EXHIBIT 10.23
FORM OF
AMENDED AND RESTATED EXECUTIVE
SEVERANCE AGREEMENT
, 2008
[Named Executive Officer]
c/o FEI Company
5350 NE Dawson Creek Drive
Hillsboro, OR 97124
Executive
FEI Company
an Oregon corporation
5350 NE Dawson Creek Drive
Hillsboro, OR 97124
FEI
FEI considers the establishment and
maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of FEI and its
shareholders. FEI recognizes that, as is the case with many
publicly held corporations, the possibility of a change of control
may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment
of FEI and its shareholders. In order to induce Executive to remain
employed by FEI in the face of uncertainties about the long-term
strategies of FEI and possible change of control of FEI and their
potential impact on Executive’s position with FEI, this
Amended and Restated Executive Severance Agreement
(“Agreement”), which has been approved by the Board of
Directors of FEI, sets forth the severance benefits that FEI will
provide to Executive in the event Executive’s employment by
FEI is terminated under the circumstances described in this
Agreement.
1. Employment Relationship .
Executive is currently employed by FEI as [INSERT TITLE]. Executive
and FEI acknowledge that Executive’s employment with FEI
constitutes “at-will” employment, and either party may
terminate this employment relationship at any time and for any or
no reason, subject to the obligation of FEI to provide the
severance benefits specified in this Agreement in accordance with
the terms hereof.
2. Release of Claims . In
consideration for and as a condition precedent to receiving the
severance benefits outlined in this Agreement, Executive agrees to
execute a Release of Claims in the appropriate form attached as
Exhibit A (“Release of Claims”). Executive
promises to execute and deliver the Release of Claims to FEI within
the later of (a) 21 days from the date Executive receives the
Release of Claims (or within such longer period of time as required
by applicable law but in no event later than sixty (60) days
following Executive’s termination, inclusive of any
revocation period set forth in the Release of Claims) or
(b) the last day of Executive’s active
employment.
3. Compensation Upon Termination
Following A Change of Control . In the event of a Termination
of Executive’s Employment (as defined in Section 6.1 of
this Agreement) other than for Cause (as defined in
Section 6.2 of this Agreement), death or Disability (as
defined in Section 6.3 of this Agreement) on or within
[18] months following a Change of Control (as defined in
Section 6.4 of this Agreement), or prior to a Change of
Control at the direction of a person who has entered into an
agreement with FEI, the consummation of which will constitute a
Change of Control, and contingent upon Executive’s execution
of the Release of Claims without revocation (subject to
Section 18) and compliance with Section 8, Executive
shall be entitled to the following benefits:
3.1 As severance pay and in lieu of
any other compensation for periods subsequent to the date of
termination, FEI shall pay Executive, in a single lump sum payment
after employment has ended, an amount in cash
equal to [two] years of
Executive’s annual base pay at the rate in effect immediately
prior to the date of termination. Subject to Section 18, if
Executive’s employment ends on or before October 15 of a
calendar year, his or her severance pay will be paid after eight
days have passed following execution of the Release of Claims
without revocation but on or before December 31 of that
calendar year. If Executive’s employment ends after
October 15 of a calendar year, his or her severance pay will
be paid on the later of (a) the second payroll date in the
calendar year next following the calendar year in which
Executive’s employment has ended or (b) the first
payroll date following the date his or her Release of Claims
becomes effective, subject to Section 18 below.
3.2 Pursuant to COBRA, a federal
law, Executive is entitled to extend coverage under any FEI group
health plan in which Executive and Executive’s dependents are
enrolled at the time of termination of employment. FEI will pay
Executive a lump sum cash payment in an amount equivalent to
[1.33] times the reasonably estimated cost Executive may
incur to extend for a period of [18] months under the COBRA
continuation laws Executive’s group health and dental plan
coverage in effect at the time of termination. Executive may use
this payment for such COBRA continuation coverage or for any other
purpose. The amount payable pursuant to Section 3.2 shall be
paid on the same date that the Section 3.1 payment is
payable.
3.3 Executive shall be entitled to
receive an amount equal to [100%] of the Executive’s
target benefit for the year in which the Termination of
Executive’s Employment occurs under the annual cash incentive
plan(s) in effect at the time of termination (less bonus amounts
previously paid for such year). The amount payable pursuant to
Section 3.3 shall be paid on the same date that the
Section 3.1 payment is payable.
3.4 For a period of [two]
years following Termination of Executive’s Employment, FEI
shall maintain in full force and effect, at its sole cost and
expense, for Executive’s continued benefit, any life
insurance policy insuring Executive’s life in effect
immediately prior to termination, provided that Executive’s
continued participation is possible under the general terms and
provisions of such policy. In the event that Executive’s
continued participation in such policy is barred, FEI shall make a
lump sum cash payment to Executive equal to the total premiums that
would have been paid by FEI for such two-year period. The maximum
amount that FEI shall be obligated to pay pursuant to this
Section 3.4 in premiums and payments to Executive shall be
$5,000. The amount payable pursuant to Section 3.4, if any,
shall be paid on the same date that the Section 3.1 payment is
payable.
