) hereof (provided that claims for such
expenses are submitted to the Employer within fifteen
(15) days following the Date of Termination) (collectively,
the “ Accrued Obligations ”), (ii) a lump
sum payable with thirty (30) days following the Date of
Termination equal to the sum of (A) a payment (the “
Base Salary Termination Payment ”) equal to two times
the Employee’s Base Salary as in effect immediately prior to
the Date of Termination and (B) two times the Bonus
Termination Payment (as defined below) (it being understood that
the payment of the Bonus Termination Payment shall be in lieu of
any annual bonus Employee would otherwise be eligible to receive
pursuant to Section 2(b) herein or otherwise in respect of the
fiscal year in which the Date of Termination occurs), and
(iii) all stock options, stock appreciation rights or other
equity awards held by the Employee and outstanding as of the Date
of Termination that would have vested within one (1) year from
the Date of Termination shall immediately vest on the Date of
Termination. In the event such Date of Termination occurs within
the one-year period immediately following a Change of Control (as
defined below), (i) all stock options, stock appreciation
rights or other equity awards held by the Employee and outstanding
as of the Date of Termination shall immediately vest as of the Date
of Termination, and (ii) in lieu of receiving the Bonus
Termination Payment and any annual bonus Employee would otherwise
be eligible to receive pursuant to Section 2(b) herein or otherwise
in respect of the fiscal year in which the Date of Termination
occurs, Employee shall receive a lump sum payment equal to two
times her Target Bonus as in effect on the date immediately
preceding her Date of Termination. Notwithstanding the foregoing,
all of the foregoing payments and benefits (other than the Accrued
Obligations) are subject to and conditioned upon the Employee,
within forty-five (45) days of the Date of Termination (the
“ Release Period ”), executing a valid general
release and waiver (in a form satisfactory to the Employer),
waiving all claims the Employee may have against the Employer, its
successors, assigns, affiliates, employees, officers and directors.
Any payment that otherwise would be made prior to Executive’s
delivery of such executed release shall be paid to the Executive on
the first business day following the conclusion of the Release
Period.
For purposes of this Agreement, “ Change of Control
” has the meaning ascribed to the phrase “Change in the
Ownership or Effective Control of a Corporation or in the Ownership
of a Substantial Portion of the Assets of a Corporation”
under Treasury Department Final Regulation 1.409A-3(i)(5), or
any successor thereto, and in the event that such regulations are
withdrawn or such phrase (or a substantially similar phrase) ceases
to be defined, as determined (reasonably and in good faith) by the
Board.
For purposes of this Agreement, “ Bonus Termination
Payment ” shall be defined as follows: (i) if the
Date of Termination is on or before February 28, 2010, then
the Bonus Termination Payment shall be equal to the
Employee’s Target Bonus for the fiscal year in which the Date
of Termination occurred, (ii) if the Date of Termination is
after February 28, 2010 but on or before February 28,
2011, then the Bonus Termination Payment shall be equal to the
average of the Employee’s Target Bonus for fiscal year 2011
and the actual bonus received by the Employee pursuant to the MIP
for fiscal year 2010, and (iii) if the Date of Termination is
after February 28, 2011, then the Bonus Termination Payment
shall be equal to the average of the last two bonuses received by
the Employee pursuant to the MIP.
(b) For Non-Renewal by the
Employer. In the event of Employer sends a Notice of Non-Renewal to
the Employee the Employer shall pay to the Employee , within
fifteen (15) days following the Date of Termination (but in no
event later than the fifteenth day of the third month following the
end of the fiscal year in which such Notice of Non-Renewal was sent
to the Employee), (i) the Accrued Obligations, (ii) a
lump-sum payment equal to the Employee’s Base Salary as in
effect immediately prior to the Date of Termination, (iii) the
Bonus Termination Payment and (iv) all stock options, stock
appreciation rights or other equity awards held by the Employee and
outstanding as of the Date of Termination that would have vested
within one (1) year from the Date of Termination shall
immediately vest on the Date of Termination. Notwithstanding the
foregoing, all of the foregoing payments and benefits (other than
the Accrued Obligations) are subject to and conditioned upon the
Employee, within the Release Period, executing a valid general
release and waiver (in a form satisfactory to the Employer),
waiving all claims the Employee may have against the Employer, its
successors, assigns, affiliates, employees, officers and directors.
Any payment that otherwise would be made prior to Executive’s
delivery of such executed release shall be paid to the Executive on
the first business day following the conclusion of the Release
Period.
