executiveemployment4_8.htm


     

    July 3,
2008

     

    Henry L.
Perret 

    4509 Freidrich Lane

    Building 2 Suite 200

    Austin,
Texas 78744-1857

    


     

    Dear
Hank:

     

    I am
pleased to offer you employment with Zarlink Semiconductor (U.S.) Inc.
(“Zarlink” or “Company”) subject to final Board of Director approval, on the
following terms and conditions. This offer and its acceptance by you will
constitute an employment agreement between Zarlink and you.

     

    All
amounts are in United States dollars.

     

    Zarlink
is an “at will” employer and your employment with Zarlink is an at-will
relationship, subject to
agreed notice requirements and any payments or other consideration due to you in
the event of your termination without Cause. This means that either Zarlink or you may
terminate the employment relationship at any time for any reason, with or
without cause or advance notice.  You acknowledge and agree that this
Agreement does not create an express or implied contract for a term of
employment and that no specific duration of employment is
guaranteed.

     

    
      	
              1.  

            	
              Work
      Responsibilities

            


    

     

    You will
be employed in the position of Sr. Vice President and General Manager, Wired
Communications Product Group, reporting to Kirk Mandy, Company CEO and will be
based in the Company’s Austin, Texas offices. Your start date will be July 21,
2008.

     

    In this
position, you will devote your best efforts, and your full working time, skill and attention, to carrying out your duties and to promoting
the interests of the Company. You will be expected
to perform all services and duties customarily associated with your
position, together with such additional duties and responsibilities as assigned
from time to time. 

     

    You agree
not to be employed or engaged in any other capacity (including as a director)
promoting, undertaking or carrying on any other business apart from that of
Zarlink, without the prior written authorization of the Board. This does not
preclude you from any passive or personal investments that you may wish to hold,
unless with a competitor of the company, in which case you will advise the Board
prior to making such investments, unless the investments are made through an
independently managed fund or your ownership represents less than 0.1 % of a
corporation’s publicly traded shares.

     

    
      	
               
      

            	
              2.  Salary and
      Incentives

            


    

     

    Your
annual base salary will be $350,000

     

    In
addition, you will be eligible to participate in the Zarlink Bonus Plan at 50%
of base salary.  Details of the plan will be communicated to
you.

     

    
      	
              3.  

            	
              Stock
      Options

            


    

     

    We are
pleased to offer you 250,000 Zarlink Semiconductor stock options, pursuant to
Zarlink’s 1991 Employee Stock Option Plan subject to and conditional on Board of
Director approval at the July 2008 Board meeting.  Grants will be
made, dated and priced on the date of Board approval.

    


    
      	
              4.  

            	
              Health, Dental and
      Related Benefits

            


    

     

    ZARLINK
maintains a comprehensive group employee benefits plan, made available to our
employees through U.S. Group Benefits Plan. Enclosed you will find a benefits
package which describes the available benefits. Your eligibility for coverage
and for benefits will be determined in accordance with the specific terms and
conditions of the Plan.

    


    
      	
              5.  

            	
              Company
      car

            


    

     

    You are
eligible to participate in the Zarlink U.S. Senior Management Fleet Vehicle
Program in accordance with its terms and conditions.

     

    
      	
              6.  

            	
              Pension

            


    

     

    You will
be entitled to participate in the Zarlink U.S. employee 401K Plan. Zarlink will
provide an annual company match payment in accordance with the terms of the
Plan. We reserve the right to terminate or amend this Plan at any
time.

     

    
      	
              7.  

            	
              Vacation

            


    

     

    Zarlink
will provide you four (4) weeks paid vacation leave per fiscal year, accrued in
equal bi-weekly installments.  In accordance with Zarlink’s U.S.
Vacation Policy, vacation accrual will cease at anytime during the year that
your accrual reaches 160 hours.  The accrual will re-start once that
total comes back down below 160 hours.  You will be offered a
reasonable time to reduce your current vacation accrual to the 160 hour cap, if
applicable.  In addition Zarlink will provide paid U.S. statutory
holidays in accordance with company policy from time to time and any other leave
you are legally entitled to receive, all in accordance with U.S. employment
standards legislation and Zarlink’s policies.  

     

    
      	
              8.  

            	
              Expenses

            


    

     

    The Company will pay or reimburse you for all reasonable
and necessary out-of-pocket expenses actually incurred by you in the performance
of your services under this Agreement, provided you provide proper records
and/or receipts for such expenses and otherwise properly account for such
expenses in accordance with the Company’s policy as presently in effect and
amended from time to time.

     

    
      	
              9.  

            	
              D&O Insurance
      Coverage

            


    

     

    You will be entitled to director and officer insurance
coverage in line with the Company’s D&O insurance policy terms and
conditions for your acts and omissions while employed as an officer of the
Company on a basis no less favorable to you than the coverage provided to all
other similarly situated officers.

