ACTEL CORPORATION
AMENDED AND RESTATED
EMPLOYEE RETENTION PLAN
December 1, 2005
Introduction
It is
expected that Actel Corporation 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 employees and can cause such employees to consider
alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication and
objectivity of these employees, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company.
The
Board believes that it is in the best interests of the Company and
its shareholders to provide these employees with an incentive to
continue their employment and to motivate these employees to
maximize the value of the Company upon a Change of Control for the
benefit of its shareholders.
The
Board believes that it is imperative to provide these employees
with certain benefits upon continued employment following a Change
of Control, which provides these employees with enhanced financial
security and provides efficient incentive and encouragement to
these employees to remain with the Company notwithstanding the
possibility or occurrence of a Change of Control.
Accordingly, the following plan has been
developed and adopted.
ARTICLE I.
ESTABLISHMENT OF PLAN
1. Establishment of Plan . As of
the Effective Date, the Company hereby establishes an employee
retention plan to be known as the “Employee Retention
Plan” (the “Plan”), as set forth in this
document. The purposes of the Plan are set forth in the
Introduction.
2. Contractual Right to Benefits .
This Plan establishes and vests in each Participant a contractual
right to the benefits to which he or she is entitled hereunder,
enforceable by the Participant against the Company.
ARTICLE II.
DEFINITIONS AND CONSTRUCTION
1. Definitions . Whenever used in
the Plan, the following terms shall have the meanings set forth
below and, when the meaning is intended, the initial letter of the
term is capitalized.
(a) Cause . “Cause” shall
mean (i) any act of personal dishonesty taken by the
Participant in connection with his or her responsibilities as an
employee and intended to result in substantial personal enrichment
of the Participant, (ii) the conviction of a felony,
(iii) a willful act by the Participant which constitutes gross
misconduct and which is injurious to the Company, and
(iv) continued substantial violations by the Participant of
the Participant’s employment duties which are demonstrably
willful and deliberate on the Participant’s part after there
has been delivered to the Participant a written demand for
performance from the Company which specifically sets forth the
factual basis for the Company’s belief that the Participant
has not substantially performed his or her duties.
(b) Change of Control . “Change of
Control” shall mean the occurrence of any of the following
events:
(i) Any “person” (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the total voting power represented
by the Company’s then outstanding voting securities;
or
(ii) A change in the composition of the
Board of Directors of the Company occurring within a two
(2) year period, 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 the Incumbent Directors at the time of
such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to
the Company); or
(iii) The date of the consummation of a
merger or consolidation of the Company with any other corporation
that has been approved by the shareholders of the Company, 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) at
least 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, or the
shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company’s
assets.
(c) Change of Control Price .
“Change of Control Price” shall mean the closing sale
price of Company common stock on the NASDAQ Stock Market on the
last trading day prior to the day upon which a Change of Control
occurs.
(d) Code . “Code” shall mean
the Internal Revenue Code of 1986, as amended.
(e) Company . “Company” shall
mean Actel Corporation, a California corporation, and any successor
entities as provided in Article VI hereof.
(f) Disability . “Disability”
shall mean that the Participant has been unable to perform his or
her duties as an Employee as the result of his or her incapacity
due to physical or mental illness, and such inability, at least
twenty-six (26) weeks after its commencement, is determined to
be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Participant or the
Participant’s legal representative (such agreement as to
acceptability not to be unreasonably withheld). Termination
resulting from Disability may only be effected after at least
thirty (30) days’ written notice by the Company of its
intention to terminate the Participant’s employment. In the
event that the Participant resumes the performance of substantially
all of his or her duties hereunder before the termination of his or
her employment becomes effective, the notice of intent to terminate
shall automatically be deemed to have been revoked.
(g) Effective Date . “Effective
Date” shall mean October 6, 1995.
(h) Employee . “Employee”
shall mean a Participant, with reference to the period of his or
her employment with the Company.
(i) Equity Plan . “Equity
Plan” shall mean the Company’s 1986 Incentive Stock
Option Plan or 1995 Employee and Consultant Stock Plan.
(j) ERISA . “ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
(k) Option . “Option shall mean an
outstanding stock option under an Equity Plan.
(l) Participant .
“Participant” shall mean an individual who meets the
eligibility requirements of Article III.
(m) Plan . “Plan” shall mean
this Actel Corporation Employee Retention Plan.
(n) Restricted Stock Unit .
“Restricted Stock Unit shall mean a bookkeeping entry
representing an amount equal to the fair market value of one share
of Company common stock. Each Restricted Stock Unit is granted
under an Equity Plan and represents an unfunded and unsecured
obligation of the Company.
(o) Retention Payment . “Retention
Payment” shall mean the payment of retention compensation as
provided in Article IV hereof.
(p) Spread . “Spread” shall
mean the dollar amount determined by subtracting (x) the
aggregate exercise price of all shares subject to Options or
Restricted Stock Units, as applicable, that are unvested and
outstanding on the date of a Change of Control, and only to the
extent that such Options or Restricted Stock Units are unvested,
from (y) the Change of Control Price multiplied by the number
of shares that are subject to such unvested Options or Restricted
Stock Units.
(q) Termination Date . “Termination
Date” shall mean (i) if a Participant’s employment
is terminated by the Company for Disability, thirty (30) days
after notice of termination is given to the Participant (provided
that the Participant shall not have returned to the performance of
the Participant’s duties on a full-time basis during such
thirty (30) day period), (ii) if the Participant’s
employment is terminated by the Company for any other reason, the
date on which a notice of termination is given, or (iii) if
the employment is terminated by the Participant, the date on which
the Participant delivers the notice of termination to the
Company.
ARTICLE III.
ELIGIBILITY
Each
employee of the Company who, as of the date of any Change of
Control, holds outstanding unvested stock options or unvested
Restricted Stock Units under an Equity Plan shall be a Participant
in the Plan. A Participant entitled to payment of a Retention
Payment shall remain a Participant in the Plan until the full
amount of the Retention Payment has been paid to the
Participant.
ARTICLE IV.
RETENTION PAYMENTS
1. Right to Retention Payments .
Subject to the provisions of Article IV.2., any payments to
which a Participant is entitled pursuant to this Article IV
shall be paid by the Company within ten (10) business days.
Payments hereunder shall be made in cash, common stock of the
Company or its acquirer, or a combination thereof, unless such
payment would subject a participant to liability under
Section 16 of the Exchange Act, in which case the payment
shall be made in cash.
(a) Continued Employment Following a Change
of Control . If a Participant remains employed with the Company
or its acquirer six (6) months following a Change of Control,
then the Participant shall be entitled to receive retention pay
that has a fair market value, on the date of payment, equal to
one-third of the Spread on such Participant’s Options and
Restricted Stock Units that were unvested on the date of the Change
of Control.
(b) Termination Following a Change of
Control . If a Participant’s employment terminates at any
time within six (6) months after a Change of Control, then,
subject to subsection IV.2. hereof, the Participant shall be
entitled to receive payments as follows:
(i) Involuntary Termination . If the
Participant’s employment is terminated as a result of
involuntary termination other than for Cause (an
