EMPLOYMENT AGREEMENT
Agreement made as of the 1st day of March, 1995
(the "Commencement Date") between Standard Microsystems
Corporation, a corporation duly organized and existing under
and by virtue of the laws of the State of Delaware and
having an office at 80 Arkay Drive, Hauppauge, New York
11788, hereinafter referred to as "SMC," and Paul Richman,
residing at 6 Swan Place, Nissequogue, NY 11780, hereinafter
referred to as "Mr. Richman."
W I T N E S S E T H:
WHEREAS, SMC is engaged, among other things, in
the business of developing, manufacturing and selling
networking and board-level products and integrated circuits
for use in the electronics industry; and
WHEREAS, SMC has for many years employed Mr.
Richman and desires to continue to employ or engage him in
an executive or consulting capacity, upon the terms and
conditions hereinafter in this Agreement set forth, and Mr.
Richman is desirous of being so employed or engaged; and
WHEREAS, SMC controls, or may control in the
future, various corporations and/or other enterprises, the
corporations and/or other enterprises from time to time
controlled by SMC being referred to in this Agreement as
"SMC AFFILIATES;" and
WHEREAS, SMC may have, or may have in the future,
a minority interest in various corporations and/or other
enterprises, the corporations and/or other enterprises in
which SMC may have, from time to time, a minority interest
being referred to in this Agreement as "SMC ASSOCIATED
COMPANIES;" and
WHEREAS, Mr. Richman is, as of the Commencement
Date, employed as the Chairman of the Board of SMC;
Now, therefore, in consideration of the premises
and the mutual covenants and conditions contained herein,
the parties hereto agree as follows:
FIRST: Subject to paragraph SIXTH, SMC agrees to
employ Mr. Richman and Mr. Richman agrees to be employed
pursuant to this Agreement for a period commencing on the
Commencement Date and ending February 29, 2000. For so long
as he shall be employed pursuant to the preceding sentence,
Mr. Richman shall serve as Chairman of the Board of SMC, if
he so desires and if elected to such office. SMC and Mr.
Richman agree that any change in Mr. Richman's position
and/or responsibilities will not alter any of the other
terms of this Agreement, except as expressly set forth
herein. Mr. Richman agrees to apply his experience and
skill to such problems as shall be presented to him from
time to time by, or at the direction of, the Board of
Directors of SMC in connection with the business of SMC, the
SMC AFFILIATES and the SMC ASSOCIATED COMPANIES. Although
Mr. Richman may be required to spend a significant portion
of his business time travelling on behalf of SMC, the SMC
AFFILIATES and the SMC ASSOCIATED COMPANIES, Mr. Richman
shall not be required to conduct his principal activities or
have his headquarters at a location outside the Hauppauge,
Long Island, New York area (hereby defined to include all
points within fifty miles of Hauppauge, Long Island, New
York).
SECOND: (a) Subject to Clause (b) of this
paragraph SECOND, Mr. Richman shall render 120 hours of
service per month hereunder, including travel time
(essentially 80% of full time) and, during such time, shall
give his full time, attention, best efforts and skill to
SMC, the SMC AFFILIATES and the SMC ASSOCIATED COMPANIES and
shall accept willingly and carry out the duties assigned to
him in the furtherance of the business of SMC, the SMC
AFFILIATES and the SMC ASSOCIATED COMPANIES. During the
period of this Agreement, he shall not engage in any
activity competing or in conflict with the best interests of
SMC, the SMC AFFILIATES and the SMC ASSOCIATED COMPANIES.
In addition to the compensation set forth in paragraph THIRD
hereof, and in consideration for these services, SMC agrees
to make available to Mr. Richman the benefits and privileges
regularly granted by SMC to other senior executives of SMC,
except for any benefit or privilege under any plan that
requires for eligibility a greater number of hours of
service than are required of Mr. Richman under this
Agreement. For purposes of computing Mr. Richman's benefit
under SMC's Executive Retirement Plan, Mr. Richman's
employment will be deemed to have terminated February 28,
1995. Mr. Richman waives all rights under the Retirement
Plan for Directors of Standard Microsystems Corporation.
