Exhibit 10.3
EXECUTIVE RETENTION
AGREEMENT
THIS EXECUTIVE RETENTION AGREEMENT
(this “Agreement”) dated as of March 19, 2009 is
made by and between __________________ (“Executive”)
and MICROSEMI CORPORATION, a Delaware corporation
(“Company”). This Agreement amends and restates in its
entirety that certain Executive Retention Agreement dated
November 10, 2008 between the Company and the Executive (the
“Prior Agreement”).
NOW, THEREFORE, for good and
valuable considerations, receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Term . The term of this
Agreement shall commence on the date hereof. The term of this
Agreement shall be renewed automatically on a daily basis so that
the outstanding term is always X year(s) after the date on which
notice of non-renewal or termination of this Agreement is given by
the Executive to the Company or by the Company to the Executive.
This Agreement relates to Executive’s employment with the
Company, or any subsidiary, successor, assign or affiliate of the
Company, under any written or oral agreement. For purposes of the
following provisions “Date of Termination” means the
effective date of termination of Executive’s employment with
any of the entities described above, after notice and lapse of the
notice period as required herein.
2. Terminations by Executive
.
a. Termination by Executive for
“Good Reason .” Following a Change in Control,
Executive may terminate his active employment under his oral or
written employment agreement with the Company upon five
(5) days’ written notice to the Company given within
ninety (90) days following the date on which the Executive
becomes aware of any of the following events, each of which shall
be deemed to be good reason for termination by
Executive:
(i) any reduction in, or limitation
upon, the compensation, reimbursable expenses or other benefits
provided in this Agreement, other than (A) as generally
effected by valid public law or regulation or (B) as results
from change in the amount of the incentive compensation pool if not
resulting from changes in the incentive pool formula or allocations
and not resulting from accounting or operational effects of the
acquisition;
(ii) any change in assignment of
Executive’s primary duties to a work location more than 50
miles from the Company’s principal executive office at 2381
Morse Avenue, Irvine, California 92614, without Executive’s
prior written consent;
(iii) any failure by the Company to
obtain the assumption of this Agreement by any successor or assign
of the Company;
(iv) any material breach by the
Company of any provision of this Agreement; or
(v) any action taken by the Board or
a standing Committee of the Board in connection with, or the
formation of a special Committee of the Board for the purpose of,
effecting any of the events listed in subparagraphs
(i) through (iv) immediately above.
b. Change of Control . For
purposes of this Agreement, “Change in Control” means
the occurrence of any of the following events:
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(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 more than fifty percent (50%) of the total voting
power represented by the Company’s then outstanding voting
securities;
(ii) Consummation 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) at
least fifty-one percent (51%) 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 stockholders of the Company approving a plan
of complete liquidation of the Company or a consummation of the
sale or disposition by the Company of all or substantially all of
the Company’s assets.
c. Voluntary Termination by
Executive . After a Change in Control, without reason or for
any reason other than “Good Reason” as set forth in
Section 2.a above, Executive may voluntarily terminate his
employment with the Company under any oral or written employment
agreement upon a minimum of one (1) month’s written
notice to the Company; provided, however, Executive shall receive
only the compensation that would otherwise be accrued or payable as
of or prior to the termination date.
3. Executive’s Benefits
Following Termination by Executive for “Good Reason” or
by Company without “Cause”, in either case only
following Change in Control . If Executive terminates his
active employment under his oral or written employment agreement
with the Company for “Good Reason” following a Change
in Control or the Company terminates his active employment under
his oral or written employment agreement with the Company without
Cause (as defined below) following a Change in Control:
a. Severance Benefits
.
(i) Salary . Executive or his
estate shall be entitled to payment, to be received (subject to
Section 3(a)(x) below) not later than the fifteenth
(15th) day following Executive’s Separation from
Service, of an amount equal to X multiplied by Executive’s
base salary as of the Date of Termination.
(ii) Incentive Compensation .
Executive or his estate will be entitled to receive, not later than
(subject to Section 3(a)(x) below) the fifteenth
(15th) day following Executive’s Separation from
Service, an incentive compensation payment of X multiplied by the
highest annual incentive compensation amount paid during any of the
preceding three (3) full plan years.
(iii) Car Allowance .
Executive or his estate will be entitled to receive, not later than
(subject to Section 3(a)(x) below) the fifteenth
(15th) day following Executive’s Separation from
Service, a lump-sum amount equal to X times his annual car
allowance in effect as of the Date of Termination.
(iv) Equity Awards . The
restriction or forfeiture period on any restricted stock granted by
the Company to Executive under all plans and all stock options and
general stock appreciation rights granted by the Company to
Executive shall lapse or accelerate, as the case may be, and become
fully vested and exercisable on the Date of Termination, and shall
remain exercisable for a period of X year(s) following the Date of
Termination, subject to the latest expiration date specified in the
restricted stock or option agreements.