3.5 All outstanding stock options
held by Executive under all stock option and stock incentive plans
of FEI shall become immediately exercisable in full and shall
remain exercisable until the earlier of (a) two years after
termination of employment or (b) the option expiration date as
set forth in the applicable option agreement. All vesting and
performance requirements shall be deemed fully satisfied, and all
repurchase rights of FEI shall immediately terminate under all
outstanding restricted stock awards held by the Executive. With
respect to outstanding awards other than stock options and
restricted stock (but including restricted stock units), Executive
will immediately vest in and have the right to exercise such
awards, all restrictions will lapse, and all performance goals or
other vesting criteria will be deemed achieved at 100 percent
target levels and all other terms and conditions met. Except as
otherwise provided herein with respect to restricted stock unit
awards granted prior to
, 2008 [INSERT EFFECTIVE DATE OF THIS AMENDED AGREEMENT] ,
such awards will be paid or otherwise settled as soon as
administratively practicable following the date of termination or,
if later, the date of exercise (subject to Section 18, to the
extent applicable). With respect to restricted stock unit awards
granted prior to
, 2008 [INSERT EFFECTIVE DATE OF THIS AMENDED AGREEMENT] ,
notwithstanding any provision in this Agreement or the applicable
restricted stock unit award to the contrary and to the extent
required to avoid imposition of any additional tax or income
recognition under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), prior to actual payment
to Executive, the restricted stock units for which the vesting
would not have otherwise been accelerated in accordance with this
Section 3.5 shall be paid at the same time or times as if such
restricted stock units had vested in accordance with the vesting
schedule and provisions set forth in the applicable restricted
stock unit award.
3.6 Notwithstanding any provision in
this Agreement, in the event that Executive would receive a greater
after-tax benefit from the Capped Benefit (as defined in the next
sentence) than from the payments pursuant to this Agreement (the
“Specified Benefits”), the Capped Benefit shall be paid
to Executive and the Specified Benefits shall not be paid. The
Capped Benefit is the Specified Benefits, reduced by the amount
necessary to prevent any portion of the Specified Benefits from
being “parachute payments” as defined in
Section 280G(b)(2) of the Internal Revenue Code
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of 1986, as amended
(“IRC”), or any successor provision. In the event of a
reduction in accordance with the preceding sentence, the reduction
will occur in the following order: reduction of the cash severance
pay provided pursuant to Sections 3.1 through 3.3, the vesting
acceleration of outstanding equity awards provided pursuant to
Section 3.5, and the Company-paid life insurance coverage (or
the cash equivalent) provided pursuant to Section 3.4. For
purposes of determining whether Executive would receive a greater
after-tax benefit from the Capped Benefit than from the Specified
Benefits, there shall be taken into account all payments and
benefits Executive will receive upon a Change of Control
(collectively, excluding the Specified Benefits, the “Change
of Control Payments”) as determined in accordance with
Section 280G of the IRC and the regulations issued thereunder.
To determine whether Executive’s after-tax benefit from the
Capped Benefit would be greater than Executive’s after-tax
benefit from the Specified Benefits, there shall be subtracted from
the sum of the before-tax Specified Benefits and the Change of
Control Payments (including the monetary value of any non-cash
benefits) any excise tax that would be imposed under IRC
Section 4999 and all federal, state and local taxes required
to be paid by Executive in respect of the receipt of such payments,
assuming that such payments would be taxed at the highest marginal
rate applicable to individuals in the year in which the Specified
Benefits are to be paid or such lower rate as Executive advises FEI
in writing is applicable to Executive. Unless FEI and Executive
otherwise agree in writing, any determination required under this
Section shall be made in writing by FEI’s independent public
accountants or other nationally recognized accountants reasonably
acceptable to both parties (the “Accountants”), whose
determination shall be conclusive and binding upon Executive and
FEI for all purposes. For purposes of making the calculations
required by this Section, the Accountants may rely on reasonable,
good faith interpretations concerning the application of Sections
280G and 4999 of the IRC. FEI and Executive shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
Section. FEI shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this
Section.
4. Tax Withholding; Subsequent
Employment .
4.1 All payments provided for in
this Agreement are subject to applicable tax withholding
obligations imposed by federal, state and local laws and
regulations.
4.2 The amount of any payment
provided for in this Agreement shall not be reduced, offset or
subject to recovery by FEI by reason of any compensation earned by
Executive as the result of employment by another employer after
termination.
5. Other Agreements or
Arrangements . In the event that severance benefits are payable
to Executive under any other agreement or arrangement with or plan
or policy of FEI in effect at the time of termination (including
but not limited to any employment agreement or severance plan or
policy, but excluding for this purpose any stock option agreement,
restricted stock agreement or restricted stock unit agreement, or
any plan under which any such stock options, shares of restricted
stock or restricted stock units may have been issued, that may
provide for accelerated vesting, extension of exercise periods, or
related benefits upon the occurrence of a change in control, death
or disability), the benefits provided in this Agreement shall be in
lieu of the benefits provided in all such other agreements and
arrangements.
