AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
EXHIBIT
10.1
AMENDED
AND RESTATED CHANGE OF CONTROL AGREEMENT
This
Amended and Restated Change of Control Agreement (this “Agreement”) is made this
_______ day of ________, 2008 by and between ____________ (the “Executive”) and
Pericom Semiconductor Corporation, a California corporation (the
“Company”).
WHEREAS,
the Executive is employed by the Company; and
WHEREAS,
the Executive and the Company are party to that certain Change of Control
Agreement dated as of [•] (the “Prior Agreement”), which provides for, among
other provisions, the payment of severance and other benefits to the Executive
upon the termination of the Executive’s employment with the Company following a
Change of Control (as hereinafter defined), under certain circumstances
specified in the Prior Agreement.
WHEREAS,
the Company and the Executive now find it desirable and necessary to enter into
this Agreement, which amends the provisions of the Prior Agreement to comply
with the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the Executive now wishes to manifest his or her
consent to the amendments to the Prior Agreement by entering into this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Definitions.
(a) Change of
Control. For purposes of this Agreement only, a “Change of
Control” shall be defined as any of the following events:
(i) An
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “Person” (as the term is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)) immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding
Voting Securities;
(ii) A
merger or consolidation in which the Company is not the surviving entity, except
for (1) a transaction in which the principal purpose is to change the state of
the Company’s incorporation, or (2) a transaction in which the Company’s
stockholders immediately prior to such merger or consolidation hold (by virtue
of securities received in exchange for their shares in the Company) securities
of the surviving entity representing more than fifty percent (50%) of the total
voting power of such entity immediately after such transaction;
(iii) The
individuals who are members of the Company’s Board of Directors (the “Board”) as
of the date this Agreement is approved by the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that if
the appointment, election or nomination for election by the Company’s
stockholders, of any new director is approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Agreement,
be considered a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a 11 promulgated the 0000
Xxx) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a “Proxy Contest”) including by reason
of any agreement intended to avoid or settle any Election Contest or Proxy
Contest;
(iv) The
sale, transfer or other disposition of all or substantially all of the assets of
the Company, unless the Company’s stockholders immediately prior to such sale,
transfer or other disposition hold (by virtue of securities received in exchange
for their shares in the Company) securities of the purchaser or other transferee
representing more than fifty percent (50%) of the total voting power of such
entity immediately after such transaction; or
(v) Any
reverse merger in which the Company is the surviving entity but in which the
Company’s stockholders immediately prior to such merger do not hold (by virtue
of their shares in the Company held immediately prior to such transaction)
securities of the Company representing more than fifty percent (50%) of the
total voting power of the Company immediately after such
transaction.
(b) Cause. For
purposes of this Agreement only, the Company shall have “Cause” to immediately
terminate the Executive’s employment hereunder if (i) Executive engages in fraud
or embezzlement against the Company and/or its subsidiaries, (ii) Executive
misappropriates Company property, proprietary information and/or trade secrets,
(iii) Executive demonstrates material unfitness for service or persistent
deficiencies in performance, (iv) Executive engages in misconduct, which
misconduct is demonstrably and materially injurious to the Company and/or its
subsidiaries; (v) Executive refuses to follow a specific, lawful direction or
order of the Company; (vi) Executive breaches any provision of this Agreement or
other agreements between Executive and the Company; or (vii) Executive dies or
becomes mentally or physically incapacitated and cannot carry out his
duties.
(c) Voluntary Resignation for Good
Reason. A voluntary resignation by Executive “Good Reason”
shall mean a voluntary resignation by Executive following any one of the
following events, provided Executive provides Company with at least two (2)
weeks notice of such termination, and provides such notice no later than thirty
(30) days following any one of the following events: (i) a material
change in Executive’s position, title, duties, or responsibilities, without
Employee’s consent, which results in a material reduction of Executive’s level
of responsibility, the assignment of duties and responsibilities which are
materially inconsistent with Executive’s position or responsibilities, or the
removal of the Executive from or failure to reelect the Executive to any of such
positions, except in connection with the termination of employment for Cause;
(ii) a reduction by the Company in the Executive’s annual salary then in effect,
without Executive’s consent, other than a reduction similar in percentage to a
reduction generally applicable to similarly situated employees of the Company;
(iii) a material reduction without the Executive’s consent in the kind or level
of benefits provided to Executive under any benefit plan of the Company in which
the Executive is participating or deprive the Executive of any material fringe
benefit enjoyed by the Executive, except those changes generally affecting
similarly situated employees of the Company.
