Exhibit 10.11
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 E. Thomas Hart (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.
2
(d)
Severance Benefits Period . “Severance Benefits
Period” shall mean a period of twenty-four (24) 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
3
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
4
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 obli
|