     

    
      	
              10.  

            	
              Confidentiality of
      Information and Ownership of Proprietary
  Property

            


    

     

    The Company agrees to and will impart to you and provide
you with access to its Confidential Information. “Confidential
Information” means all information and compilations of information of
any kind, type or nature (tangible and intangible, written or oral, and
including information contained, stored, or transmitted through any electronic
medium), whether owned by the Company or licensed from third parties, which, at
any time during your employment, is devised, developed, designed or discovered
or otherwise acquired or learned by you to the extent it relates to the Company,
including without limitation, products and services, including without
limitation, plans, procedures, formulae, processes, pricing, and costs;
customers, including without limitation, lists, contact information, pricing,
preferences, and other non-public information concerning customers; sources of
supply and vendors; good-will; marketing plans, strategies, and budget;
management and employees, including without limitation, compensation, personal
data, contact information, and other non-public information concerning
employees; technology, technical data, research, manuals, drawings, designs, and
documentation; financial condition, including without limitation, product or
service fees, sales information, volume, pricing, costs, properties, assets,
analysis, and reports and the information contained therein; accounting and
business methods and plans; business development, including without limitation,
plans, prospects, strategies, fees, costs, pricing, and new ideas and
developments; inventions made, developed or conceived by the Company and/or its
subsidiaries and affiliates; trade secrets; and computer software,
specifications, source code, and executable
code.    

     

    You acknowledge and agree that the Confidential
Information is valuable and is a unique asset that provides the Company an
advantage over competitors; is developed or acquired by the Company at
considerable time and expense, and is proprietary to the Company and is intended
to be used solely for the benefit of the Company.  You acknowledge and
agree that, but for your agreement to the terms and conditions of this
Agreement, the Company would not impart or provide access to such Confidential
Information.

     

    As a
condition of your acceptance of this offer, you are required to provide Zarlink
with an executed original of the enclosed Intellectual Property Rights &
Non-Solicitation Agreement.  Please note the ongoing nature of the
obligations set out in the Agreement. The terms of this Agreement form part of
the terms and conditions of this employment agreement. In addition, you will be
required to sign Zarlink’s “Code of Ethics and Business Conduct” as a condition
of employment.  This will be provided to you on your start
date.

     

    
      	
              11.  

            	
              Notification of
      Materials or Documents from Other Employers.

            


    

     

    You
warrant that you will not bring to Zarlink or use in the performance of your
responsibilities at Zarlink any information, materials or documents of a former
employer that are not generally available to the public, unless you obtained
express written authorization from the former employer for their possession and
use, and disclosed such circumstances to Zarlink.

     

    
      	
              12.  

            	
              Notification of Other
      Post-Employment Obligations

            


    

     

    As part
of your employment with Zarlink, you are not to breach any obligation of
confidentiality that you have to former employers (other than Legerity), and you
agree to honor all such obligations to former employers during your employment
with Zarlink.  You warrant that you are not subject to an employment
agreement or restrictive covenant preventing full performance of your duties
under this Agreement.

     

    
      	
              13.  

            	
              Director, CEO and
      Executive Stock Ownership

            


    

     

    As an
executive of Zarlink reporting directly to the CEO, you will be required to
establish and hold specified stock ownership levels in the Company within
defined periods of time in accordance with the terms and conditions as set out
in the Directors, CEO and Executive Stock Ownership Policy (policy available at
www.Zarlink.com).

     

    
      	
              14.  

            	
              Cessation of
      Employment

            


    

     

    
      	
              a.  

            	
              Definitions

            


    

     

                For
the purposes of this employment agreement, the following definitions
apply:

     

    “Cause” means (i) your commission of any act of dishonesty,
fraud, misrepresentation, misappropriation, embezzlement or the like, which was
intended to result in substantial gain or personal enrichment for you at the
expense of the Company; (ii) your unauthorized use or intentional disclosure of
any confidential information or trade secrets of the Company (not including
inadvertent or non-injurious disclosures), including your breach of that certain
Intellectual Property Rights & Non-Solicitation Agreement entered into in
connection herewith; (iii) any willful or intentional violation by you of a law
or regulation applicable to the Company’s business, which violation, in the
reasonable discretion of the Board, is or is reasonably likely to be injurious
to the Company; (iv) your commission of (a) a felony or (b) any other crime
which involves moral turpitude or which would seriously damage the reputation of
the Company; (v) gross negligence or willful misconduct in the performance of
your duties after written notice from the Company identifying the misconduct,
and if reasonably capable of being cured, a reasonable cure period of not less
than thirty (30) days; or (vi) your willful or intentional violation of a
material Company policy or procedure that is injurious to the
Company.