(c) Disability or Death. If the
Employee’s employment is terminated during the Employment
Period as a result of the Employee’s death or Disability, the
Employer shall pay the Employee or the Employee’s estate, as
the case may be, (i) within thirty (30) days following
the Date of Termination, the Accrued Obligations, and (ii) a
“ Pro-Rata Bonus ” equal to the product of the
Bonus that the Employee would have earned for such fiscal year
pursuant to Section 2(b) herein and a fraction, the numerator of
which is the number of calendar days beginning on the first day of
the Employer’s fiscal year in which the Date of Termination
occurs and ending on and including the Date of Termination and the
denominator of which is 365, such Pro-Rata Bonus to be paid on the
date annual bonuses are otherwise paid to other executive officers
of the Employer (but in no event later than the date that is two
and one-half months following the end of the fiscal year in which
the Date of Termination occurs).
(d) Cause or Voluntarily. If
the Employee’s employment is terminated during the Employment
Period by the Employer for Cause or voluntarily by the Employee
without Good Reason, the Employer shall pay to the Employee, within
thirty (30) days following the Date of Termination, the
Accrued Obligations.
(e) (i) If all or any
portion of the amounts payable or benefits provided to Employee
under this Agreement or otherwise are “excess parachute
payments” and, as a result, are subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the “ Code ”, and such excise tax,
the “ Excise Tax ”), and if the net after-tax
amount (taking into account all applicable taxes payable by the
Employee, including without limitation the Excise Tax) that
Employee would receive with respect to such payments or benefits
exceeds the net after-tax amount Employee would receive if the
amount of such payments and benefits were reduced to the maximum
amount which could otherwise be payable to Employee without the
imposition of the Excise Tax, then, only to the extent necessary to
eliminate the imposition of the Excise Tax, such payments and
benefits shall be reduced, in the order and of the type mutually
agreed to by the Employee and the Employer. The calculations
required under this Section 5(e) shall be prepared by the Employer
and reviewed for accuracy by the Employee and the Employer’s
regular certified public accountants.
(ii) Notwithstanding anything
herein to the contrary, if at the time of Employee’s
termination of employment with the Employer, Employee is a
“specified employee” as defined in Section 409A of
the Code and the deferral of the commencement of any payments or
benefits otherwise payable hereunder as a result of such
termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code,
then the payments to which Employee would otherwise be entitled
during the first six months following her termination of employment
shall be deferred and accumulated (without any reduction in such
payments or benefits ultimately paid or provided to Employee) for a
period of six months from the date of the Employee’s
separation from service (as determined under Section 409A of
the Code) and paid in a lump sum on the first day of the seventh
month following such separation from service (or, if earlier, the
date of the Employee’s death).
(f) Except as provided in this
Section 5, the Employer shall have no additional obligations
to the Employee under this Agreement or otherwise and the Employee
shall not be entitled to any other severance or similar benefits
under any other plan, program, policy or agreement. Notwithstanding
the foregoing, the terms and conditions of any agreements relating
to stock options, stock appreciation rights or other equity awards
held by the Employee on the Date of Termination shall continue in
full force and effect except as specifically set forth herein or
unless inconsistent with or prohibited by the applicable plan
document.
6. Restrictive
Covenants . The Employee acknowledges and recognizes the highly
competitive nature of the businesses of the Employer (which, for
purposes of this Section 6, shall include the Employer, all of
Employer’s subsidiaries and all affiliated companies and
joint ventures connected by ownership to Employer at any time) and
accordingly agrees as follows:
(a) Non-competition with
Employer. During the Restricted Period, Employee shall not become
an employee, director, or independent contractor of, or consultant
to, or perform any services for, any Competitor of Employer. For
purposes of this Agreement, a “ Competitor of Employer
” shall mean (i) any unit, division, line of business,
parent, subsidiary or subsidiary of the parent of any of the
competitors listed in the Employer’s Annual Report on Form
10-K filed immediately preceding termination; or (ii) any
individual or entity that within the one-year period immediately
following the Date of Termination could reasonably be expected to
generate more than $5 million in annualized gross revenue from
any activity that competes, or combination of activities that
competes, with any business of Employer. For purposes of this
Agreement, Restricted Period shall mean the period commencing on
the Effective Date and ending on (i) in the event the
Employee’s employment is terminated without Cause or for Good
Reason, the twenty four month anniversary of the Date of
Termination or (ii) in the event the Employee’s
employment is terminated for any other reason, the twelve month
anniversary of the Date of Termination.
(b) Non-solicitation of
Employer Customers. During the Restricted Period, Employee shall
not, directly or indirectly, on behalf of Employee or of anyone
other than Employer, solicit or attempt to solicit (or assist any
third party in soliciting or attempting to solicit) any of
Employer’s then current and actively sought potential
customers (“ Customers ”) in connection with any
business activity that is operated by a Competitor of Employer.