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(d) Closing
Date. “Closing Date” shall mean the date of the first closing
of any transactions constituting a Change of Control.
(e) Termination
Date. “Termination Date” shall mean the date the Executive’s
employment is terminated by the Company other than for Cause or is terminated by
the Executive for Good Reason.
(f) Company. “Company”
shall mean Pericom Semiconductor Corporation and its successors or assigns
(including without limitation, any entity, entities or persons acquiring control
of the Company through a Change of Control).
2. Severance Payments and Benefits;
Vesting of Equity Incentives. If, during the twelve (12) month
period following the Closing Date of a Change of Control, the Company shall
terminate the Executive’s employment other than for Cause or the Executive shall
voluntarily resign from employment for Good Reason, then in such
event:
(a) Severance
Payments. The Company shall pay the Executive, in a lump sum
in cash within 30 days after the Termination Date, an amount equal to
Executive’s annualized base salary as in effect as of the Termination
Date;
(b) Bonus. In addition
to the severance payments set forth in Section 2(a) above, the Company shall pay
the Executive a bonus according to the following formula:
(i) If
the Termination Date occurs after the Executive’s bonus for the last completed
fiscal year has been determined by the Compensation Committee of the Board of
Directors (the “Compensation Committee”) and paid to the Executive, then the
Executive shall receive a bonus in the amount of no less than:
X1 + X1
(Y/365)
(ii) If
the Termination Date occurs before the Executive’s bonus for the last completed
fiscal year has been determined by the Compensation Committee and paid to the
Executive, then the Executive shall receive a bonus in the amount of no less
than:
2(X2) +
X2 (Y/365)
where:
|
|
“X1”
=
|
the
bonus amount paid to the Executive for the last completed fiscal
year;
|
|
|
“X2”
=
|
the
bonus amount paid to the Executive for the fiscal year prior to the last
completed fiscal year;
|
and
|
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“Y”
=
|
the
number of days in the current fiscal year prior to and including the
Termination Date.
|
The bonus
shall be paid in a lump sum in cash within 30 days after the Termination
Date. Such amount shall be payable to the Executive regardless of the
Company’s financial performance, and shall not be conditioned on the Company’s
continued satisfaction of any goals or criteria required by any compensation
plan;
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(c) Medical and Dental
Benefits. During the period of twelve months commencing on the
date next following the Termination Date (the “Severance Period”), the Company
shall either, at its discretion: (i) continue the Executive’s medical
and dental benefits as such benefits are generally offered to the Company’s
employees as of the Termination Date, or (ii) reimburse the Executive for COBRA
payments made by the Executive to maintain his medical and dental benefits, as
applicable under the Company’s insurance policies;
(d) Life
Insurance. During the Severance Period, the Company shall
continue payment of the Executive’s life insurance premiums, if
applicable;
(e) Stock Options, Performances Shares
or Units and Restricted Shares or Units. Any outstanding stock
option, performance share or unit, or restricted share or unit shall vest as to
that number of shares or other units that would have been vested on the various
anniversary dates of the Termination Date and become exercisable or, with
respect to such performance share or unit or restricted share or unit, be
released from restrictions on transfer and repurchase rights, immediately prior
to the Termination Date to the extent provided in the addendum to this Agreement
relating to vesting acceleration; and
(f) Extension of Stock Option Exercise
Term. All vested stock options held by the Executive as of the
Termination Date shall expire six (6) months after the
Termination Date; provided, however, that any extension contemplated by this
provision shall not extend beyond the date that is the earlier of the tenth
anniversary of the date of grant or the original expiration date of the term of
the option. Note: Exercising ISO stock
options later than three months after the Executive’s Termination Date is a
disqualifying event for ISO purposes and will turn the ISO into a non-qualifying
stock option.
(g) Noncompetition and
Nonsolicitation. Executive acknowledges and agrees that during
his employment with the Company he has had access to the Company’s confidential
and proprietary information and the activities forbidden by this subsection
would necessarily involve the improper use and disclosure of such
information. To forestall this use or disclosure, Executive agrees
that during the Severance Period he shall not, directly or
indirectly: (i) engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise) or have any ownership interest in,
or participate in the financing operation, management, control of, any person,
firm, corporation or business that engages in any business activity that is
competitive with the Company (or of any affiliated Company), provided, however,
that nothing contained in this Section 2(g)(i) shall be construed to prohibit
Executive from purchasing and owning (directly or indirectly) up to one percent
(1%) of the capital stock or other securities of any corporation or other entity
whose stock or securities are traded on any national or regional securities
exchange or the national over-the-counter market and such ownership shall not
constitute a violation of this Section 1(e)(1); (ii) divert or attempt to divert
from the Company (or any affiliated Company) any business of any kind in which
it is engaged, including, without limitation, the solicitation of or
interference with any of its suppliers or customers; (iii) solicit, hire,
recruit, or employ any person or entity who is employed by or has a contractual
relationship with the Company, or encourage any person or entity who is employed
by or has a contractual relationship with the Company to terminate their
employment or contractual relationship with the Company. Executive
understands and agrees his receipt of the benefits described in paragraphs
2(a)-(f) above is contingent upon his continued adherence to the restrictions
set forth in this paragraph 2(g) during the Severance Period.
