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EXHIBIT 10.2 MICROCHIP TECHNOLOGY
INCORPORATED CHANGE OF CONTROL SEVERANCE AGREEMENT (Double
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“Agreement”) was originally made and entered into by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 severance 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. Severance Benefits.
(a) Benefits Following Termination During Change of
Control Period. Upon termination of employment for any
reason other than for “Cause” (as defined herein)
during the Change of Control Period 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) Involuntary
Termination Other than for Cause, Voluntary Termination for Good
Reason During the Change of Control Period. If within
the period beginning three (3) months preceding a Change of Control
and ending twenty-four (24) months following a Change of Control
(the “Change of Control Period”), (i) the Employee
terminates his or her employment with the Company (or any parent or
subsidiary of the Company) for “Good Reason” (as
defined herein) or (ii) the Company (or any parent or subsidiary of
the Company) terminates the Employee’s employment for 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 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 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 as was provided to such Employee immediately prior to
termination and at the same ratio of Company premium subsidy to
Employee premium payment 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) twelve (12) months from the date of termination, or
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(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 the 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 he 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 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(g) 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(g). 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 benefits 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) Voluntary Resignation. If the Employee’s
employment with the Company terminates during the Change of Control
Period voluntarily by the Employee other than for Good Reason, then
the Employee shall not be entitled to receive severance or other
benefits except for those described in 3(a)(i) and as may then be
established under the Company’s then existing severance and
benefits plans and practices or pursuant to other written
agreements with the Company. (f) 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. (g) 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”
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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 considered together with any other severance
payments or separation benefits that are considered deferred
compensation under Section 409A (together the “Deferred
Compensation Separation Payments”) that are payable within
the first six (6) months following Employee’s termination of
employment, shall be delayed until the first payroll date that
occurs on or after the date that is six (6) months and one (1) day
after the date of the termination, when they shall be paid in full
arrears. All subsequent Deferred Compensation
Separation Payments, if any, shall be paid in accordance with the
payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the
contrary, if Employee dies following his termination but prior to
the six (6) month anniversary of his termination, then any Payments
delayed in accordance with this paragraph will be payable in a lump
sum as soon as administratively practicable after the date of
Employee’s death and all other Payments will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Each payment and benefit payable under this
Agreement is intended to constitute a separate payment for purposes
of Section 1.409A-2(b)(2) of the T
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