(c) Non-solicitation of
Employer Employees. During the Restricted Period, , Employee shall
not, without the prior written consent of the Board, directly or
indirectly, on behalf of Employee or any third party, solicit or
hire or recruit or, other than in the good faith performance of
Employee’s duties hereunder, induce or encourage (or assist
any third party in hiring, soliciting, recruiting, inducing or
encouraging) any employees of Employer or any individuals who were
employees within the six-month period immediately prior thereto to
terminate or otherwise alter her employment with Employer.
Notwithstanding the foregoing, the restrictions contained in this
Section 6(c) shall not apply to general published solicitations
that are not specifically directed to employees of the
Employer.
(d) Non-disclosure of
Confidential Information and Trade Secrets. During the Restricted
Period and thereafter, except in the good faith performance of
Employee’s duties hereunder or where required by law,
statute, regulation or rule of any governmental body or agency, or
pursuant to a subpoena or court order, Employee shall not, directly
or indirectly, for Employee’s own account or for the account
of any other person, firm or entity, use or disclose any
Confidential Information or proprietary Trade Secrets of Employer
(each as defined below) to any third person. For purposes of this
Agreement, “ Confidential Information ” shall
mean all information regarding Employer and any of its affiliates,
any Employer activity or the activity of any affiliate, Employer
business or the business of any affiliate or Employer Customer or
the Customers of any affiliate that is not generally known to
persons not employed or retained (as employees or as independent
contractors or agents) by Employer, that is not generally disclosed
by Employer practice or authority to persons not employed by
Employer, that does not rise to the level of a Trade Secret and
that is the subject of reasonable efforts to keep it confidential.
Confidential Information shall, to the extent such information is
not a Trade Secret, include, but not be limited to product code,
product concepts, production techniques, technical information
regarding Employer or affiliate products or services, production
processes and product/service development, operations techniques,
product/service formulas, information concerning Employer or
affiliate techniques for use and integration of its website and
other products/services, current and future development and
expansion or contraction plans of Employer or any affiliate,
sale/acquisition plans and contacts, marketing plans and contacts,
information concerning the legal affairs of Employer or any
affiliate and certain information concerning the strategy, tactics
and financial affairs of Employer or any affiliate.
“Confidential Information” shall not include
information that (i) has become generally known or available
to the public, other than information that has become available as
a result, directly or indirectly, of the Employee’s failure
to comply with any of her obligations to Employer or its
affiliates, or (ii) is already known by the Employee prior to
the Effective Date of this Agreement and not subject to a duty of
confidentiality to Employer or another party, or (iii) is
hereafter rightfully furnished to the Employee by a third party
without a confidentiality obligation and without breach of this
Agreement. This definition shall not limit any definition of
“confidential information” or any equivalent term under
the Uniform Trade Secrets Act or any other state, local or federal
law.
For purposes of this Agreement,
“ Trade Secret ” shall mean all secret,
proprietary or confidential information regarding Employer (which
shall mean and include all of Employer’s subsidiaries and all
affiliated companies and joint ventures connected by ownership to
Employer at any time) or any Employer activity that fits within the
definition of “trade secrets” under the Uniform Trade
Secrets Act or other applicable law. Without limiting the foregoing
or any definition of Trade Secrets, Trade Secrets protected
hereunder shall include all source codes and object codes for
Employer’s software and all website design information to the
extent that such information fits within the Uniform Trade Secrets
Act. Nothing in this agreement is intended, or shall be construed,
to limit the protections of any applicable law protecting trade
secrets or other confidential information. “Trade
Secrets” shall not include information that (i) has
become generally known or available to the public, other than
information that has become available as a result, directly or
indirectly, of the Employee’s failure to comply with any of
Employee’s obligations to Employer or its affiliates, or
(ii) is already known by the Employee prior to the Effective
Date of this Agreement and not subject to a duty of confidentiality
to Employer or another party, or (iii) is hereafter rightfully
furnished to the Employee by a third party without a
confidentiality obligation and without breach of this Agreement.
This definition shall not limit any definition of “trade
secrets” or any equivalent term under the Uniform Trade
Secrets Act or any other state, local or federal law.
(e) Intellectual Property.
Employee agrees that all right, title and interest to all works of
whatever nature generated in the course of her employment with the
Employer or its affiliates resides with Employer and its
affiliates, and that Employee will do all acts and execute all
documents necessary to vest such right, title and interest with the
Employer. Employee agrees that in connection with any termination
of Employee’s employment with the Employer she will return to
Employer, not later than the Date of Termination, all property, in
whatever form (including computer files and other electronic data),
of Employer or its affiliates in her possession, including without
limitation, all copies (in whatever form) of all files or other
information pertaining to Employer, its officers, directors,
shareholders, customers or affiliates, and any business or business
opportunity of Employer and its affiliates.
(f) No Disparagement. During
the Employment Period and the Restricted Period, the Employee shall
not make any statements, encourage others to make statements or
release information to disparage or defame Employer, any of its
affiliates or any of their respective directors or officers.