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(h) Application of Section 409A of the
Code. Anything in this Agreement to the contrary
notwithstanding, any payment under Sections 2(a) or 2(b), and delivery of shares
in connection with the accelerated vesting of an equity award under Section
2(e), in each case, that is nonqualified deferred compensation subject to
Section 409A of the Code shall be paid or delivered only to the extent the
Executive experiences a “separation from service,” within the meaning of Section
409A of the Code. Further, in the event that the Executive is a
“specified employee,” within the meaning of Section 409A of the Code (as
determined in accordance with the methodology established by the Company as in
effect on the Termination Date) on the Termination Date, any amounts payable
under Sections 2(a) and 2(b) hereof and any delivery of shares underlying
restricted stock units or other equity awards that are subject to accelerated
vesting under Section 2(e) hereof, in each case, to the extent such amounts or
equity awards are nonqualified deferred compensation subject to Section 409A of
the Code, shall be paid or delivered, as applicable, and, in the case of cash
amounts payable under Section 2(a) and 2(b) above, with interest on any delayed
payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code, on the first business day of the seventh month following the
Termination Date, or, if earlier, the date of Executive’s death, to the extent
such delayed payment or delivery is required in order to avoid a prohibited
distribution under Section 409A(a)(2) of the Code (the “Delayed Payment
Date”). On the Delayed Payment Date, all payments and delivery of
shares deferred pursuant to this Section 2(h) shall be paid, or delivered, as
applicable, in a lump sum to the Executive, and any remaining payments due under
the Agreement shall be paid in accordance with the normal payment dates
specified in this Agreement.
3. No Employment Agreement, Employment
at Will. Executive and the Company each acknowledge and agree
that: (i) this Agreement does not provide for the terms and
conditions of Executive’s employment with the Company prior to any Change of
Control and does not require or obligate Executive to provide services to the
Company or the Company to continue to employ Executive; and (ii) Executive’s
employment with the Company is and remains an employment relationship terminable
at will and without advance notice by either Executive or the
Company.
4. Release of the Company and Its
Affiliates. Executive’s receipt of the benefits described in
paragraphs 2(a)-(f) above shall be contingent upon Executive executing a general
release of claims in a commercially customary form prescribed by the Company,
which releases and discharges the Company and any past, present or future
agents, attorneys, directors, officers, stockholders, employees, affiliates,
predecessors and successors of the Company, of and from any and all claims and
demands of every kind and nature, in law, equity or otherwise, known or unknown,
disclosed or undisclosed, and a covenant not to xxx or prosecute any legal
action or proceeding based upon such claims provided that the requirement
contemplated in this Section 4 shall not serve to modify the time and form of
payment of a nonqualified deferred compensation subject to Section 409A of the
Code payable under this Agreement.
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5. Exclusive
Remedy. Executive’s right to severance payment and other
severance benefits pursuant to paragraphs 2 (a)-(f) above shall be Executive’s
sole and exclusive remedy for any termination of Executive’s employment by the
Company other than for Cause or by Executive for Good Reason following a Change
of Control. The payments, severance benefits and severance
protections provided to Executive pursuant to this Agreement are provided in
lieu of any severance payments, severance benefits and severance protections
provided in any other plan or policy of the Company, except as may be expressly
provided in writing under the terms of any plan or policy of the Company, or in
a written agreement between the Company and Executive entered into after the
date of this Agreement, and only to the extent as would not result in a
violation of Section 409A of the Code. Notwithstanding the foregoing,
nothing in this Agreement shall prevent or limit Executive’s continuing or
future participation in any benefit, bonus, incentive or other plan or program
provided by the Company (except for any severance or termination policies,
plans, programs or practices) and for which Executive may qualify, nor shall
anything herein limit or reduce such rights as Executive may have under any
other agreements with the Company (except for any severance or termination
agreement). Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan or program of the Company shall be
payable in accordance with such plan or program, except as explicitly modified
by this Agreement.
