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Exhibit 10.10
QUICKLOGIC CORPORATION
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is
made and entered into effective as of __________, 200_ (the
"Effective Date"), by and between [Executive Officer] (the
"Employee") and QuickLogic Corporation, a Delaware corporation (the
"Company"). Certain capitalized terms used in this Agreement
are defined in Section 1 below.
R E C I T A L S
A.
It is expected that the Company from time to time will consider the
possibility of a 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.
B.
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 employment and to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C.
In order to provide the Employee with enhanced financial security
and sufficient encouragement to remain with the Company
notwithstanding the possibility of a Change of Control, 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.
AGREEMENT
In consideration of the mutual covenants herein contained and
the continued employment of Employee by the Company, the parties
agree as follows:
1.
Definition of Terms . The following terms referred to
in this Agreement shall have the following meanings:
(a)
Cause . "Cause" shall mean (i) any act of
personal dishonesty taken by the Employee in connection with his
responsibilities as an employee which is intended to result in
substantial personal enrichment of the Employee,
(ii) Employee’s conviction of a felony which the Board
reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business, (iii) a
willful act by the Employee which constitutes misconduct and is
injurious to the Company, or (iv) continued willful violations
by the Employee of the Employee’s obligations to the Company
after there has been delivered to the Employee a written demand for
performance from the Company which describes the basis for the
Company’s belief that the Employee has not substantially
performed his duties, and a period of thirty (30) days following
the date of delivery of such written demand for the Employee to
cure such violations.
(b)
Change of Control . "Change of Control" shall mean the
occurrence of any of the following events:
(i) the approval by stockholders of the
Company of a merger or consolidation of the Company with any other
corporation, other than 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 fifty percent (50%) of the total
voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation;
(ii) the approval by the stockholders of the Company
of 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;
(iii) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) becoming the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total
voting power represented by the Company’s then outstanding
voting securities; or
(iv) a change in the composition of the Board, as a result
of which fewer than a majority of the directors are Incumbent
Directors. "Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of the date hereof,
or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of those
directors whose election or nomination was not in connection with
any transactions described in subsections (i), (ii), or (iii)
or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.
(c)
Involuntary Termination . "Involuntary Termination"
shall mean (i) without the Employee’s express written
consent, a significant reduction of the Employee’s duties,
position or responsibilities relative to the Employee’s
duties, position or responsibilities in effect immediately prior to
such reduction, or the removal of the Employee from such position,
duties and responsibilities, unless the Employee is provided with
comparable duties, position and responsibilities; (ii) without
the Employee’s express written consent, a substantial
reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the
Employee immediately prior to such reduction; (iii) without
the Employee’s express written consent, a reduction by the
Company of the Employee’s base or target incentive cash
compensation as in effect immediately prior to such reduction;
(iv) without the Employee’s express written consent, a
material reduction by the Company in the kind or level of employee
benefits to which the Employee is entitled immediately prior to
such reduction with the result that the Employee’s overall
benefits package is significantly reduced; (v) without the
Employee’s express written consent, the relocation of the
Employee to a facility or a location more than fifty (50) miles
from his current location; (vi) any purported termination of
the Employee by the Company which is not effected for Cause or for
which the grounds relied upon are not valid; or (vii) the
failure of the Company to obtain the assumption of this Agreement
by any successors contemplated in Section 6 below.
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(d)
Severance Benefits Period . "Severance Benefits
Period" shall mean a period of twelve (12) months following the
Termination Date.
(e)
Termination Date . "Termination Date" shall mean the
effective date of any notice of termination delivered by one party
to the other hereunder.
2.
Term of Agreement . This Agreement shall terminate
upon the date that all obligations of the parties hereto under this
Agreement have been satisfied or, if earlier, on the date, prior to
a Change of Control, Employee is no longer employed by the
Company.
3.
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. If
the Employee’s employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement, or
as may otherwise be established under the Company’s then
existing employee benefit plans or policies at the time of
termination.
4.
Severance Benefits .
