EXHIBIT 10.86
Xx. Xxxxxx Xxxx, Xx.
Chairman
Microsemi Corporation
0000 X. Xxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Dear Phil:
Re: Transition and Consulting Agreement
The purpose of this letter is to confirm a formal arrangement between Microsemi
Corporation (MSC) and your transition from your role as Chairman, Chief
Executive Officer and President of MSC to your continuing role as the Chairman
of the Board of Directors (BOD) and new role as a Consultant to MSC.
Also this letter restates, amends and supersedes the version of this letter as
previously signed on, before or about December 18, 2000.
As discussed with the BOD you will retire December 18, 2000, but continue to
support MSC in a consulting role. The following items outline the specific
terms and conditions that are applicable regarding this transition and your
services as a consultant to MSC.
1. The consulting period shall be from December 18, 2000, and shall continue
until, December 17, 2001.
2. In your consulting role, you shall provide consulting services as specified
in writing by the BOD, or its designee. These assignments may cover a
variety of projects, but will focus primarily on strategic planning,
business acquisitions, disposition of certain assets and interface with key
military and aerospace accounts. As a consultant, you are an independent
contractor, responsible for the means and manner of your performance of
these consulting services.
3. MSC agrees to pay you the sum of Twenty Five Thousand Dollars ($ 25,000) per
month during the consulting period under this agreement.
4. At the date you retire you will receive pay out of all accrued vacation
(1,574 hours) and Three Hundred and Ten Thousand Eight Hundred and Eighteen
Dollars ($310,818) as payment of your Executive Performance Bonus for your
fiscal year 2000 performance.
5. Based on your December 18, 2000 retirement date, you will receive the
initial payment of benefits from the Microsemi Corporation Supplemental
Executive Retirement Plan of One Hundred Sixteen Thousand Five Hundred and
Fifty Six Dollars and ninety-six Cents ($116,556.96) on February 1, 2001.
6. MSC will provide you medical, dental and life insurance coverage during the
consulting period of this Agreement through the company's benefits plan. You
will not be eligible to participate in other benefit, bonus or compensations
plans except as provided by your role on the Board of Directors and by your
participation in the Microsemi Corporation Supplemental Executive Retirement
Plan.
7. As part of the medical benefits commitment made by the BOD, the company will
provide you a Medicare Supplemental Insurance policy effective January 1,
2002. This is a lifetime benefit in recognition of your long service and
significant contributions as Chairman, President and CEO.
8. As part of this Agreement Microsemi Corporation agrees to pay the $34,000
premium for your existing life insurance policy for a period of twelve
months starting with the date of your retirement.
9. It is understood you will be taking some personal time during this
transition and may not be available for consulting assignments during the
last two weeks of December and possibly some time in January.
10. All of the stock options granted to you through December 2000 will continue
to vest until their expiration as provided in your stock option agreements,
and to the extent that each such option agreement is vested or hereafter
vests, it shall remain exercisable for a period ending on the earlier to
occur of (a) the first anniversary of your death or (b) the latest
expiration date specified in the option agreement (generally five years from
the date of grant).
11. The Board of Directors will approve a resolution awarding you options for
Ten Thousand (10,000) shares of MSC stock upon your retirement. The Board
will also award you options for Five Thousand (5,000) shares of Microsemi
Corporation stock annually, starting in 2002 as part of the recognition for
your service and as long as you continue to serve as Chairman. Your service
as Chairman will also include a Fifteen Thousand-Dollar ($15,000) quarterly
retainer.
12. MSC shall pay you a $1,000 per month car allowance during the consulting
period and reimburse you for reasonable expenses that are incurred as a
result of the work performed by you outside of the Santa Ana, California
area.
13. Payments made under this Agreement shall be at a rate commensurate with the
value of the services or expenses described herein. These payments shall not
include any amount, which will be used improperly by you to influence the
actions of another person on MSC's behalf.
14. To the extent required by law, you shall have the rights under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), or any successor
statute.
15. Excise Taxes. You will be financially responsible for any taxes imposed on
you on account of payments by MSC to you; provided, however, that if all or
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any portion of the amounts payable to you or on your behalf under this
letter agreement or otherwise are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (or similar
state tax and/or assessment), the Company shall pay you an amount necessary
to place you in the same after-tax position as you would have been had no
such excise tax been imposed. The amount payable pursuant to the preceding
sentence shall be grossed-up to the extent necessary to pay income and
excise taxes due on such amount. The determination of the amount of any such
tax indemnity shall initially be made by the independent accounting firm
then employed by the Company. If at a later date it is determined (pursuant
to final regulations or published rulings of the IRS, final judgment of a
court of competent jurisdiction or otherwise) that the amount of excise
taxes payable by you is greater than the amount initially so determined,
then the Company (or its successor) shall pay you an amount equal to the sum
of (1) such additional excise taxes, (2) any interest, fines and penalties
resulting from such underpayment, plus (3) a gross-up amount necessary to
reimburse you for any income, excise or other taxes payable by you with
respect to the amounts specified in (1) and (2) above, and the reimbursement
provided by this clause (3).
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16. Indemnification. For at least ten (10) years following the date of your
retirement, you shall continue to be indemnified under the Company's
Certificate of Incorporation and Bylaws at least to the same extent
indemnification was available prior to the date of retirement and permitted
by law, and you shall be insured under the directors' and officers'
liability insurance, the fiduciary liability insurance and the professional
liability insurance policies that are the same as, or provide coverage at
least equivalent to, those applicable or made available by the Company to
the then members of senior management of the Company. Independent of such
provision, if at any time you are made, or threatened to be made, a party to
any legal action or proceeding, whether civil or criminal, by reason of the
fact that you are or were a director or officer of the Company or serves or
served any other corporation or entity fifty percent (50%) or more owned or
controlled by the Company in any capacity at the Company's request, you
shall be indemnified by the Company, and the Company shall pay your related
expenses when and as incurred, all to the full extent permitted by law.