Notwithstanding the foregoing, nothing in this Section 6(f) shall
prohibit the Employee from making truthful statements when required
by order of a court or other body having jurisdiction or as
required by law.
(g) Employer Property. In
connection with any termination of Employee’s employment with
the Employer, the Employee hereby agrees to return to Employer and
to cease using any property of Employer, including without
limitation, security key cards, corporate credit cards, telephone
calling cards or home office equipment provided by Employer and to
return such property no later than the Date of Termination.
(h) Enforceability of
Covenants. Employee acknowledges that Employer has a present and
future expectation of business from and with the Customers.
Employee acknowledges the reasonableness of the term, geographical
territory, and scope of the covenants set forth in this
Section 6, and Employee agrees that Employee will not, in any
action, suit or other proceeding, deny the reasonableness of, or
assert the unreasonableness of, the premises, consideration or
scope of the covenants set forth herein and Employee hereby waives
any such defense. Employee further acknowledges that complying with
the provisions contained in this Agreement will not preclude
Employee from engaging in a lawful profession, trade or business,
or from becoming gainfully employed. Employee agrees that
Employee’s covenants under this Section 6 are separate
and distinct obligations under this Agreement, and the failure or
alleged failure of Employer or the Board to perform obligations
under any other provisions of this Agreement shall not constitute a
defense to the enforceability of Employee’s covenants and
obligations under this Section 6. Employee agrees that any
breach of any covenant under this Section 6 will result in
irreparable damage and injury to Employer and that Employer will be
entitled to injunctive relief in any court of competent
jurisdiction without the necessity of posting any bond.
7. Representations
.
(a) The parties hereto hereby
represent that they each have the authority to enter into this
Agreement, and the Employee hereby represents to the Employer that
the execution of, and performance of duties under, this Agreement
shall not constitute a breach of or otherwise violate any other
agreement to which the Employee is a party.
(b) The Employee hereby
represents to the Employer that she will not utilize or disclose
any confidential information obtained by the Employee in connection
with her former employment with respect to her duties and
responsibilities hereunder.
(c) The Employee is not a party
to any litigation.
8. Miscellaneous .
(a) Any notice or other
communication required or permitted under this Agreement shall be
effective only if it is in writing and delivered personally or sent
by registered or certified mail, postage prepaid, addressed as
follows (or if it is sent through any other method agreed upon by
the parties).
If to the Employer , to:
SMSC
80 Arkay Drive
Hauppauge, NY 11788
Attention: Walter
Siegel, Esq.
Vice President and General
Counsel
Copy: Chairman of the Compensation
Committee of the Employer
If to the Employee, to the address on record with Employer; or,
for either party, to such other address as any party hereto may
designate by notice to the others, and shall be deemed to have been
given upon receipt.
(b) This Agreement shall
constitute the entire agreement among the parties hereto with
respect to the Employee’s employment hereunder, and
supersedes and is in full substitution for any and all prior
understandings or agreements with respect to the Employee’s
employment.
(c) This Agreement may be
amended only by an instrument in writing signed by the parties
hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party or parties against whom
or which enforcement of such waiver is sought. The failure of any
party hereto at any time to require the performance by any other
party hereto of any provision hereof shall in no way affect the
full right to require such performance at any time thereafter, nor
shall the waiver by any party hereto of a breach of any provision
hereof be taken or held to be a waiver of any succeeding breach of
such provision or a waiver of the provision itself or a waiver of
any other provision of this Agreement.
(d) The parties hereto
acknowledge and agree that each party has reviewed and negotiated
the terms and provisions of this Agreement and has had the
opportunity to contribute to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against
the drafting party shall not be employed in the interpretation of
this Agreement. Rather, the terms of this Agreement shall be
construed fairly as to both parties hereto and not in favor or
against either party.
(e) Employee shall provide
Employee’s reasonable cooperation in connection with any
action or proceeding (or any appeal from any action or proceeding)
which relates to events occurring during Employee’s
employment hereunder. In such an event, Employer shall reimburse
Employee for all reasonable expenses incurred at Employer’s
request; provided that in no event shall such reimbursement be made
later than the date that is two and one-half months following the
end of the taxable year following the taxable year in which such
expenses were incurred. This provision shall survive any
termination of this Agreement, without implication of the survival
of any other provision of this Agreement.
(f) (i) This Agreement is
binding on and is for the benefit of the parties hereto and their
respective successors, permitted assigns, heirs, executors,
administrators and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be assigned by
the Employee.
(ii) The Employer shall 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 Employer to assume this Agreement in
the same manner and to the same extent that the Employer would have
been required to perform it if no such succession had taken place.
As used in the Agreement, “the Employer” shall mean
both the Employer as defined above and any such successor that
assumes this Agreement, by