6. Excise
Tax. Notwithstanding anything contained in this Agreement to
the contrary, to the extent that any payment or benefit (within the meaning of
Section 280G(b)(2) of the Code) to Executive or for Executive’s benefit, paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise in connection with, or arising out of, Executive’s employment with
the Company or a Change of Control (a “Payment” or “Payments”), would be subject
to the excise tax imposed under Code Section 4999, or any interest or penalties
are incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), the Payments shall be reduced (but not below
zero) if and to the extent necessary so that no Payment to be made or benefit to
be provided to Executive shall be subject to the Excise Tax (such reduced amount
is hereinafter referred to as the “Limited Payment Amount”). The
Company shall reduce or eliminate the Payments by (i) first reducing or
eliminating those payments or benefits which are payable in cash and (ii) then
reducing or eliminating non-cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the furthest in time
from the Determination (as hereinafter defined); provided, however, that,
anything to the contrary in the foregoing notwithstanding, payments or benefits
that constitute nonqualified deferred compensation subject to Section 409A of
the Code shall be reduced or eliminated last in time . Any notice
given by Executive pursuant to the preceding sentence shall take precedence over
the provisions of any other plan, arrangement or agreement governing Executive’s
rights and entitlements to any benefits or compensation.
(a) An
initial determination as to whether the Payments shall be reduced to the Limited
Payment Amount and the amount of such Limited Payment Amount shall be made, at
the Company’s expense, by the accounting firm that is the Company’s independent
accounting firm as of the date of the Change of Control (the “Accounting
Firm”). The Accounting Firm shall provide its determination (the
“Determination”), together with detailed supporting calculations and
documentation, to the Company and Executive within five (5) days after the
Termination Date, if applicable, or such other time as requested by the Company
or by Executive (provided Executive reasonably believes that any of the Payments
may be subject to the Excise Tax) and, if the Accounting Firm determines that no
Excise Tax is payable by Executive with respect to a Payment or Payments, it
shall furnish Executive with an opinion reasonably acceptable to Executive that
no Excise Tax will be imposed with respect to any such Payment or
Payments. Within ten (10) days after the delivery of the
Determination to Executive, Executive shall have the right to dispute the
Determination (the “Dispute”). If there is no Dispute, the
Determination shall be binding, final and conclusive upon the Company and
Executive, subject to the application of Section 6(b) below.
(b) As
a result of the uncertainty in the application of Sections 4999 and 280G of the
Code, it is possible that the Payments to be made to, or provided for the
benefit of, Executive will be either greater (an “Excess Payment”) or less (an
“Underpayment”) than the amounts provided for by the limitations contained in
this Section 6.
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(i) If
it is established, pursuant to a final determination of a court or an Internal
Revenue Service (the “IRS”) proceeding which has been finally and conclusively
resolved, that an Excess Payment has been made, such Excess Payment shall be
deemed for all purposes to be a loan to Executive made on the date Executive
received the Excess Payment, which loan Executive must repay to the Company
together with interest at the applicable federal rate under Code Section
7872(f)(2); provided,
that no loan shall be deemed to have been made and no amount will be payable by
Executive to the Company unless, and only to the extent that, the deemed loan
and payment would either reduce the amount on which Executive is subject to tax
under Code Section 4999 or generate a refund of tax imposed under Code Section
4999.
(ii) In
the event that it is determined (i) by the Accounting Firm, the Company (which
shall include the position taken by the Company, or together with its
consolidated group, on its federal income tax return) or the IRS, (ii) pursuant
to a determination by a court, or (iii) upon the resolution to Executive’s
satisfaction of the Dispute, that an Underpayment has occurred, the Company
shall pay an amount equal to the Underpayment to Executive within ten (10) days
after such determination or resolution, together with interest on such amount at
the applicable federal rate under Code Section 7872(f)(2) from the date such
amount would have been paid to Executive until the date of payment.
7. Notices. All
notices or other communications required or permitted hereunder shall be made in
writing and shall be deemed to have been duly given if delivered by hand, by
facsimile or mailed, postage prepaid, by certified or registered mail, return
receipt requested, and addressed to the Company at:
Pericom
Semiconductor Corporation
0000
Xxxxx Xxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Attention: Chief
Executive Officer
or to the
Executive at:
___________________________
___________________________
___________________________
___________________________
Notice of
change of address shall be effective only when done in accordance with this
Section.
