Exhibit 10.1

 
MICREL, INCORPORATED
 
CHANGE IN CONTROL AND SEVERANCE AGREEMENT
 
This Change in Control and Severance Agreement (the “Agreement”) is made and
entered into by and between Mansour Izadinia (the “Executive”) and Micrel,
Incorporated (the “Company”), effective as of the latest date set forth by the
signatures of the parties hereto below (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 another company or other change in
control.  The Board of Directors of the Company (the “Board”) recognizes that
such consideration as well as the possibility of an involuntary termination or
reduction in responsibility can be a distraction to Executive and can cause
Executive 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
Executive, notwithstanding the possibility, threat or occurrence of such an
event.
 
B. The Board believes that it is in the best interests of the Company and its
stockholders to provide Executive with an incentive to continue Executive’s
employment and to motivate Executive to maximize the value of the Company upon a
Change in Control (as defined below) for the benefit of its stockholders.
 
C. The Board believes that it is imperative to provide Executive with severance
benefits upon certain terminations of Executive’s service to the Company that
enhance Executive’s financial security and provide incentive and encouragement
to Executive to remain with the Company notwithstanding the possibility of such
an event.
 
D.           Certain capitalized terms used in this Agreement are defined in
Section 8 below.
 
The parties hereto agree as follows:
 
1. Term of Agreement.  This Agreement shall become effective as of the Effective
Date and 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 Executive acknowledge that Executive’s
employment is and shall continue to be “at-will,” as defined under applicable
law.  If Executive’s employment terminates for any reason, Executive shall not
be entitled to any payments, benefits, damages, awards or compensation other
than as provided by this Agreement.

| ||
 
 

--------------------------------------------------------------------------------

 

 
3. Change in Control Acceleration.  Immediately prior to the consummation of a
Change in Control, each outstanding equity award, including, without limitation,
each stock option, restricted stock unit and restricted stock award, held by
Executive shall automatically become vested and, if applicable, exercisable and
any forfeiture restrictions or rights of repurchase thereon shall immediately
lapse, in each case, with respect to that number of shares that would have
vested and, if applicable, become exercisable in the twenty-four (24) months
immediately following such Change in Control assuming Executive’s employment had
continued during such twenty-four (24) month period.  The remaining unvested
equity awards shall continue to vest and, if applicable, become exercisable and
any forfeiture restrictions or rights of repurchase thereon shall continue to
lapse, following the Change in Control at the same rates and in the same amounts
as prior to the acceleration provided for by this Section 3 but twenty-four (24)
months earlier than they would have otherwise vested, become exercisable or
lapsed, pursuant to the original vesting schedule associated with such equity
awards.  In all other respects the equity awards shall continue to be bound by
and subject to the terms of their respective agreements.
 
4. Covered Termination Other Than During a Change in Control Period.  If
Executive experiences a Covered Termination other than during a Change in
Control Period, and if Executive executes and fails to revoke during any
applicable revocation period a general release of all claims against the Company
and its affiliates within sixty (60) days, or such shorter period of time
specified by the Company, following such Covered Termination (a “Release of
Claims”), then in addition to any accrued but unpaid salary, bonus, vacation and
expense reimbursement payable in accordance with applicable law, the Company
shall provide Executive with the following:
 
(a)           Severance.  Executive shall be entitled to receive an amount equal
to twelve (12) months of Executive’s base salary at the rate in effect
immediately prior to Executive’s termination of employment and payable in a cash
lump sum, less applicable withholdings as soon as administratively practicable
following the date the Release of Claims is not subject to revocation and, in
any event, within sixty (60) days following the date of the Covered Termination.
 
(b)           Continued Healthcare.  If Executive elects to receive continued
healthcare coverage pursuant to the provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall
directly pay, or, at Executive’s request, reimburse Executive for, the premium
for Executive and Executive’ s covered dependents through the twelve (12) month
anniversary of the date of Executive’s termination of employment.  After the
Company ceases to pay premiums pursuant to the preceding sentence, Executive
may, if eligible, elect to continue healthcare coverage at Executive’s expense
in accordance the provisions of COBRA.
 
5. Covered Termination During a Change in Control Period.  If Executive
experiences a Covered Termination during a Change in Control Period, and if
Executive executes and fails to revoke during any applicable revocation period a
Release of Claims within sixty (60) days, or such shorter period of time
specified by the Company, following such Covered Termination, then in addition
to any accrued but unpaid salary, bonus, vacation and expense reimbursement
payable in accordance with applicable law, the Company shall provide Executive
with the following:

--

| ||
 
2

--------------------------------------------------------------------------------

 

 
(a)           Severance.  Executive shall be entitled to receive an amount equal
to twelve (12) months of Executive’s base salary and an estimated prorated share
of Executive’s target annual bonus (“Prorated Bonus”), in each case, at the rate
in effect immediately prior to Executive’s termination of employment payable in
a cash lump sum, less applicable withholdings, as soon as administratively
practicable following the date the Release of Claims is not subject to
revocation and, in any event, within sixty (60) days following the date of the
Covered Termination; provided, however, that the Prorated Bonus shall not exceed
seventy percent (70%) of Executive’s annual base salary in effect immediately
prior to Executive’s termination.
 