6. Definitions .
6.1 Termination of
Executive’s Employment . Termination of Executive’s
Employment means that FEI has terminated Executive’s
employment with FEI (including any subsidiary of FEI), provided
that such termination is a “separation from service”
within the meaning of Section 409A, as determined by FEI.
Termination of Executive’s Employment shall include
termination by Executive, on or within 18 months following a Change
of Control, by written notice to FEI referring to the applicable
paragraph of Section 6.1, for “Good Reason” based
on:
(A) the assignment to Executive of a
different title, job or responsibilities that results in a
substantial decrease in the level of responsibility of Executive
with respect to the surviving company after the Change of Control
when compared to Executive’s level of responsibility for
FEI’s operations prior to the Change of Control;
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(B) a reduction by FEI or the
surviving company in Executive’s base pay as in effect
immediately prior to the Change of Control, other than a salary
reduction that is part of a general salary reduction affecting
employees generally;
(C) a significant reduction by FEI
or the surviving company in total benefits available to Executive
under cash incentive, stock incentive and other employee benefit
plans after the Change of Control compared to the total package of
such benefits as in effect prior to the Change of Control;
or
(D) FEI or the surviving company
requires Executive to be based more than 50 miles from where
Executive’s office is located immediately prior to the Change
of Control except for required travel on company business to an
extent substantially consistent with the business travel
obligations which Executive undertook on behalf of FEI prior to the
Change of Control.
6.2 Cause . Termination of
Executive’s Employment for “Cause” shall mean
termination upon (a) the willful and continued failure by
Executive to perform substantially Executive’s reasonably
assigned duties with FEI (other than any such failure resulting
from Executive’s incapacity due to physical or mental
illness) after a demand for substantial performance is delivered to
Executive by the Board of Directors, the Chief Executive Officer,
or the President of FEI, which specifically identifies the manner
in which the Board of Directors or FEI believes that Executive has
not substantially performed Executive’s duties or
(b) the willful engaging by Executive in illegal conduct which
is materially and demonstrably injurious to FEI. No act, or failure
to act, on Executive’s part shall be considered
“willful” unless done, or omitted to be done, by
Executive without reasonable belief that Executive’s action
or omission was in, or not opposed to, the best interests of FEI.
Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board of Directors shall be
conclusively presumed to be done, or omitted to be done, by
Executive in the best interests of FEI.
6.3 Change of Control . A
Change of Control shall mean that one of the following events has
taken place:
(A) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of FEI representing more than twenty
percent (20%) of the total voting power represented by
FEI’s then outstanding voting securities (other than to the
extent such beneficial ownership arises from a voting agreement,
proxy or similar document entered into in connection with and
pertaining to a merger or similar transaction approved by
FEI’s Board);
(B) the consummation of the sale or
disposition by FEI of all or substantially all of FEI’s
assets;
(C) the consummation of a merger or
consolidation of FEI with any other corporation, other than a
merger or consolidation which would result in the voting securities
of FEI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power
represented by the voting securities of FEI or such surviving
entity or its parent outstanding immediately after such merger or
consolidation; or
(D) a change in the composition of
the Board occurring within a one (1) year period, as a result
of which less than a majority of the directors are Incumbent
Directors. “Incumbent Directors” means directors who
either (A) are directors of FEI as of the date hereof, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least two-thirds of the directors of
FEI at the time of such election or nomination (but will 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 FEI).
Notwithstanding anything in the
foregoing to the contrary, no Change of Control shall be deemed to
have occurred for purposes of this Agreement by virtue of any
transaction which results in Executive, or a group of
persons
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which includes Executive, acquiring,
directly or indirectly, securities representing 20 percent or more
of the voting power of outstanding securities of FEI.
6.4 Disability . Termination
of Executive’s Employment based on “Disability”
shall mean termination without further compensation under this
Agreement, due to Executive’s absence from Executive’s
full-time duties with FEI for 180 consecutive days as a result of
Executive’s incapacity due to physical or mental illness,
unless within 30 days after notice of termination by FEI following
such absence Executive shall have returned to the full–time
performance of Executive’s duties.
7. Successors; Binding
Agreement .
7.1 This Agreement shall be binding
on and inure to the benefit of FEI and its Successors and
assigns.
7.2 This Agreement shall inure to
the benefit of and be enforceable by Executive and
Executive’s legal representatives, executors, administrators
and heirs. None of the rights of Executive to receive any form of
compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution.
Any other attempted assignment, transfer, conveyance, or other
disposition of Executive’s right to compensation or other
benefits will be null and void.
8. Resignation of Corporate
Offices . Executive will resign Executive’s office, if
any, as a director, officer or trustee of FEI, its subsidiaries or
affiliates and of any other corporation or trust of which Executive
serves as such at the request of FEI, effective as of the date of
termination of employment. Executive agrees to provide FEI such
written resignation(s) upon request and that no severance will be
paid until after such resignation(s) are provided.
9. Governing Law, Attorneys
Fees . This Agreement shall be construed in accor
