executiveemployment4_14.htm


     

    August 1,
2007

     

     

    Gary
Tanner

    4509
Freidrich Lane

    Building
2 Suite 200

    Austin,
Texas 78744-1857

    
 

     

     

    Dear
Gary:

     

     

    I am
pleased to offer you employment with Zarlink Semiconductor LE Inc. ("Zarlink" or
"Company") on the following terms and conditions. This offer and its acceptance
are conditional upon Zarlink Semiconductor Inc. completing the acquisition
of Legerity Holdings, Inc.

     

    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 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, WW Operations, reporting to
Kirk Mandy, Company CEO and will be based in the Company's Austin, Texas
offices. Your start date will be immediately following the close of the Legerity
acquisition.

     

    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.

     

    2. Salary and
Incentives

     

    Your
annual base salary will be $255,672

     

    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.

     

    In order
to provide you with an incentive to remain in the employ of the Company, you
will be entitled to receive a retention bonus equal to $256,000. The retention
bonus, less applicable statutory deductions and withholdings, will be payable as
follows: 50% of the bonus after the completion of one (1) year of employment and
the remaining 50% after the completion of two (2) years of employment; provided,
however, if your employment is terminated by the Company without Cause, you will
be entitled to receive 100% of the retention bonus or any unpaid portion thereof
upon termination. The retention bonus payments will be made within 30 days of
each respective anniversary date of employment, or in the case of termination
without Cause, of the Termination Date.

     

    3. Signing
Bonus

     

    The
Company agrees to pay you a signing bonus in an amount equal to $59,500 within
30 days following the closing of the Legerity acquisition. This amount will be
repayable by you in full to the Company if you voluntarily leave your employment
with the Company before 6 months after the closing of the Legerity
acquisition.

     

    4. Stock
Options

     

    We are
pleased to offer you 250,000 Zarlink stock options. These options will be
granted by the Company's Board of Directors within 20 days following your start
date with the Company. The formula for pricing options will be the US dollar
exchange equivalent to the Canadian dollar price determined by the greater of
the average of the closing sales price on the TSX (Toronto Stock Exchange) for
the five (5) day trading period immediately preceding the date of the grant or
the closing price on the date of the grant.

     

    5. Health, Dental and Related
Benefits

     

    Zarlink
will initially maintain Legerity's current comprehensive group employee benefits
plan. Your eligibility for coverage and for benefits will be determined in
accordance with the specific terms and conditions of the plan. We reserve the
right to terminate or amend any of these plans from time to time.

     

    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 biweekly 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 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 determined to 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 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 mount 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:

     

    Gary
Tanner

    
      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. 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 Don McIntyre, no
later than 10 days before the closing of the Legerity acquisition.

     

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

     

     

    Zarlink
Semiconductor Inc.

     

     

     

    /s/
Don McIntyre

     

    Per:
Don
McIntyre

    Sr. VP
General Counsel and Secretary

     

     

    


     

     

    Acknowledgement
and Acceptance

     

     

    I, Gary
Tanner, have read and reviewed, in their entirety, this offer of employment
dated August 1, 2007 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, assuming the closing of the
acquisition of Legerity by Zarlink, I am not under any contractual or other
legal obligation (other than my obligations to Legerity), which prevents me from
accepting this conditional offer of employment or from abiding by the terms and
conditions of my employment with Zarlink. I accept this conditional offer of
employment, to be effective as of and conditioned on the closing of the
acquisition of Legerity by Zarlink, and agree to the terms and conditions
as set out.

     

     

    DATED
AT  Austin, Texas this 2nd day of
August, 2007

     

     

     

    /s/ Gary
Tanner

     

     

    Gary
Tanner

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    ZARLINK
SEMICONDUCTOR INTELLECTUAL PROPERTY RIGHTS & NON-SOLICITATION
AGREEMENT

     

     

    In
consideration of my employment with Zarlink Semiconductor (U.S.) Inc., Zarlink
Semiconductor V. N. Inc. or Zarlink Semiconductor LE Inc (hereinafter referred
to as "Zarlink Semi"), the salary or wages paid to me in connection with such
employment and other good and valuable consideration, the sufficiency of which
is hereby acknowledged, I agree as follows:

     

     

    
      	
              1.  

            	
              Ownership of Inventions.
      Every invention, discovery, art, device, design, apparatus, machine,
      practice, process, method, manufacture or composition of matter and any
      improvement thereof (each of which is hereinafter called an "invention")
      whether patentable or not, made, developed, perfected, devised, conceived,
      or first reduced to practice by me, either solely or in collaboration with
      others, during the period of my employment with Zarlink Semi, whether or
      not during regular working hours, relating in any way to the existing or
      anticipated business, products, developments, services, manufacture or
      activities of Zarlink Semi shall be the sole and exclusive property of
      Zarlink Semi. I will hold each and every invention in a fiduciary capacity
      for the benefit of Zarlink Semi and shall promptly disclose in writing
      full information concerning each and every such invention to the Zarlink
      Semi Legal Department or to any person specifically designated by Zarlink
      Semi.