     

    “Incapacity” means any
permanent physical or mental incapacity,
disability or condition which prevents you
from performing the essential duties of your position, even with reasonable accommodation, for a period of not
less than 90 consecutive days and with no reasonable prospect of
recovery, as determined in good faith by
Zarlink on the basis of medical evidence satisfactory to the Board.

     

    “Termination Date”
means:

     

    
      	
              (i)  

            	
              if Zarlink terminates your employment, the date
      designated by the  Company as the last day of your employment
      (without reference to any applicable notice period to which you may
      be entitled, whether under statute, common
      law, contract, or
otherwise);

            


    

     

    
      	
              (ii)  

            	
              if
      you resign your employment with Zarlink, the date which is the end
      of  the three-month notice period or such shorter notice period as
      the parties agree;

            


    

     

    
      	
              (iii)  

            	
              if
      you die, the date of death;

            


    

     

    
      	
              (iv)  

            	
               in the event of Incapacity, the date
      designated by Zarlink as the last day of your  employment after determination that such Incapacity
      exists.

            


    

     

    
      	
              b.  

            	
                 Notice of
      Resignation

            


    

     

    You may
resign at any time, for any reason, upon giving a minimum of three month advance
written notice or such shorter notice period as
the parties agree. Zarlink reserves
the right to accelerate the Termination Date.

     

          c.      Entitlements upon
Resignation, Termination for Cause

     

    If you
resign or your employment is terminated for Cause, then you will be entitled to
receive any compensation, benefits and perquisites which have accrued up to the
Termination Date. Your rights respecting any options, which have been granted to
you, will be determined in accordance with the terms of the Zarlink 1991 Stock
Option Plan, as it may be amended from time to time.

     

          d.      Entitlements upon Death,
Incapacity

     

    If you
die, or if determined that you suffer an Incapacity, then you (or your estate,
in the event of your death) will be entitled to receive any compensation,
benefits and perquisites which have accrued up to the Termination Date. Your
rights respecting any options, which have been granted to you, will be
determined in accordance with the terms of the Zarlink 1991 Stock Option Plan,
as it may be amended from time to time.

     

          e.      Entitlements upon
Termination without Cause

     

    If your
employment is terminated by the
Company without Cause you will be provided with the following termination
package (which is inclusive of any statutory entitlements you may have under
applicable employment standards legislation, and will be provided net of
required deductions):

     

    
      	
              (i)  

            	
              You
      will be paid for all time worked and your accrued vacation balance through
      the Termination Date. This payment will be made on the Termination
      Date.

            


    

     

    
      	
              (ii)  

            	
              You
      will be paid in a lump sum an amount equal to twelve (12) months of your
      then current annual base salary net of required tax and other
      withholdings. This payment will be made within 30 days following the
      Termination Date.

            


    

     

    
      	
              (iii)  

            	
              You
      will be paid in a lump sum an amount in lieu of bonus equal to one times
      your target
      annual bonus.
      This payment will be made within 30 days following the Termination
      Date.

            


    

     

    
      	
              (iv)  

            	
              You
      will be paid a gross amount in cash, less
      statutory deductions, sufficient to pay for twelve (12) months of
      insurance premiums, such as COBRA premiums,
      in order to obtain, if you are eligible, life, health and dental
      insurance coverage at the same or similar
      premium basis and level that was available to you at the time of your
      termination. You will need to contact our insurance carrier
      (currently Unum) for conversion or portability of your life insurance
      policy.

            


    

     

    
      	
              (v)  

            	
              You
      will have ninety (90) days following the Termination Date (or until the
      natural expiry date of your stock options, whichever is earlier), to
      exercise any stock options which have been granted to you under the
      Zarlink 1991 Stock Option Plan, as it may be amended from time to time,
      and which have vested as of the last day of that three (30) month
      period.  In all other respects, your rights respecting any
      options, which have been granted to you, will be determined in accordance
      with the terms of the Zarlink 1991 Stock Option Plan, as it may be amended
      from time to time.

            


    

     

    
      	
              (vi)  

            	
              All
      other perquisites, if any, will cease 30 days following the Termination
      Date.

            


    

     

    
      	
              f.  

            	
                 Resignation of
      Office

            


    

     

    If your
employment ends for any reason, you agree to resign in writing effective
upon   the Termination Date from any office or directorship held
with Zarlink or with any subsidiary or affiliated company.

     

    
      	
              15.  

            	
               Non-Competition and
      Non-Solicitation Obligations

            


    

     

    You acknowledge and agree that your training, work and
experience with the Company will enhance your value to competitors, and that the
nature of the Confidential Information will make it difficult, if not impossible
for you to work in any business that competes directly with the principal
business of the Company without disclosing or utilizing the Confidential
Information to which you have access during the course of your
employment.  You further acknowledge and agree that the Company’s
agreement to impart to and to provide you with access to its Confidential
Information is ancillary to and contingent upon your agreement that you will
not, for a period of twelve (12) months immediately following the Termination
Date:

     

    
      	
              a.  

