ACTEL CORPORATION
MANAGEMENT CONTINUITY AGREEMENT
This Management Continuity Agreement (the "Agreement") is made and
entered into by and between _____________________ (the "Employee") and Actel
Corporation, a California corporation (the "Company"), effective as of
_________________, _______ (the "Effective Date").
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by or of 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 shareholders 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 below) of the Company.
B. The Board believes that it is in the best interests of the Company and
its shareholders to provide the Employee with an incentive to continue
employment and to motivate the Employee to maximize the value of the
Company upon a Change of Control for the benefit of its shareholders.
C. The Board believes that it is imperative to provide the Employee with
certain severance benefits upon Employee's termination of employment
following a Change of Control that provides the Employee with enhanced
financial security and provides incentive and encouragement to the
Employee to remain with the Company notwithstanding the possibility or
occurrence of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section
4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that
all 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. If the Employee's employment terminates for any
reason, including (without limitation) any termination prior to a
Change of Control, the Employee shall not be entitled to any payments,
benefits, damages, awards, or compensation other than as provided by
this Agreement or as may otherwise be available in accordance with the
Company's established employee plans and practices or pursuant to
other agreements with the Company.
3. Severance Benefits
(a) Termination Following A Change of Control. If Employee's
employment with the Company terminates as a result of an
Involuntary Termination other than for Cause, or such Employee's
employment is terminated due to the death of the Employee, at any
time following a Change of Control when Employee's options under
the Company's stock option plans that were not fully vested on
the date of the Change of Control (the "Unvested Options") have
not yet fully vested (the "Protection Period"), then, subject to
Section 4, one hundred percent (100%) of the Unvested Options
held by the Employee shall automatically and immediately be
accelerated in full so as to become completely vested and the
Employee may exercise any option under the Company's stock option
plans that was not fully exercised on the date of the Change of
Control at any time within twelve (12) months following the
Termination Date (but in no event later than the expiration of
the term of the option).
(b) Voluntary Resignation; Termination For Cause. If the Employee's
employment terminates by reason of the Employee's voluntary
resignation (and is not an Involuntary Termination), or if the
Employee is terminated for Cause, then the Employee shall not be
entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company's then
existing severance and benefits plans and practices or pursuant
to other agreements with the Company.
(c) Disability. If the Company terminates the Employee's employment
as a result of the Employee's Disability, then the Employee shall
not be entitled to receive severance or other benefits except for
those (if any) as may then be established under the Company's
then existing severance and benefits plans and practices or
pursuant to other agreements with the Company.
(d) Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior
to the occurrence of a Change of Control or after the Protection
Period, then the Employee shall be entitled to receive severance
and any other benefits only as may then be established under the
Company's existing severance and benefits plans and practices or
pursuant to other agreements with the Company.
4. Attorney Fees, Costs and Expenses. The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable
attorney fees, costs and expenses incurred by the Employee in
connection with any action brought by Employee to enforce his
rights hereunder, regardless of the outcome of the action.
5. Limitation on Payments. In the event that the severance benefits
provided for in this Agreement or otherwise payable to the
Employee (i) constitute "parachute payments" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") and (ii) but for this Section 5, would be subject to
the excise tax imposed by Section 4999 of the Code, then the
Employee's severance benefits under Section 3(a) shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise
tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the
applicable federal, state, and local income taxes and the excise
tax imposed by Section 4999, results in the receipt by the
Employee on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of
such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section 5 shall be
made in writing by the Company's independent public accountants
immediately prior to Change of Control (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee
and the Company for all purposes. For purposes of making the
calculations required by this Section 5, the Accountants may make
reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code.
The Company and the Employee shall furnish to the Accountants
such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this Section
5.
6. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his
responsibilities as an employee and intended to result in
substantial personal enrichment of the Employee, (ii) the
conviction of a felony, (iii) a willful act by the Employee
which constitutes gross misconduct and which is injurious to
the Company, and (iv) following delivery to the Employee of
a written demand for performance from the Company which
describes the basis for the Company's belief that the
Employee has not substantially performed his duties,
continued violations by the Employee of the Employee's
obligations to the Company which are demonstrably willful
and deliberate on the Employee's part.
