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EXHIBIT 10.1 MICROCHIP TECHNOLOGY INCORPORATED
CHANGE OF CONTROL SEVERANCE AGREEMENT (Single Trigger) This
Change of Control Severance Agreement (the “Agreement”)
was originally made and entered into by and between
________________ (the “Employee”) and Microchip
Technology Incorporated (the “Company”), effective as
of ________________, and is hereby amended and restated in its
entirety effective as of the last date signed below in order to
comply with Internal Revenue Code Section 409A. RECITALS
1. It is expected that the Company from time to time
will consider the possibility of an acquisition by another company
or other change of control. The Board of Directors of
the Company (the “Board”) recognizes that such
consideration can be a distraction to the Employee and can cause
the Employee to consider alternative employment
opportunities. The Board has determined that it is in
the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication and objectivity
of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined herein) of the
Company. 2. The Board believes that it is in the best
interests of the Company and its stockholders to provide the
Employee with an incentive to continue his or her employment and to
motivate the Employee to maximize the value of the Company upon a
Change of Control for the benefit of its stockholders.
3. The Board believes that it is imperative to provide the
Employee with certain benefits upon a Change of Control and
certain benefits upon the Employee’s termination
of employment following a Change of Control. These
benefits will provide the Employee with enhanced financial security
and incentive and encouragement to remain with the Company
notwithstanding the possibility of a Change of Control.
4. Certain capitalized terms used in the Agreement are defined
in Section 5 below. AGREEMENT NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties
hereto agree as follows: 1. Term of
Agreement. This Agreement shall terminate upon the date
that all of the obligations of the parties hereto with respect to
this Agreement have been satisfied.
2. At-Will Employment. The Company and
the Employee acknowledge that the Employee’s employment is
and shall continue to be at-will, as defined under applicable law,
except as may otherwise be specifically provided under the terms of
any written formal employment agreement or offer letter between the
Company and the Employee (an “Employment
Agreement”). If the Employee’s employment
terminates prior to the Change of Control Period, the Employee
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or under his
or her Employment Agreement if any exists in writing, or as may
otherwise be available in accordance with the Company’s
established employee plans. 3. Benefits.
(a) Benefits Upon a Change of Control. Immediately
prior to consummation of a Change of Control the
Employee shall receive the following benefit:
(i) Equity Compensation Acceleration. One hundred
percent (100%) of the Employee’s outstanding stock options,
stock appreciation rights, restricted stock units and other Company
equity compensation awards (the “Equity Compensation
Awards”) shall immediately vest and become
exercisable. Any Company stock options and stock
appreciation rights shall remain exercisable following the
Employee’s employment termination for the period prescribed
in the respective option and stock appreciation right agreements.
(b) Termination Other than for Cause During the Change
of Control Period. If within the period beginning three
(3) months preceding a Change in Control and ending twenty-four
(24) months following a Change of Control (the “Change of
Control Period”), the Employee ceases to be employed with the
Company (or any parent or subsidiary of the Company) for any reason
other than “Cause” (as defined herein), and the
Employee signs, and does not revoke, a standard release of claims
with the Company in a form acceptable to the Company (the
“Release”) subject to conditions of Section 3(d), then
the Employee shall receive the following severance from the
Company: (i) Severance Payment. The Employee
shall be entitled to receive a lump-sum severance payment (less
applicable withholding taxes) equal to [one hundred/two hundred
percent (100/200%)] percent of the Employee’s annual base
salary (as in effect immediately prior to (A) the Change of
Control, or (B) the Employee’s termination of employment,
whichever is greater) plus [one hundred/two hundred percent
(100/200%)]percent of the Employee’s target bonuses for which
Employee was or would have been eligible (for the fiscal year in
which the Change of Control or the Employee’s termination
occurs, whichever is greater). (ii) Continued Employee
Benefits. Reimbursement of Employee’s health,
dental, vision, and life insurance coverage at the same level of
coverage premiums as was provided to such Employee immediately
prior to termination and at the same ratio of Company premium
payment to Employee premium subsidy as was in effect immediately
prior to termination (the “Company-Paid
Coverage”). The Company portion of such payments
shall be made within thirty (30) days of the premium due
date. If such coverage included the Employee’s
eligible dependents immediately prior to termination, such
dependents shall also be covered at Company
expense. Company-Paid Coverage shall continue until the
earlier of (A) [12 (twelve)/ 24 (twenty-four)] 2
months from the date of termination, or (B) the date upon
which the Employee and his dependents become covered under another
employer’s group health, dental, vision, long-term disability
or life insurance plans that provide Employee and his dependents
with comparable benefits and levels of coverage; provided, however
that if such reimbursement results in the imposition of additional
taxes to Employee under Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), Employee shall be
paid an additional full gross-up for such additional taxes, so that
Employee is in the same position, on an after-tax basis, as if such
taxes did not apply. Such payment shall be made no later
than the Employee’s taxable year next following the year in
which the Employee remits such taxes. For purposes of
Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), the date of the “qualifying
event” for Employee and his or her dependents shall be the
date upon which the Company-Paid Coverage
terminates. Coverage in this Section is dependent on the
valid and timely election of continued COBRA coverage under
applicable law. (c) Timing of Severance
Payments. Subject to Section 3(f) below, the severance
payment to which Employee is entitled shall be paid by the Company
to Employee in cash and in full, on the 61st day following the
employment termination date or such later date as is required under
Section 3(f). If the Employee should die before all
amounts have been paid, such unpaid amounts shall be paid in a
lump-sum payment (less any withholding taxes) to the
Employee’s designated beneficiary, if living, or otherwise to
the personal representative of the Employee’s estate.
(d) Release Effectiveness. The receipt of any
severance payment or benefit pursuant to section 3(b) will be
subject to the Employee signing and not revoking the Release and
provided that such Release is effective within sixty (60) days
following the termination of Employee’s
employment. No severance pursuant to such section shall
be paid or provided until the Release becomes effective.
(e) Termination for Cause; Termination Other Than During a
Change of Control Period. In the event the
Employee’s employment is terminated for Cause, or for any
reason prior to or following the Change of Control Period, then the
Employee shall not be entitled to receive severance and any other
benefits except as may then be established under the
Company’s existing written severance and benefits plans and
practices or pursuant to other written agreements with the Company.
(f) Internal Revenue Code Section 409A.
(i) Notwithstanding any provision to the contrary herein, no
Deferred Compensation Separation Payments (as defined below) that
becomes payable under this Agreement by reason of Employee’s
termination of employment with the Company (or any successor entity
thereto) will be made unless such termination of employment
constitutes a “separation from service” within the
meaning of Section 409A of the Internal Revenue Code (the
“Code”), and any final regulations and Internal Revenue
Service guidance promulgated thereunder (“Section
409A”). Further, if Employee is a “specified
employee” of the Company (or any successor entity thereto)
within the meaning of Section 409A on the date of Employee’s
termination (other than a termination due to death), then the
severance payable to Employee, if any, under this Agreement, when
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considered together with any other severance payments or
separation benefits that are considered deferred compensation under
Section 409A (together the “Deferred Compensation Separation
Payments”)
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