            


    

     

     

    
      	
              2.  

            	
              Agreement to Assist. I
      will, during and after the period of my employment with Zarlink Semi,
      without charge to Zarlink Semi, but at its request and expense, assist
      Zarlink Semi and its nominees in every proper way to obtain and vest in it
      or them title to patents on such inventions in all countries by executing
      all necessary or desirable documents, including applications for patents
      and assignments thereof, I will also cooperate with Zarlink Semi and its
      nominees in the prosecution or defense of any patent claims, lawsuits or
      other proceedings arising from such inventions, without charge to Zarlink
      Semi, but at its expense and
request.

            


    

     

     

    
      	
              3.  

            	
              Records. I will keep and
      maintain adequate and current records of all such inventions and agree
      that these records shall be and remain the property of and available to
      Zarlink Semi at all times. I agree that on leaving the employ of Zarlink
      Semi, I will promptly hand over to Zarlink Semi's designated
      representative all such records in the form of notes, sketches, drawings,
      copy drawings, tables, notices, correspondence, engineering books provided
      by Zarlink Semi and other written, printed or photographed matter in my
      possession, power or control relating to such inventions and will not
      retain any such document or
writing.

            


    

     

     

    
      	
              4.  

            	
              Confidentiality/Non-Solicitation/Non-Recruitment.
      I recognize that during the period of my employment with Zarlink Semi, I
      will receive, develop or otherwise acquire information proprietary and/or
      confidential to Zarlink Semi, its other affiliates and associated
      companies or information in respect of which any of said companies owe an
      obligation of confidence. I will not directly or indirectly publish or
      disclose to any third-party or use at any time during (except within the
      scope of my employment) or subsequent to my employment, any information
      relating to inventions, products, trade secrets, source code, product
      specifications, processes, procedures, machinery, apparatus, manufacturing
      affairs, business affairs, future plans, marketing plans, ideas, technical
      data, customer lists or other information which is of a secret or
      confidential nature (whether or not obtained, acquired, or developed by
      me) without first obtaining the prior written authorization of Zarlink
      Semi for such publication, disclosure, or use. Likewise, I agree not to
      solicit Zarlink Semi's customers or accept business from them in regards
      to any products which compete with those marketed and sold by Zarlink Semi
      (during and after termination of my employment with Zarlink Semi), for a
      period of one (I) year after my employment with Zarlink Semi ends. I also
      agree for a period of one (I) year after my employment with Zarlink Semi
      ends, not to directly or indirectly solicit or recruit Zarlink Semi's
      employees to resign from Zarlink Semi in order to join a company or
      enterprise witl1 which I am directly or indirectly associated. During the
      term of my employment with Zarlink Semi, I will not engage in any business
      activity that competes with that of Zarlink Semi, nor shall I engage in
      any other activities that conflict with my obligations to Zarlink
      Semi.

            


    

     

     

    
      	
              5.  

            	
              Term. This Agreement
      shall be effective upon execution and shall survive the termination of my
      employment with Zarlink Semi.

            


    

     

     

    
      	
              6.  

            	
              Severability. If any
      provision of this Agreement, or any part thereof, shall be held to be
      invalid or unenforceable, such provision, or part thereof, shall be
      severable and of no force and effect without invalidating the
      remaining provisions hereof, and this Agreement shall continue in full
      force and effect as if same had not been a part
  hereof.

            


    

     

     

    
      	
              7.  

            	
              Successors, Assigns, etc.
      This Agreement shall ensure to the benefit of the successors and assigns
      of Zarlink Semi and be binding upon my heirs, executors, and
      administrators.

            


    

     

     

    
      	
              8.  

            	
              Not a Contract of
      Employment. Nothing stated herein shall be construed as creating a
      contract of employment or as changing the at will relationship of the
      parties.

            


    

     

     

    
      	
              9.  

            	
              Governing Law. This
      Agreement shall be governed by and construed in accordance with the laws
      of the State of California and the venue is agreed to be in San Diego,
      California in regards to employees of Zarlink Semiconductor (U.S.) Inc.,
      the laws of the State of Arizona and the venue is agreed to be in Phoenix,
      Arizona in regards to employees of Zarlink Semiconductor (U.S.) Inc. and
      the laws of the State of Texas and the venue is agreed to be in Austin,
      Texas.

            


    

     

     

    


     

     

    I HEREBY
ACKNOWLEDGE RECEIPT OF A FULLY EXECUTED COPY OF THIS AGREEMENT.

     

    /s/ Gary
Tanner

    Gary
Tanner