Mr. Richman shall be entitled to vacation determined as the
product obtained by multiplying the number of vacation days
per year to which he currently is entitled by the Adjustment
Factor, as hereinafter defined. At all times when he is not
required to serve SMC pursuant to this Agreement, Mr.
Richman shall be free to pursue, for his own enjoyment and
financial benefit, other activities such as, but not limited
to, acting as President of the Consortium for Technology
Licensing, Ltd., teaching, lecturing and writing, so long as
such activities do not compete with SMC or conflict with the
best interests of SMC. Mr. Richman will report all
significant changes and/or new developments pertaining to
such activities to the Board of Directors of SMC at its
regular meetings and, between such meetings, to the Chief
Executive Officer of SMC.
(b) Either party may at any time, and from time
to time, give notice to the other (a "Change Time Notice")
that the hours of service per month specified in Clause (a)
of this paragraph SECOND shall be reduced, as specified in
such notice to 90, 60 or 30 hours of service per month,
effective on the first day of a calendar month specified in
the notice (the "Change Date"), which day shall be not less
than three months following the giving of such notice and
not earlier than March 1, 1996. Effective from the Change
Date, the reduced number of hours specified in the Change
Time Notice shall be substituted for 120 in the penultimate
sentence of paragraph THIRD (A). Once the number of service
hours per month is reduced in the manner described herein
above, the number of service hours per month may be
increased only by written mutual agreement of the parties.
THIRD: A. SMC shall pay to Mr. Richman, and Mr.
Richman agrees to accept as compensation for and in
consideration of the work to be performed hereunder by Mr.
Richman, a weekly salary at an annual rate determined by
multiplying the Base Rate, as hereinafter defined, by the
Adjustment Factor, as hereinafter defined. The Base Rate
shall be $386,500 provided, however, that the Base Rate
shall be modified as of March 1, 1995, and as of each
successive March 1 to the end of the term of this Agreement
in proportion to any increase in the Consumer Price Index,
as hereinafter defined, between the February levels of the
two immediately preceding years. Each such modification
shall be made retroactively when the Consumer Price Index
for the February next preceding the date of such adjustment
becomes available. The words "Consumer Price Index," as
used in this Agreement shall mean the Consumer Price Index
for All Urban Consumers, U.S. City Average, All Items (1982-
84=100), as reported by the Bureau of Labor Statistics of
the U.S. Department of Labor. In the event that this
Consumer Price Index shall be superseded or shall be
published by a different agency, then the superseding index
shall be substituted for this Consumer Price Index in such a
manner as to implement the intent of this Agreement that the
Base Rate shall be modified annually, beginning as of March
1, 1996, so that the purchasing power thereof shall be
maintained at a level at least equivalent to the purchasing
power thereof at March 1, 1995. The Adjustment Factor shall
be a fraction, the numerator of which shall be 120, or such
other number of hours of service as the parties shall agree
that Mr. Richman shall provide pursuant to paragraph SECOND,
and the denominator of which shall be 150. The Board of
Directors of SMC shall have full discretion from time to
time to fix the Base Rate, for any period specified by the
Board, at an amount exceeding the Base Rate determined
pursuant to the preceding provisions of this paragraph THIRD
(a).
B. As additional compensation for his services,
SMC shall pay to Mr. Richman:
1. a further amount equal to five percent
(5%) of all revenues receivable by SMC and/or SMC AFFILIATES
from the licensing of any patent or technology of SMC and/or
SMC AFFILIATES (whether or not such technology is covered by
any patent of SMC and/or SMC AFFILIATES), which revenues
become receivable after February 28, 1995 and while Mr.
Richman is employed under this Agreement or any
modification, extension or renewal thereof or while Mr.
