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EXHIBIT 10.43
LSI LOGIC CORPORATION
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into effective as of November 20, 1998 (the "Effective Date"), by and
between [Name of Executive Officer] ("Employee") and LSI Logic Corporation a
Delaware corporation (the "Company"). Certain capitalized terms used in this
Agreement are defined in Section 1 below.
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of a 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.
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 his
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, 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.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as follows:
1. 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 with
the intention or reasonable expectation that such may result in substantial
personal enrichment of the Employee, (ii) Employee's conviction of a felony
which the Board reasonably believes has had or will have a material
detrimental effect on the Company's reputation or business, (iii) a willful
act by the Employee which constitutes misconduct and is injurious to the
Company, or (iv) continued willful violations by the Employee of the
Employee's obligations to the Company after there has been delivered to the
Employee 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.
(b) Change of Control. "Change of Control" shall mean the occurrence
of any of the following events:
(i) the consummation of the Company of a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;
(ii) the approval by the shareholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
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(iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming 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.
(c) Involuntary Termination. "Involuntary Termination" shall mean (i)
without the Employee's express written consent, a significant reduction of
the Employee's duties, position or responsibilities relative to the
Employee's duties, position or responsibilities in effect immediately prior
to such reduction, or the removal of the Employee from such position,
duties and responsibilities, unless the Employee is provided with
comparable duties, position and responsibilities; provided, however, that a
reduction in duties, position or responsibilities solely by virtue of the
Company being acquired and made part of a larger entity (as, for example,
when the Chief Financial Officer of the Company remains as such following a
Change of Control but is not made the Chief Financial Officer of the
acquiring corporation) shall not constitute an "Involuntary Termination;"
(ii) without the Employee's express written consent, a substantial
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction; (iii) a reduction by the Company of the Employee's
base salary as in effect immediately prior to such reduction; (iv) a
material reduction by the Company in the kind or level of employee benefits
to which the Employee is entitled immediately prior to such reduction with
the result that the Employee's overall benefits package is significantly
reduced; (v) without the Employee's express written consent, the relocation
of the Employee to a facility or a location more than thirty-five (35)
miles from his current location; (vi) any purported termination of the
Employee by the Company which is not effected for Cause or for which the
grounds relied upon are not valid; or (vii) the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in
Section 5 below.
(d) Termination Date. "Termination Date" shall mean the effective date
of any notice of termination delivered by one party to the other hereunder.
2. Term of Agreement. This Agreement shall terminate upon the date that is
five (5) years following the Effective Date, unless within such term a Change of
Control has occurred, in which case this Agreement shall terminate upon the date
that all obligations of the parties hereto under this Agreement have been
satisfied.
3. 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, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as otherwise also may
be established under the Company's then existing employee benefit plans or
policies at the time of termination.
4. Severance Benefits.
(a) Termination Following A Change of Control.
(i) Involuntary Termination.
(A) Option Acceleration. If the Employee's employment with the
Company terminates as a result of an Involuntary Termination at any
time within twelve (12) months after a Change of Control, then as to
the unvested portion of each option to purchase shares of the
Company's equity securities that was granted to the Employee by the
Company at least six (6) months prior to the Change of Control (the
"Options"), the vesting and exercisability of each of the Options
shall be automatically accelerated and shall be fully vested and
exercisable as at the date of Involuntary Termination.
(B) Severance Benefits. If the Employee's employment with the
Company terminates as a result of an Involuntary Termination at any
time within twelve (12) months after a Change of Control, the
Employee, within seven (7) days of such Involuntary Termination,
shall be paid a lump sum that shall be equal to the sum of: (i)
twenty-four (24) months of the Employee's
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base salary (as in effect immediately prior to the Change of
Control), plus (ii) 200% of the Employee's target bonus for the year
in which the Change of Control occurs. In addition, the Company shall
provide the Employee with (x) health, dental and vision coverage
benefits during the period of twenty-four (24) months following the
date of Involuntary Termination, provided, however, that the Employee
elects continuation coverage pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), within the
time period prescribed pursuant to COBRA and (y) life insurance
benefits during the period of eighteen (18) months following the date
of Involuntary Termination, at the same level as each of such
benefits were in effect for the Employee on the day immediately
preceding the day of the Employee's termination of employment.