(b) Change of Control. "Change of Control" means the occurrence
of any of the following events after the Effective Date:
(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
50% 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 occurring
within a two-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);
(iii)The shareholders of the Company approve a merger or
consolidation of the Company with any other
corporation; or
(iv) 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) Disability. "Disability" shall mean that the Employee has
been unable to perform his Company duties as the result of
his incapacity due to physical or mental illness, and such
inability, at least 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
Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the
Company of its intention to terminate the Employee's
employment. In the event that the Employee resumes the
performance of substantially all of his duties hereunder
before the termination of his employment becomes effective,
the notice of intent to terminate shall automatically be
deemed to have been revoked.
(d) Involuntary Termination. "Involuntary Termination" shall
mean (i) without the Employee's express written consent, a
significant reduction in the Employee's duties, authority or
responsibilities, relative to the Employee's duties,
authority, or responsibilities as in effect immediately
prior to such reduction, or the assignment to Employee of
such reduced duties, authority, or responsibilities; (ii)
without the Employee's express written consent, a
substantial reduction, without good business reasons, in the
facilities and perquisites (including office space and
location) available to the Employee immediately prior to
such reduction; (iii) a reduction by the Company in the base
salary of the Employee as in effect immediately prior to
such reduction; (iv) a material reduction by the Company in
the kind or level of employee benefits, including bonuses,
to which the Employee was entitled immediately prior to such
reduction with the result that the Employee's overall
benefits package is significantly reduced; (v) the
relocation of the Employee to a facility or a location more
than thirty (30) miles from the Employee's then present
location, without the Employee's express written consent;
(vi) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause,
or any purported termination for which the grounds relied
upon are not valid; (vii) the failure of the Company to
obtain the assumption of this agreement by any successors
contemplated in Section 7(a) below; or (viii) any act or set
of facts or circumstances which would, under California case
law or statute, constitute a constructive termination of the
Employee.
(e) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability,
thirty (30) days after notice of termination is given to the
Employee (provided that the Employee shall not have returned
to the performance of the Employee's duties on a full-time
basis during such thirty (30)-day period), (ii) if the
Employee's employment is terminated by the Company for any
other reason, the date on which a notice of termination is
given, provided that if within thirty (30) days after the
Company gives the Employee notice of termination, the
Employee notifies the Company that a dispute exists
concerning the termination or the benefits due pursuant to
this Agreement, then the Termination Date shall be the date
on which such dispute is finally determined, either by
mutual written agreement of the parties, or a by final
judgment, order, or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected), or (iii) if the
Agreement is terminated by the Employee, the date on which
the Employee delivers the notice of termination to the
Company.
7. Successors
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger,
consolidation, liquidation, or otherwise) to all or
substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would
be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's
business and/or assets which executes and delivers the
assumption agreement described in this Section 7(a) or which
becomes bound by the terms of this Agreement by operation of
law.
(b) Employee's Successors. The terms of this Agreement and all
rights of the Employee hereunder shall inure to the benefit
of, and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees.
8. Notice
(a) General. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to
have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in
writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for
Cause or by the Employee as a result of a voluntary
resignation or an Involuntary Termination shall be
communicated by a notice of termination to the other party
hereto given in accordance with Section 8(a) of this
Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the
provision so indicated, and shall specify the termination
date (which shall be not more than 30 days after the giving
of such notice). The failure by the Employee to include in
the notice any fact or circumstance which contributes to a
showing of Involuntary Termination shall not waive any right
of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights
hereunder.
9. Miscellaneous Provisions
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any benefit contemplated by this
Agreement, nor shall any such benefit be reduced by any
earnings that the Employee may receive from any other
source.
(b) Waiver. No provision of this Agreement shall be modified,
waived, or discharged unless the modification, waiver, or
discharge is agreed to in writing and signed by the Employee
and by an authorized officer of the Company (other than the
Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No agreements, representations, or
understandings (whether oral or written and whether express
or implied) which are not expressly set forth in this
Agreement have been made or entered into by either party
with respect to the subject matter hereof. This Agreement
shall take precedence over any other documents that may
conflict with this Agreement.
(d) Choice of Law. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the
laws of the State of California.
(e) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision
hereof, which shall remain in full force and effect.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but
all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the Effective Date.
ACTEL CORPORATION EMPLOYEE
By:
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Xxxx X. East (Signature)
President & Chief Executive Officer
