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Exhibit 10.20
ANALOG DEVICES, INC.
Employee Change in Control Severance Policy
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(Effective December 13, 1988)
(As Amended on June 13, 1989 and December 9, 1993)
1. Purpose
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The purpose of this Employee Change in Control Severance Policy is to
diminish the distraction of covered employees (as defined below) in the event of
a threatened or pending Change in Control (as defined below) and to provide
financial assistance to any covered employee whose employment with Analog
Devices, Inc. or any of its subsidiaries is terminated by the Company, other
than for the reasons set forth below, following such a Change in Control. For
purposes of this Policy, a covered employee shall be any employee of the Company
(other than any exempt employee with a labor grade of 15 or above) who is not
covered under any severance pay agreement (other than a stock option or
restricted stock agreement) that provides special cash benefits following such a
Change in Control. Unless the context otherwise requires, the "Company" means
Analog Devices, Inc. and its subsidiaries (other than portfolio companies of AD
Enterprises).
2. Eligibility for Severance Benefits
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A covered employee shall qualify for severance benefits under this
Policy if the employee is terminated from employment by the Company following a
Change in Control (as defined below) other than for Cause or Disability (as such
terms are defined below).
For purposes of this Policy, termination by the Company of employment
for Cause shall mean termination (a) upon the willful and continuing failure by
the employee to substantially perform his or her duties with the Company,
provided that a written demand for substantial performance has been delivered to
the employee by the Company specifically identifying the manner in which the
Company believes that such employee has not substantially performed his or her
duties and such employee shall not have cured such failure within 30 days after
such demand or (b) by reason of the employee's willful engagement in conduct
which is demonstrably and materially injurious to the Company. For purposes of
this Policy, no act or failure to act on the part of an employee shall be deemed
"willful" unless done or admitted to be done by the employee not in good faith
and without reasonable belief that his or her action or omission was in the best
interest of the Company.
For purposes of this Policy, Disability shall mean that as a result of
incapacity due to physical or mental illness, the employee shall have been
absent from the full-time performance of his or her duties with the Company for
six consecutive months and, within 30 days after written notice of termination
is given to the employee, the employee shall not have returned to the full-time
performance of his or her duties.
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3. Change in Control
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For purposes of this Policy, a Change in Control shall occur or be
deemed to have occurred only if any of the following events occur: (i) any
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; (ii) individuals who, as of the
effective date hereof, constitute the Board of Directors of the Company (as of
the date hereof, the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A under the Exchange Act) shall be, for purposes of this Policy, considered as
though such person were a member of the Incumbent Board; (iii) the stockholders
of the Company approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 30% of the combined voting power of the Company's then outstanding
securities; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets."
4. Computation of Severance Benefit
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If a covered employee's employment by the Company shall be terminated
by the Company other than for Cause or Disability during the 18-month period
following a Change in Control, then such employee shall be entitled to receive,
promptly upon the termination of his or her employment, a lump-sum severance
payment equal to the base salary otherwise payable to such employee for the
following number of weeks' employment with the Company:
Period of Employment Hourly Exempt
Prior to Termination Non-Exempt (L.G. E01-14)
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0 to 89 days 2 weeks 4 weeks
90 days to less than 1 year 4 weeks 8 weeks
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Period of Employment Hourly Exempt
Prior to Termination Non-Exempt (L.G. E01-14)
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1 year to less than 3 years 6 weeks 12 weeks
3 years to less than 5 years 8 weeks 16 weeks
5 years to less than 10 years 2 weeks for each full 24 weeks
year of employment
10 years or more 20 weeks, plus 4 weeks 32 weeks, plus 4 weeks for
for each full year of each full year of employment
employment over 10 years over 10 years
Notwithstanding the figures in the second column of the foregoing
table, the severance benefit for covered employees with labor grades of 12, 13
or 14 shall be a minimum of 26 weeks of base salary.
Notwithstanding the foregoing, in no event shall any lump sum payment
to any covered employee hereunder exceed two times such covered employee's
annual compensation for the last full year immediately preceding the termination
of employment with the Company following a Change in Control.
Subject to the provisions of Section 5(b), this Policy establishes in
each covered employee, following a Change in Control, a contractual right to the
benefits to which he or she is entitled under this Policy, and such right shall
be enforceable by each covered employee against the Company following a Change
in Control.
5. Amendment and Terminations
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(a) This Policy shall be effective until December 31, 1994 and shall
continue in effect thereafter unless the Board of Directors of the Company shall
vote to terminate or modify this Policy, provided, however, that if a Change in
Control shall have occurred prior to December 31, 1994 (or such later date that
this Policy is in effect because no action has been taken by the Board of
Directors to terminate this Policy), this Policy shall remain in effect for a
period of not less than 18 months after the date of such Change in Control and
all obligations of the Company arising under this Policy as a result of any
termination during such 18-month period shall survive until such obligations are
fully performed.
(b) Notwithstanding the foregoing, this Policy and the benefits
described herein may be amended or terminated by the Board of Directors of the
Company at any time; provided, however, that following a Change in Control this
Policy may not be terminated or amended in any manner materially adverse to then
covered employees without the written consent of a majority of the covered
employees actively employed by the Company and covered by this Policy both
immediately prior to the Change in Control and at the date of such amendment.
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6. No Mitigation
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An employee shall not be required to mitigate the amount of any payment
provided for in this Policy by seeking other employment or otherwise and shall
not be required to offset against such payment any payments he or she may
receive from future employment.
7. No Fiduciary or Employment Relationship
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Nothing contained in this Policy and no action taken pursuant to the
provisions of this Policy shall create or be construed to create a trust of any
kind or fiduciary relationship or contract for employment between the Company
and any employee, and nothing in this Policy shall affect the right of the
Company to terminate the employment of any employee for any reason whatsoever.
8. Notice
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For the purpose of this Policy, notices and all other communications
provided for in the Policy shall be in writing and shall be deemed to have been
duly given when delivered in person or mailed by United States registered mail,
return receipt requested, postage prepaid.
9. Withholding
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Any payment provided for hereunder shall be paid net of any applicable
withholding required under foreign, federal, state or local law.
10. Governing Law
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All questions pertaining to the construction, regulation, and validity
and effect of the provisions of this Policy shall be determined in accordance
with the laws of the Commonwealth of Massachusetts without regard for the
conflict of law principles thereof.
11. Conflict with Surplus (Reduction in Work Force) Policy
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Any payments made to a covered employee under this Policy shall be in
lieu of, and not in addition to, any payments to such employee under the
Company's Surplus (Reduction in Work Force) Policy.
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