|
EXHIBIT 10.2
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 severance 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.
Severance Benefits .
(a)
Benefits Following Termination During Change of Control
Period . Upon termination of employment for any
reason other than for “Cause” (as defined herein)
during the Change of Control Period 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)
Involuntary Termination Other than for Cause, Voluntary
Termination for Good Reason 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”), (i) the Employee
terminates his or her employment with the Company (or any
parent or subsidiary of the Company) for “Good
Reason” (as defined herein) or (ii) the Company (or any
parent or subsidiary of the Company) terminates the
Employee’s employment for 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 percent 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 percent (100%) of the
Employee’s target bonuses for which the 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.)
(ii)
Continued Employee Benefits . Reimbursement
of Employee’s health, dental, vision, and life insurance
coverage at the same level of coverage as was provided to such
Employee immediately prior to termination and at the same
ratio of Company premium subsidy to Employee premium payment
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) twelve (12)
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
the 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 he is in the same position, on an after-tax basis, as
if such taxes did not apply. For purposes of Title
X of 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)
Voluntary Resignation . If the
Employee’s employment with the Company terminates during
the Change of Control Period voluntarily by the Employee other
than for Good Reason, then the Employee shall not be entitled
to receive severance or other benefits except for those
described in 3(a)(i) and as may then be established under the
Company’s then existing severance and benefits plans and
practices or pursuant to other written agreements with the
Company.
(e)
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.
(f)
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 . In the
event that the benefits provided for in this agreement or
otherwise payable to Employee, including vesting acceleration
upon a change of control pursuant to Company equity plans or
any Employment Agreement which may exist
(i)
| 