Richman is willing to act as an employee of, or consultant
to, SMC on terms acceptable to SMC; plus, but without
duplication,
2. a further amount equal to five percent
(5%) of all revenues receivable by SMC ASSOCIATED COMPANIES
from the licensing of any patent or technology of any SMC
ASSOCIATED COMPANIES (whether or not such technology is
covered by any patent of SMC, SMC AFFILIATES and/or SMC
ASSOCIATED COMPANIES), which revenues become receivable
after February 28, 1995 and while Mr. Richman is employed
under this Agreement or any modification, extension or
renewal thereof or while Mr. Richman is willing to act as an
employee of, or consultant to, SMC on terms acceptable to
SMC; plus, but without duplication,
3. a further amount equal to one percent
(1%) of sales by SMC and/or SMC AFFILIATES of products
manufactured and/or sold by SMC and/or SMC AFFILIATES
pursuant to any second-sourcing, technology transfer or
other agreement with a licensee of any patent or technology
of SMC and/or SMC AFFILIATES (whether or not such technology
is covered by any patent of SMC and/or SMC AFFILIATES) which
sales are actually made by SMC and/or SMC AFFILIATES after
February 28, 1995 and while Mr. Richman is employed under
this Agreement or any modification, extension or renewal
thereof or while Mr. Richman is willing to act as an
employee of, or consultant to, SMC on terms acceptable to
SMC; plus, but without duplication,
4. a further amount equal to one percent
(1%) of sales by SMC ASSOCIATED COMPANIES of products
manufactured and/or sold by SMC ASSOCIATED COMPANIES
pursuant to any second-sourcing, technology transfer or
other agreement with a licensee of any patent or technology
of SMC, SMC AFFILIATES and/or SMC ASSOCIATED COMPANIES
(whether or not such technology is covered by any patent of
SMC, SMC AFFILIATES and/or SMC ASSOCIATED COMPANIES) which
sales are actually made by SMC ASSOCIATED COMPANIES after
February 28, 1995 and while Mr. Richman is employed under
this Agreement or any modification, extension or renewal
thereof or while Mr. Richman is willing to act as an
employee of, or consultant to, SMC on terms acceptable to
SMC.
Payments required to be made pursuant to subparagraphs (i),
(ii), (iii) and (iv) of this subsection THIRD (b) or
subsection THIRD (c), which payments are based on revenues
or sales of SMC AFFILIATES or SMC ASSOCIATED COMPANIES,
shall be reduced by a percentage equal to the percentage of
the equity not owned by SMC of the SMC AFFILIATE or SMC
ASSOCIATED COMPANY generating such sales or revenues, during
the period covered by the payment.
In computing the compensation payable pursuant to this
subsection THIRD (b) or subsection THIRD (c), there shall be
excluded from the computation all revenues receivable from
Texas Instruments Incorporated and all sales pursuant to any
second-sourcing, technology transfer or other agreements
with Texas Instruments Incorporated.
Payments due pursuant to this subsection THIRD (b) shall be
made to Mr. Richman by SMC quarterly, not later than ninety
(90) days after the end of each fiscal quarter of each
fiscal year of SMC, beginning with the quarter ending May
31, 1995. Such payments shall continue during the lifetime
of Mr. Richman, so long as he is willing to act as an
employee of, or consultant to, SMC on terms acceptable to
SMC.
Notwithstanding the preceding provisions of this paragraph
THIRD (b), the aggregate amount payable pursuant to this
paragraph THIRD (b) for any fiscal year of SMC shall not
exceed $364,000.
C. In the event of the death of Mr. Richman
while Mr. Richman is employed under this Agreement or any
modification, extension or renewal thereof, or while Mr.
Richman is acting as a consultant to SMC, an amount equal to
two and one half percent (2.5%) of all revenues receivable
by SMC and/or SMC AFFILIATES, during the five (5) year
period commencing on the day following the death of Mr.