(ii) Other Termination. If the Employee's employment with the
Company terminates other than as a result of an Involuntary Termination
at any time within twelve (12) months after a Change of Control, then
the Employee shall not be entitled to receive severance or other
benefits hereunder, but may be eligible for those benefits (if any) as
may then be established under the Company's then existing severance and
benefits plans and policies at the Termination Date.
(b) Accrued Wages and Vacation; Expenses. Without regard to the reason
for, or the timing of, Employee's termination of employment: (i) the
Company shall pay the Employee any unpaid base salary due for periods prior
to the Termination Date; (ii) the Company shall pay the Employee all of the
Employee's accrued and unused vacation through the Termination Date; and
(iii) following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date. These payments shall be made
promptly upon termination and within the period of time mandated by law.
5. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and/or assets shall assume the Company's obligations under this
Agreement and agree expressly to perform the Company's 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 subsection
(a) or which becomes bound by the terms of this Agreement by operation of
law.
(b) Employee's Successors. Without the written consent of the Company,
Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights
of Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
6. Limitation on Payments.
(a) In the event that the severance and other 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
6 would be subject to the excise tax imposed by Section 4999 of the Code,
then the Employee's severance benefits under Section 4 shall be payable
either (i) in full, or (ii) as to such lesser amount 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 under this
Agreement, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code.
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(b) If a reduction in the payments and benefits that would otherwise
be paid or provided to the Employee under the terms of this Agreement is
necessary to comply with the provisions of Section 6(a), the Employee shall
be entitled to select which payments or benefits will be reduced and the
manner and method of any such reduction of such payments or benefits
(including but not limited to the number of options that would vest under
Sections 4(a)(i)(A)) subject to reasonable limitations (including, for
example, express provisions under the Company's benefit plans) (so long as
the requirements of Section 6(a) are met). Within thirty (30) days after
the amount of any required reduction in payments and benefits is finally
determined in accordance with the provisions of Section 6(c), the Employee
shall notify the Company in writing regarding which payments or benefits
are to be reduced. If no notification is given by the Employee, the Company
will determine which amounts to reduce. If, as a result of any reduction
required by Section 6(a), amounts previously paid to the Employee exceed
the amount to which the Employee is entitled, the Employee will promptly
return the excess amount to the Company.
(c) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 6 shall be made in writing by
the Company's independent public accountants (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 6, 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 6.
7. Notices.
(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 this Section. 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.
8. Arbitration.
(a) Any dispute or controversy arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, shall be settled
by binding arbitration to be held in Santa Xxxxx County, California, in
accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (the
"Rules"). The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to conflicts of law rules. The
arbitration proceedings shall be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. Employee hereby
consents to the personal
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jurisdiction of the state and federal courts located in California for any
action or proceeding arising from or relating to this Agreement or relating
to any arbitration in which the parties are participants.
(c) The Company and Employee shall each pay one-half of the costs and
expenses of such arbitration, and each shall separately pay its counsel
fees and expenses.
(d) Employee understands that nothing in this Section modifies
Employee's at-will employment status. Either Employee or the Company can
terminate the employment relationship at any time, with or without cause.
(e) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO
A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED
TO, THE FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH
OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT
OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION
IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990,
THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING
ACT, AND LABOR CODE SECTION 201, et seq;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor
shall any such payment be reduced by any earnings that the Employee may
receive from any other source.
(b) Waiver. No provision of this Agreement may 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) Integration. This Agreement and the stock option agreements
representing the Options represent the entire agreement and understanding
between the parties as to the subject matter herein and supersede all prior
or contemporaneous agreements, whether written or oral.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.
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(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) Employment Taxes. All payments made pursuant to this Agreement
shall be subject to withholding of applicable income and employment taxes.
(g) 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 day and year first
above written.
EMPLOYEE
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LSI LOGIC CORPORATION
By:
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Title:
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