17. You shall deliver to MSC detailed reports and documentation if requested by
the BOD or its designee. Your reports to MSC should disclose all work or
services completed to date during the course of your assigned projects and
shall be supported by appropriate documentation, such as graphs, computer
programs, formulae, sketches, drawings, summaries and the like.
18. The liaison and general administration of this Agreement shall be through
the BOD or its designee.
19. You shall maintain confidential and secret all MSC information which has
been or may be disclosed to you as being confidential or secret in
character, and you shall not disclose this information to any other person,
firm or corporation. You shall also maintain as confidential MSC's "know-
how" and future plans relating to the fields of endeavor in which you
perform your services as part of this Agreement. The terms of this section
shall survive indefinitely after any termination of the consulting period.
20. You represent and warrant that no part of the payment of any sums due and
payable under this Agreement will in any way be paid or distributed to MSC
or its subsidiaries and affiliates, or any of the directors, officers,
employees or agents thereof.
21. The consulting period shall continue and is irrevocable during the initial
term specified above. However, if the consulting period is extended, MSC may
terminate this Agreement for its convenience upon ninety days (90) prior
written notice. In such event, MSC's sole obligation shall be to pay you for
any authorized work performed prior to the end of such notice period in the
amounts as set forth in paragraphs 3, 6 and 12 above.
22. We agree to attempt to settle any dispute arising out of this Agreement, the
execution thereof, or in connection therewith, through friendly consultation
and negotiation in the spirit of mutual cooperation. However, if settlement
cannot be reached within a reasonable time, then the dispute shall first be
submitted to a mutually acceptable neutral advisor for Non-Binding
Mediation. Neither of us shall unreasonably withhold acceptance of such
advisor, and the party requesting such Mediation shall make the selection
within thirty (30) days after written notice. Any disputes arising from this
Agreement, which we cannot resolve in good faith within three (3) months of
the date of the written request for Mediation, shall be submitted to an
Arbitration Association consisting of retired judges for arbitration in
accordance with its rules of procedure. The party seeking ADR as provided by
this Agreement, agrees that the other party shall select the venue for such
mediations and arbitration. We agree that the Arbitrator's award shall be
final and binding upon us. During Arbitration, the terms and conditions of
this Agreement shall be executed continuously by us except for matters in
dispute. Each party shall be responsible for all costs associated with the
preparation and representation by attorneys, or any other persons retained
thereby, to assist in connection with
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any such Alternative Dispute Resolution. However, all costs charged by the
mutually agreed upon Alternative Dispute Resolution Entity, shall be equally
shared by us.
23. This Agreement shall be binding upon and inure to the benefit of MSC's
successors and assigns, and shall be binding upon and inure to the benefit
of your heirs, legal representatives, successors and assigns.
24. The validity, construction and performance of this Agreement, and the legal
relations between the parties shall be governed by and construed in
accordance with the laws of the State of California.
25. This Agreement shall not be assignable by you without MSC's prior written
consent, and any purported assignment not permitted hereunder including full
or partial assignment or delegation to any agent or subcontractor, shall be
deemed void. This Agreement may be modified only by an instrument in writing
and signed by you and duly authorized representatives of MSC Board of
Directors. This document constitutes the entire Agreement between us with
respect to the subject matter hereof, and supersedes all previous
communications, representations, understanding and agreements either oral or
written, between the parties or any official or representative thereof. The
Agreement dated November 17, 1997 between the Company and you concerning
generally a termination of your employment and change in control is hereby
specifically terminated by written agreement effective as of the date of
your retirement, and thereafter the Agreement dated November 17, 1997 shall
be of no force or effect whatsoever.
26. In the event any court of competent jurisdiction determines that a
particular provision of this Agreement is unenforceable and/or contrary to
law, this will not affect the validity and enforceability of the other
provisions of this Agreement in such jurisdiction, or the validity and
enforceability of this Agreement as a whole in any other jurisdiction.
27. MSC's obligations under this Agreement shall not constitute the personal
obligations of its shareholders, or of it's directors, officers, employees,
consultants, agents or invitees, and you shall look only to the assets of
MSC for the satisfaction of any liability with respect to this Agreement,
and shall not seek recourse against its shareholders, or against its
directors, officers, employees, consultants, agents, or invitees, or against
their personal assets for such satisfaction.
28. Separate Counsel. You have been invited and given opportunity to engage
separate and independent counsel to review or negotiate this Agreement, and
you have either done so or chosen not to engage counsel.
Phil, we would like to personally thank you for your support and your many years
of service to Microsemi Corporation, its customers, employees and shareholders.
The corporation's success in large measure is a function of your many years of
dedication, contribution and sacrifice. Much of what Microsemi has accomplished
is a direct result of your efforts. You move into your new roles with the very
best wishes from your colleagues, co-workers and the Board of Directors.
If you agree with the foregoing terms and conditions please so indicate by
signing and dating one copy hereof at the place provided and return to us for
our records.
Respectfully,
/S/ XXXXX X. XXXXXXXX /S/ XXXXXX X. XXXXXX
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Xxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxx
CEO and President Chairman, Compensation Committee
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CC: Xxxx Xxxxxxxx, Corporate VP, Human Resources
AGREED AND ACCEPTED
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By: /S/ XXXXXX XXXX, XX.
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Xxxxxx Xxxx, Xx.
Date: January 24, 2001
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