(a)
Termination Following A Change of Control . If the
Employee’s employment with the Company terminates as a result
of an Involuntary Termination at any time three (3) months prior
to, or twelve (12) months after, a Change of Control, Employee
shall be entitled to the following severance benefits provided that
Employee enters into and does not revoke a general release of
claims with the Company in substantially the form attached hereto
as Exhibit A:
(i) Employee’s base salary for the
Severance Benefits Period as in effect as of the date of such
termination, less applicable withholding, payable in a lump sum
within thirty (30) days of the Involuntary Termination;
(ii) Employee’s incentive cash compensation
computed at 100% of target for the Severance Benefits Period as in
effect as of the date of such termination, less applicable
withholding, payable in a lump sum within thirty (30) days of the
Involuntary Termination;
(iii) one hundred percent (100%) of any incentive cash
compensation or bonus declared prior to the date of any such
termination for the Employee but not yet paid, if any;
(iv) all stock options and equity compensation awards
granted by the Company to the Employee prior to the Change of
Control shall become fully vested and exercisable as of the date of
the termination and will remain exercisable for a 90 day period
following the Termination Date, notwithstanding any shorter period
stated in the respective stock option agreements and;
(v) the same level of health (i.e., medical, vision
and dental) coverage and benefits as in effect for the Employee on
the day immediately preceding the day of the Employee’s
termination of employment; provided, however, that (i) the
Employee constitutes a qualified beneficiary, as defined in Section
4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and
(ii) Employee elects continuation coverage pursuant to the
Consolidated Omnibus Budget
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Reconciliation Act of 1985, as amended ("COBRA"), within the
time period prescribed pursuant to COBRA. The Company shall
continue to provide Employee with health coverage until the earlier
of (i) the date Employee is no longer eligible to receive
continuation coverage pursuant to COBRA, or (ii) the end of
the Severance Benefits Period as measured from the termination
date.
(b)
Termination Apart from a Change of Control . If the
Employee’s employment with the Company terminates other than
as a result of an Involuntary Termination at any time three (3)
months prior or twelve (12) months following a Change of Control,
then the Employee shall not be entitled to receive severance or
other benefits hereunder, but may be eligible for those benefits
(if any) as may then be established under the Company’s then
existing severance and benefits plans and policies at the time of
such termination.
(c)
Accrued Wages and Vacation; Expenses . Without regard
to the reason for, or the timing of, Employee’s termination
of employment: (i) the Company shall pay the Employee
any unpaid base salary and incentive cash compensation due for
periods prior to the Termination Date; (ii) the Company shall
pay the Employee all of the Employee’s accrued and unused
vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company
shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the
business of the Company prior to the Termination Date. These
payments shall be made promptly upon termination and within the
period of time mandated by law.
5.
Limitation on Payments . In the event that the
severance and other benefits provided for in this Agreement or
otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Code, and
(ii) would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then
Employee’s benefits under this Agreement shall be either
delivered in full, or delivered as to such lesser extent which
would result in no portion of such benefits being subject to the
Excise Tax, whichever of the foregoing amounts, taking into account
the applicable federal, state and local income taxes and the Excise
Tax, results in the receipt by Employee on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some
portion of such benefits may be taxable under Section 4999 of
the Code.
Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section shall be made in
writing by the Company’s independent public accountants (the
"Accountants"), whose determination shall be conclusive and binding
upon the Employee and the Company for all purposes. For
purposes of making the calculations required by this Section, the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and
4999 of the Code. The Company and the Employee shall furnish
to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination
under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any
calculations contemplated by this Section.
6.
Successors .
(a)
Company’s Successors . Any successor to the
Company (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or
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substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement
and agree expressly to perform the Company’s obligations
under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the
Company’s business and/or assets which executes and delivers
the assumption agreement described in this subsection (a) or
which becomes bound by the terms of this Agreement by operation of
law.
(b)
Employee’s Successors . Without the written
consent of the Company, Employee shall not assign or transfer this
Agreement or any right or obligation under this Agreement to any
other
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