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(v) Medical and Life
Insurance . Payment of premiums for medical, dental and vision
insurance and life insurance by the Company shall continue on and
subject to the terms of this Agreement for a period of X year(s)
following the Date of Termination, subject to termination under
Section 7. To the extent that the payment of any premiums
pursuant to this Section 3(a)(v) is taxable to Executive, any
such payment shall be paid to Executive on or before the last day
of Executive’s taxable year following the taxable year in
which the related expense was incurred. Executive’s right to
payment of such premiums is not subject to liquidation or exchange
for another benefit and the amount of such benefits that Executive
receives in one taxable year shall not affect the amount of such
benefits that Executive receives in any other taxable
year.
(vi) Retirement Plans; Unvested
Company Contribution . The Executive shall be entitled to
receive, not later than the fifteenth (15th) day following the
Date of Termination (or, if so required under the provisions of the
applicable plan, program or arrangement and/or to comply with
Section 409A of the Code, not later than the fifteenth
(15 th
) day following
Executive’s Separation from Service), all benefits payable to
him upon or on account of termination under any of the
Company’s tax-qualified employee benefit plans and any other
plan, program or arrangement relating to deferred compensation,
retirement or other benefits including, without limitation, any
profit sharing, 401(k), employee stock ownership plan, or any plan
established as a supplement to any of the aforementioned plans. The
Company shall also pay Executive, not later than the fifteenth
(15th) day following the Date of Termination, an amount equal
to all unvested Company contributions credited to the
Executive’s account under any tax-qualified employee benefit
plan maintained by the Company as of the Date of Termination. In
the event that this subparagraph (a)(vi) should conflict with the
provisions of any of the Company’s tax-qualified employee
benefit plans and any other plan, program or arrangement relating
to deferred compensation, retirement or other benefits including,
without limitation, any profit sharing, 401(k), employee stock
ownership plan, or any plan established as a supplement to any of
the aforementioned plans, then the provisions of the plan shall
govern, provided that the Company’s contribution shall vest
pursuant to this subparagraph (a)(vi) to the maximum extent
permissible.
(vii) Vacation and Sick Leave
. The Company shall also pay Executive, not later than the second
day following the Date of Termination, a pro rata amount of his
base salary under his employment agreement, in effect on the Date
of Termination, for each day of vacation leave which has accrued as
of the Date of Termination, but which is unpaid as of such date, to
which Executive is entitled under the Company’s vacation
leave policy. The Company shall be required to pay for sick leave
days only to the extent that Executive has taken sick leave on or
prior to the Date of Termination to which Executive is entitled
under the Company’s sick leave policy.
(viii) General . Executive or
his estate shall also be entitled to any other amounts then owing
or accrued but unpaid to the Executive pursuant to any plans or
arrangements of the Company.
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(ix) Separation from Service
. As used herein, a “Separation from Service” occurs
when Executive dies, retires, or otherwise has a termination of
employment with the Company that constitutes a “separation
from service” within the meaning of Treasury Regulation
Section 1.409A-1(h)(1), without regard to the optional
alternative definitions available thereunder.
(x) Specified Employees .
Notwithstanding any provision of this Agreement to the contrary, if
Executive is a “specified employee” within the meaning
of Treasury Regulation Section 1.409A-1(i) as of the date of
Executive’s Separation from Service, Executive shall not be
entitled to any payment or benefit pursuant to Section 3 until
the earlier of (i) the date which is six (6) months after
Executive’s Separation from Service for any reason other than
death, or (ii) the date of Executive’s death. Any
amounts otherwise payable to Executive upon or in the six (6)
month period following Executive’s Separation from Service
that are not so paid by reason of this Section 3(a)(x) shall
be paid as soon as practicable (and in all events within
thirty (30) days) after the date that is six (6) months
after Executive’s Separation from Service (or, if earlier, as
soon as practicable, and in all events within thirty (30)
days, after the date of Executive’s death) and, in the event
of such a delay, the amount of the benefit that is so delayed shall
include interest from the date the amount was otherwise payable
(but for such delay) through the date upon which payment is
actually made. For this purpose, interest shall be simple interest
calculated using a rate equal to 200% of the Short-term Applicable
Federal Rate (annual compounding) published by the Internal Revenue
Service for the month in which the Executive’s Separation
from Service occurs. The provisions of this Section 3(a)(x)
shall only apply if, and to the extent, required to avoid the
imputation of any tax, penalty or interest pursuant to
Section 409A of the U.S. Internal Revenue Code of 1986, as
amended (the “Code”).
b. Cause . For purposes of
this Agreement, “Cause” means that the Board, based on
the information available to it, reasonably determines that any of
the following events or contingencies exists or has
occurred:
(i) Executive is convicted of, or
pleads guilty or nolo contendre to, a felony (whether or not
invol