8. Arbitration. The
parties hereby agree that any dispute, claim or controversy arising out of,
relating to or in connection with this Agreement (“Arbitrable Claims”) shall be
determined exclusively by and through final and binding arbitration in Santa
Xxxxx County, California, each party hereto expressly and conclusively waiving
its right to proceed to a judicial determination with respect to the merits of
such arbitrable matters. Such arbitration shall be conducted in
accordance with the American Arbitration Association National Rules for
Resolution of Employment Disputes then in effect before a neutral and impartial
arbitrator who shall be selected by mutual agreement of the
parties. The arbitrator shall prepare a written decision containing
the essential findings and conclusions on which the award is based so as to
ensure meaningful judicial review of the decision. The arbitrator
shall apply the same substantive law, with the same statutes of limitations and
same remedies, that would apply if the claims were brought in a court of
law. This Agreement shall be governed by the California Arbitration
Act and the arbitrator, in ruling on procedural and substantive issues raised in
the arbitration itself, shall apply the substantive law of the State of
California. Either party may bring an action in court to compel
arbitration under this Agreement and to enforce an arbitration
award. Otherwise, neither party shall initiate or prosecute any
lawsuit in any way related to any Arbitrable Claim. Notwithstanding
the foregoing, the parties shall have the right to obtain provisional remedies
or interim relief from a court of competent jurisdiction for any claim or
controversy arising out of or related to violations of Section 2(g) of this
Agreement. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL
BY JURY IN REGARD TO ARBITRABLE CLAIMS.
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9. Successors. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
assigns. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive or Executive’s beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive’s legal personal representative.
10. Governing Law. The
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of California.
11. Entire
Agreement. This Agreement represents the entire Agreement and
understanding between the Company and the Executive concerning the Executive’s
termination of employment with the Company after a Change of
Control. This Agreement supersedes any prior agreement or
understanding of the parties with respect to the subject matter hereof,
including, without limitation, the Prior Agreement.
12. Amendment or
Waiver. No provision of this Agreement may be amended unless
and to the extent such amendment is agreed to in writing and signed by both the
Executive and an authorized officer of the Company. No waiver by
either party of any breach by the other party of any condition, obligation,
performance or provision contained in this Agreement shall be deemed a waiver of
a similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by the party to be
charged with the waiver.
13. Compliance with Section 409A of the
Code. It is the intent of the parties to this Agreement that
any of the payments set forth in this Agreement that constitute nonqualified
deferred compensation subject to Section 409A of the Code shall be made in a
manner that complies with Section 409A of the Code and any ambiguities will be
construed accordingly. The Company reserves the right, to the extent
the Company deems necessary or advisable in its sole discretion, to unilaterally
amend or modify this Agreement as may be necessary to ensure that all benefits
provided under this Agreement are made in a manner that qualifies for exemption
from or complies with Section 409A of the Code to the extent permitted under
Section 409A of the Code, provided, however, that the Company makes no
representations that the compensation or benefits provided under this Agreement
will be exempt from or comply with Section 409A of the Code and makes no
undertaking to preclude Section 409A of the Code from applying to the
compensation and benefits provided under this Agreement.
14. Severability. If
any provision of this Agreement of the application thereof to any person, place,
or circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable, or voice, the remainder of this Agreement and such
provisions as applied to other persons, places, and circumstances shall remain
in full force and effect.
15. Counterparts. This
Agreement may be executed in counterparts, and each counterpart shall have the
same force and effect as the original and shall constitute an effective, binding
agreement on the part of each of the undersigned.
16. Attorneys’
Fees. If any legal action, arbitration or other proceeding is
brought to interpret or enforce the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys’ fees and any other
costs incurred in that proceeding, in addition to any other relief to which it
is entitled.
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first above written.
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PERICOM
SEMICONDUCTOR CORPORATION, EXECUTIVE:
a
California corporation
By: ___________________________ By: ___________________________
[Signature] [Signature]
Title: ___________________________ Title:
___________________________
[Print
Name] [Print
Name]
Addendum—Vesting
Acceleration
If,
during the 12 (twelve) months following a Change of Control, the Company
terminates the Executive’s employment for any reason other than Cause or the
Executive voluntarily resigns from employment for Good Reason, then the vesting
of outstanding options, restricted stock awards and restricted stock units then
held by the Executive shall be accelerated as follows:
If the
Executive has completed two years of service as of the Termination Date — one
full year of acceleration
If the
Executive has completed over two years of service but less than four years as of
the Termination Date — two full years of acceleration
If the
Executive has completed over four years of service — all options, restricted
stock awards and restricted stock units will be accelerated
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