EXHIBIT
10.1
MICROCHIP TECHNOLOGY INCORPORATED
CHANGE OF CONTROL SEVERANCE AGREEMENT
This
Change of Control Severance Agreement (the
“Agreement”) is made and entered into by and
between _____________________ (the “Employee”) and
Microchip Technology Incorporated (the “Company”),
effective as of ____________________ (the “Effective
Date”).
RECITALS
1. It
is expected that the Company 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 the Employee and can
cause the Employee to consider alternative employment
opportunities. The Board has determined that it is
in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication
and objectivity of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined herein) of the Company.
2. 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 or her employment and to motivate
the Employee to maximize the value of the Company upon a
Change of Control for the benefit of its
stockholders.
3. The
Board believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control and certain
benefits upon the Employee’s termination of employment
following a Change of Control. These benefits will
provide the Employee with enhanced financial security and
incentive and encouragement to remain with the Company
notwithstanding the possibility of a Change of
Control.
4. Certain
capitalized terms used in the Agreement are defined in
Section 5 below.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1.
Term of Agreement . This Agreement shall
terminate upon the date that all of the obligations of the
parties hereto with respect to this Agreement have been
satisfied.
2.
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, except as may otherwise be specifically provided under
the terms of any written formal employment agreement or offer
letter between the Company and the Employee (an
“Employment Agreement”). If the
Employee’s employment terminates prior to the Change of
Control Period, the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation other than
as provided by this Agreement, or under his or her Employment
Agreement if any exists in writing, or as may otherwise be
available in accordance with the Company’s established
employee plans.
3.
Benefits .
(a)
Benefits Upon a Change of Control
. Immediately prior to consummation of a Change of
Control the Employee shall receive the following
benefit:
(i)
Equity Compensation Acceleration . One
hundred percent (100%) of the Employee’s outstanding
stock options, stock appreciation rights, restricted stock
units and other Company equity compensation awards (the
“Equity Compensation Awards”) shall immediately
vest and become exercisable. Any Company stock
options and stock appreciation rights shall remain exercisable
following the Employee’s employment termination for the
period prescribed in the respective option and stock
appreciation right agreements.
(b)
Termination Other than for Cause During the Change of
Control Period . If within the three-month
period preceding or any time following a Change of Control
(the “Change of Control Period”), the Employee
ceases to be employed with the Company (or any parent or
subsidiary of the Company) for any reason other than
“Cause” (as defined herein), and the Employee
signs, and does not revoke, a standard release of claims with
the Company in a form acceptable to the Company (the
“Release”), then the Employee shall receive the
following severance from the Company:
(i)
Severance Payment . The Employee shall be
entitled to receive a lump-sum severance payment (less
applicable withholding taxes) equal to [one hundred/two
hundred percent (100/200%)] of the Employee’s annual
base salary (as in effect immediately prior to (A) the Change
of Control, or (B) the Employee’s termination of
employment, whichever is greater) plus [one hundred/two
hundred percent (100/200%)] of the Employee’s target
bonuses for which Employee was or would have been eligible
(for the fiscal year in which the Change of Control or the
Employee’s termination occurs, whichever is greater.)
100%/200% (one hundred/two hundred percent)
(ii)
Continued Employee Benefits . Reimbursement
of Employee’s health, dental, vision, and life insurance
coverage at the same level of coverage premiums as was
provided to such Employee immediately prior to termination and
at the same ratio of Company premium payment to Employee
premium subsidy as was in effect immediately prior to
termination (the “Company-Paid
Coverage”). If such coverage included the
Employee’s eligible dependents immediately prior to
termination, such dependents shall also be covered at Company
expense. Company-Paid Coverage shall continue until
the earlier of (A) [12 (twelve)/ 24 (twenty-four)] months
from the date of termination, or (B) the date upon which the
Employee and his dependents become covered under another
employer’s group health, dental, vision, long-term
disability or life insurance plans that provide Employee and
his dependents with comparable benefits and levels of
coverage; provided, however that if such reimbursement results
in the imposition of additional taxes to Employee under
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), Employee shall be paid an additional
full gross-up for such additional taxes, so that Employee is
in the same position, on an after-tax basis, as if such taxes
did not apply. For purposes of Title X of to the
Consolidated Budget Reconciliation Act of 1985
(“COBRA”), the date of the “qualifying
event” for Employee and his or her dependents shall be
the date upon which the Company-Paid Coverage terminates.
Coverage in this Section is dependent on the valid and timely
election of continued COBRA coverage under applicable
law.
(c)
Timing of Severance Payments . Except as
otherwise provided herein, the severance payment to which
Employee is entitled shall be paid by the Company to Employee
in cash and in full, not later than ten (10) calendar days
after the effective date of the Release. If the
Employee should die before all amounts have been paid, such
unpaid amounts
shall be paid in a lump-sum payment (less any withholding
taxes) to the Employee’s designated beneficiary, if
living, or otherwise to the personal representative of the
Employee’s estate.
(d)
Termination for Cause; Termination Prior to Change of
Control Period . In the event the
Employee’s employment is terminated for Cause, or for
any reason prior to the Change of Control Period, then the
Employee shall not be entitled to receive severance and any
other benefits except as may then be established under the
Company’s existing written severance and benefits plans
and practices or pursuant to other written agreements with the
Company.
(e)
Internal Revenue Code Section 409A
. Notwithstanding any other provision of this
Agreement, if the Employee is a “key employee”
under Code Section 409A and a delay in making any payment or
providing any benefit under this Agreement is required by Code
Section 409A and any Treasury Regulations, and IRS guidance
thereunder, or necessary in the good faith judgment of the
Company, to avoid the Employee incurring additional tax under
Section 409A, such payments shall not be made until the end of
six (6) months following the date of the Employee’s
separation from service in accordance with Code Section
409A.
4.
Golden Parachute Excise Tax .
(a)
Parachute Payment Full Gross-Up
. &
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