SEPARATION AND RELEASE AGREEMENT
This is a complete and final
Agreement between Tony Pearl (for yourself, your spouse and anyone
acting for you) (“you”), and Freescale Semiconductor,
Inc. (for itself, its subsidiaries and affiliates and anyone acting
for Freescale) (“Freescale”) that resolves all matters
between you and Freescale. Except where otherwise specified, this
Agreement supersedes and nullifies all prior and concurrent
communications, acknowledgements and agreements between you and
Freescale, including any prior versions of this Agreement. This
Agreement has been individually negotiated and is not part of a
group incentive or other termination program. In consideration for
the payments and benefits provided under this Agreement, you and
Freescale agree to the following terms of your separation from
Freescale:
1. SEPARATION . You
are relieved of all duties and responsibilities effective
immediately, but you will remain on payroll at your current salary
until February 12, 2005, on which date your employment will
end (the “Separation Date”). You tender and Freescale
accepts your resignation as a director and/or officer of Freescale
and its subsidiaries and affiliates effective as of the Separation
Date. Your separation shall be documented as a termination without
cause. At Freescale’s request, you shall execute any and all
documents reasonably necessary to confirm your resignation as a
director and/or officer of Freescale and its subsidiaries and/or
affiliates.
2. SEPARATION ALLOWANCE
AND INCENTIVE PLANS . Freescale will pay you at your regular
base salary rate at regular payroll intervals, less applicable
state and federal payroll deductions until the Separation Date.
Freescale also will pay you a lump sum Separation Allowance in the
amount of Three Hundred Twenty-Five Thousand Dollars ($325,000.00),
less applicable state and federal payroll tax deductions and any
other legally required withholding. You acknowledge and agree that
this Separation Allowance constitutes an amount to which you are
not otherwise entitled. Freescale will make this payment to you on
or before February 28, 2005, provided that you have signed,
returned and not revoked this Agreement.
In addition, you are eligible to
receive an incentive payment from Freescale under the
Freescale/Motorola Incentive Plan for the 2004 plan year in
accordance with the terms of that plan. Freescale will apply an
individual performance factor of 1.00 in computing the amount of
payment you receive under the plan. You understand that you will
not receive any payment under the Freescale Incentive Plan for the
2005 plan year.
The Separation Allowance and
other payments described in this section include and exceed any
pay, bonuses, or any other amounts that are unpaid as of your
separation, other than pay for accrued and unused Paid Time Off.
You will be paid for any Paid Time Off you have accrued but not
used as of your Separation Date. You acknowledge that you will only
be paid the amounts specifically identified in this Agreement and
will not receive any additional payments from Freescale.
3. BENEFIT AND EQUITY
PLANS .
(a) The effect of your
separation and this Agreement upon your participation in, or
coverage under, any of Freescale’s benefit or compensation
plans and any applicable stock option plans, award documents or
restricted stock or restricted stock unit agreements shall be
governed by the terms of those plans and agreements except as
specifically modified by this Agreement. Unless specifically set
forth in this Agreement, Freescale is making no guarantee, warranty
or representation regarding any position that may be taken by any
administrator or plan regarding the effect of this Agreement upon
your rights, benefits or coverage under those plans
.
(b) Upon your separation,
your outstanding stock option grants will be treated as follows:
(i) Pursuant to the letter offering you employment with Freescale,
for the grant of options to purchase 60,000 shares of Motorola
stock which was converted to Freescale stock options as of
Freescale’s separation from Motorola, options in this grant
not vested as of your Separation Date will be accelerated and vest
effective February 12, 2005. You will have until
February 11, 2006 to exercise any of the options from this
grant that have already vested as of your Separation Date or are
vested on February 12, 2005 pursuant to this provision
(iii) Any other stock options, restricted stock, or restricted
stock units granted to you by Freescale or its predecessor,
Motorola, Inc. (including but not limited to the Freescale Initial
Grant) and not vested as of your Separation Date will be forfeited
in accordance with the terms of the applicable plan and award
documents.
(c) Benefits coverage under
the Freescale Employee Medical Benefits Plan (the “Medical
Plan”), as amended from time to time, will be continued at
the regular employee contribution rate through February 28,
2005, provided that you comply with all terms and conditions of the
Medical Plan, including paying the necessary contributions and
provided further, if you are reemployed with another employer and
become covered under that employer’s medical plan, the
medical benefits described herein (if they are not terminated as
provided in COBRA, defined below) shall be secondary to those
provided under such other plan. After your Separation Date, you may
elect to continue medical benefits under the Medical Plan at your
own expense, in accordance with COBRA. The COBRA period commences
on the first of the month following the Separation Date. As
additional consideration for this Agreement, Freescale will pay you
the amount of Ten Thousand Dollars ($10,000.00), less applicable
state and federal tax deductions. This payment is provided to help
you with payment of COBRA premiums for continuation of your medical
benefits.
4. TRANSFER OF
EQUIPMENT/OUTPLACEMENT/RELOCATION . Effective on or within
thirty business days after your Separation Date, Freescale will
transfer to you ownership of your company car. On that date you
will assume responsibility for all insurance, maintenance, service
and other fees related to this vehicle. You understand that the
gift of this car will result in imputed income to you based upon
the fair market value of the car as of your Separation Date.
Freescale will gross up the imputed income amount to include
federal taxes and employee FICA/Medicare taxes. Freescale also will
provide senior executive outplacement and career continuation
services by a firm to be selected by Freescale for a period of up
to one (1) year, and will also reimburse you for up to Ten
Thousand Dollars ($10,000.00) for financial planning services and
tax preparation services you receive in 2005 (tax preparation
services for your 2004 tax return). To receive this reimbursement
you must incur the expense and provide receipts for these services
to David Doolittle no later than December 31, 2004. Finally,
Freescale will relocate you and your personal items from Austin,
Texas to your existing home in Illinois using our standard
relocation providers. The amount of this relocation assistance will
be the lesser of the actual cost of the relocation or Fifteen
Thousand Dollars ($15,000.00).
5. NO DISPARAGEMENT
. You agree that you will not, directly or indirectly, individually
or in concert with others, engage in any conduct or make any
statement calculated or likely to have the effect of undermining,
disparaging or otherwise reflecting poorly upon Freescale or its
good will, products or business opportunities, or in any manner
detrimental to Freescale, though you may assist and cooperate with
the Equal Employment Opportunity Commission or other government
agency and otherwise give truthful and nonmalicious testimony if
properly subpoenaed to testify under oath.
6.
COOPERATION/INDEMNIFICATION . From your Separation Date, and
for as long thereafter as shall be reasonably necessary, you agree
to cooperate fully with Freescale in any investigation,
negotiation, litigation or other action arising out of transactions
in which you were involved or of which you had knowledge during
your employment by Freescale. If you incur any business expenses in
the course of performing your obligations under this paragraph, you
will be reimbursed for the full amount of all reasonable expenses
upon your submission of adequate receipts confirming that such
expenses actually were incurred. Freescale will indemnify you for
judgments, fines, penalties, settlement amounts and expenses
(including reasonable attorneys fees and expenses) reasonably
incurred in defending any actual or threatened action, lawsuit,
investigation or other similar proceeding arising out of your
employment with Fre