            	
               participate (as an employee or consultant,
      executive, director or significant investor (greater than 20%)) in
      any business operating anywhere in the world
      that competes directly with the principal businesses of Zarlink (or its
      successors);

            


    

     

    
      	
              b.  

            	
              directly
      or indirectly solicit any of Zarlink’s customers for business in competition with Zarlink (or its successors);
      and,

            


    

     

    
      	
              c.  

            	
              solicit, entice, approach or induce any of
      Zarlink’s employees or consultants to leave their employment or to
      end their consultancy arrangements with
      Zarlink (or its successors) or to join another business or
      organization.

            


    

     

                            

    
      	
              16.  

            	
              Notices

            


    

     

    All notices, requests, and other communications
hereunder must be in writing and will be deemed to have been duly given only if
(i) delivered personally to a person authorized to accept, (ii) delivered by
facsimile transmission with transmission confirmation, (iii) mailed (by U.S.
certified or registered mail, return receipt requested), or (iv) delivered by
overnight courier at the following addresses and facsimile
numbers:

     

                            To the Company:

     

    Zarlink Semiconductor
Inc.                                                                

     

    400 March
Road                                                                

    Ottawa, Ontario, Canada K2K
3H4                                                                           

    Facsimile: 613
270-7403                                                                

    Attn: Don McIntyre 

     

    To the Employee:

     

    Henry L. (Hank)
Perret        

    
      4509
Freidrich Lane

      Building
2 Suite 200

      Austin,
Texas
78744-1857
                                                        

    

    All such notices, requests, and other written
communications will (i) if delivered personally or by overnight carrier to the
address as provided herein, be deemed given upon delivery and (ii) if delivered
by facsimile transmission or by U.S. mail in the manner and to the address as
provided herein, be deemed given three (3) days after the date of the facsimile
transmission verification or after deposit in the U.S. mail.  Any
party from time to time may change its address, facsimile number, or other
information for the purpose of notices to that party by giving written notice
specifying such change to the other parties hereto.

     

    
      	
              17.  

            	
              Choice of Law and
      Jurisdiction

            


    

     

    This
employment agreement will be governed by and construed in accordance with the
laws of the State of Texas, U.S.A., without regard to the principles of
conflicts of law, and will in all respects be treated as a Texas
contract.  In the event of a dispute, you agree that any legal
proceedings must be brought in the state or federal courts in the County of Travis in the State of Texas, and you hereby
submit to personal jurisdiction in such courts in connection with any such
dispute.

     

    
      	
              18.  

            	
              Whole
      Agreement

            


    

     

    By
accepting this offer of employment, you are agreeing that the terms and
conditions set out in this offer (including the terms and conditions of any
documents enclosed) represent the entire agreement relating to your employment
with the Company; that any and all previous
agreements or representations, written or oral, are hereby terminated and
cancelled; and that you hereby release Zarlink from any and all claims
whatsoever under or in respect of any such previous agreements or
representations, excepting the retention bonus equal to $350,000 (less
applicable statutory deductions and withholdings) as agreed in your July 31,
2007 employment contract which will be paid in August 2008. If any provision of
this Agreement is held to be unenforceable in whole or in part, the remaining
provisions shall remain in full force and effect, and such unenforceable
provision shall be deemed to be automatically amended and replaced by a legal,
valid and enforceable provision which accomplishes as far as possible the
purposes and intent of such original provision.

     

    We trust
that you will find this offer of employment responsive to your needs. To signify
your acceptance, please sign below, and return one complete signed original of
this offer and of the enclosed Agreement to the attention of Eileen Speirs, no
later than the close of business, July 4, 2008.

     

    All of us
at Zarlink look forward to working with you.

     

    Zarlink
Semiconductor Inc.

     

    /s/ Kirk
Mandy

     

    
      	
               
      

            	
              Per: 

            


    

    
      	
               
      

            	
              Kirk
      Mandy

            


    

    
      	
               
      

            	
              President
      and CEO

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Acknowledgement and
Acceptance

     

    I, Henry
L. Perret, have read and reviewed, in their entirety, this offer of employment
dated July 3, 2008 and the documents enclosed.   I have had an
opportunity to ensure that I clearly understand the terms and conditions of my
employment with Zarlink, and I have had the opportunity to confer with an
independent legal advisor if I so wished, in advance of accepting this offer of
employment.  I hereby represent and confirm to Zarlink that I am not
under any contractual or other legal obligation, which prevents me from
accepting this offer of employment or from abiding by the terms and conditions
of my employment with Zarlink.  I accept this conditional offer of
employment, and agree to the terms and conditions as set out.

     

    DATED
AT  Austin, Texas____ this   3rd___day
of July, 2008.

     

    /s/ H.L. Perret

     

    Henry L.
Perret