Richman, from the licensing of any patent or technology of
SMC and/or SMC AFFILIATES (whether or not such technology is
covered by any patent of SMC and/or SMC AFFILIATES) shall be
paid to the estate of Mr. Richman and, in addition, an
amount equal to five-tenths of one percent (0.5%) of sales
by SMC and/or SMC AFFILIATES of products manufactured and/or
sold by SMC and/or SMC AFFILIATES pursuant to any second-
sourcing, technology transfer or other agreement with a
licensee of any patent or technology of SMC and/or SMC
AFFILIATES (whether or not such technology is covered by any
patent of SMC and/or SMC AFFILIATES) shall also be paid to
the estate of Mr. Richman. Payments due pursuant to this
subsection THIRD (c) shall be made to the estate of Mr.
Richman quarterly, not later than ninety (90) days after the
end of each fiscal quarter of each fiscal year of SMC,
beginning with the quarter ending just after the death of
Mr. Richman.
D. In the case of any dispute between SMC and
Mr. Richman as to the amounts of revenues or sales or the
percentage of equity not owned by SMC, the determination of
such consolidated net income, revenues, sales or percentage
by the independent public accountants retained by SMC to
audit its financial statements for such fiscal year shall be
binding and conclusive upon both parties to this Agreement.
FOURTH: The Patent and Trade Secrets Agreement
between SMC and Mr. Richman, dated March 1, 1983, shall
remain in effect but, commencing March 1, 1995, shall be
applicable only to inventions and improvements discovered or
made after February 28, 1995 and relating to semiconductor
devices and/or integrated circuits or networking-related
electronic components and/or systems; provided that if SMC
shall enter into any new line of business after the date of
this Agreement, the Patents and Trade Secrets Agreement
shall apply to inventions and improvements related to that
line of business from the date on which SMC shall enter such
line of business. Nothing in this paragraph FOURTH shall
release or otherwise affect Mr. Richman's obligations under
the Patent and Trade Secrets Agreement in relation to any
invention or improvement made or discovered prior to March
1, 1995.
FIFTH: The obligations of SMC under this
Agreement shall not be affected by the sale, lease or
exchange of all, or any substantial part, of the property
and assets of SMC unless SMC shall require the purchaser, by
an instrument in writing to assume such obligations, in
which event SMC shall be relieved of such obligations to the
extent they have been so assumed. Except to the extent such
obligations are so assumed, SMC's obligations under this
Agreement shall continue in full force and effect through
February 29, 2000.
SIXTH: Should SMC's Board of Directors fail to
elect Mr. Richman Chairman of the Board, or request that he
retire or resign from such position, or should Mr. Richman
desire so to retire or resign, he shall continue to render
services hereunder, as a consultant and independent
contractor, but shall no longer be an employee of SMC. SMC
shall continue to make available to Mr. Richman the same
benefits and privileges to which he is entitled under
paragraph SECOND, except for any benefit or privilege under
any plan as to which eligibility is restricted to employees.
SEVENTH: Any notice or any other communication
given under this Agreement to either party shall be in
writing and shall be delivered or mailed to such party at
the address of such party appearing at the head of this
Agreement; provided that either party may by notice
designate a changed address for such party. Any such notice
shall be deemed given (a) if mailed properly addressed,
postage prepaid, certified mail, return receipt requested,
on the third business day after mailing in New York, New
York or Hauppauge, New York, or (b) if delivered otherwise
than pursuant to (a), at the time of the actual delivery.
EIGHTH: Each previous Employment Agreement
between the parties to this Agreement is hereby superseded
by this Agreement.
IN WITNESS WHEREOF, SMC has caused this Agreement
to be executed on its behalf by its representative,
thereunto duly authorized, and Mr. Richman has executed this
Agreement as of the day and year first above written.
STANDARD MICROSYSTEMS CORPORATION
By:
Herman Fialkov, Director and
Chairman, Compensation Committee
______________________________
Paul Richman