(b)           Continued Healthcare.  If Executive elects to receive continued
healthcare coverage pursuant to the provisions of COBRA, the Company shall
directly pay, or, at Executive’s request, reimburse Executive for, the premium
for Executive and Executive’s covered dependents through the twelve (12) month
anniversary of the date of Executive’s termination of employment.  After the
Company ceases to pay premiums pursuant to the preceding sentence, Executive
may, if eligible, elect to continue healthcare coverage at Executive’s expense
in accordance the provisions of COBRA.
 
6. Other Terminations.  If Executive’s service with the Company is terminated by
the Company or by Executive for any or no reason other than as a Covered
Termination, then Executive shall not be entitled to any benefits hereunder
other than accrued but unpaid salary, bonus, vacation and expense reimbursement
in accordance with applicable law and to elect any continued healthcare coverage
as may be required under COBRA or similar state law.
 
7. Limitation on Payments. Notwithstanding anything in this Agreement to the
contrary, if any payment or distribution Executive would receive pursuant to
this Agreement or otherwise (“Payment”) would (a) constitute a “parachute
payment” within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), and (b) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such
Payment shall either be (i) delivered in full, or (ii) delivered as to such
lesser extent which would result in no portion of such Payment being subject to
the Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results in
the receipt by Executive on an after-tax basis, of the largest payment,
notwithstanding that all or some portion the Payment may be taxable under
Section 4999 of the Code. The accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change in
Control shall perform the foregoing calculations.  The Company shall bear all
expenses with respect to the determinations by such accounting firm required to
be made hereunder.  The accounting firm shall provide its calculations to the
Company and Executive within fifteen (15) calendar days after the date on which
Executive’s right to a Payment is triggered (if requested at that time by the
Company or Executive) or such other time as requested by the Company or
Executive.  Any good faith determinations of the accounting firm made hereunder
shall be final, binding and conclusive upon the Company and Executive.  Any
reduction in payments and/or benefits pursuant to this Section 7 will occur in
the following order: (1) reduction of cash payments; (2) cancellation of
accelerated vesting of equity awards other than stock options; (3) cancellation
of accelerated vesting of stock options; and (4) reduction of other benefits
payable to Executive.

--

| ||
 
3

--------------------------------------------------------------------------------

 

 

 
8. Definition of Terms.  The following terms referred to in this Agreement shall
have the following meanings:
 
(a) Cause.  “Cause” means (i) theft, dishonesty or falsification of any
employment or Company records; (ii) malicious or reckless disclosure of the
Company’s confidential or proprietary information; (iii) commission of any
immoral or illegal act or any gross or willful misconduct, where the Board
reasonably determines that such act or misconduct has (A) seriously undermined
the ability of the Company’s Board or management to entrust Executive with
important matters or otherwise work effectively with Executive, (B) contributed
to the Company’s loss of significant revenues or business opportunities, or (C)
significantly and detrimentally effected the business or reputation of the
Company or any of its subsidiaries; and/or (iv) the failure or refusal by
Executive to follow the reasonable and lawful directives of the Board or the
Company’s Chief Executive Officer, provided such failure or refusal continues
after Executive’s receipt of reasonable notice in writing of such failure or
refusal and an opportunity to correct the problem.  Notwithstanding the
foregoing, “Cause” shall not exist where any of the foregoing are due to
Executive’s physical or mental disability.
 
(b) Change in Control.  “Change in Control” means the consummation of any of the
following transactions: (i) a sale, transfer or disposition of all or
substantially all of the Company’s assets other than to (A) a corporation or
other entity of which at least a majority of its combined voting power is owned
directly or indirectly by the Company, (B) a corporation or other entity owned
directly or indirectly by the holders of capital stock of the Company in
substantially the same proportions as their ownership of Common Stock, or (C) an
Excluded Entity (as defined in subsection (ii) below); or (ii) any merger,
consolidation or other business combination transaction of the Company with or
into another corporation, entity or person, other than a transaction with or
into another corporation, entity or person in which the holders of at least a
majority of the shares of voting capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by such shares
remaining outstanding in the continuing entity or by their being converted into
shares of voting capital stock of the surviving entity) a majority of the total
voting power represented by the shares of voting capital stock of the Company
(or the surviving entity) outstanding immediately after such transaction (an
“Excluded Entity”); or (iii) an acquisition of any voting securities of the
Company by any “person” (as the term “person” is used for purposes of Section
13(d) or Section 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) of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding voting securities.  Notwithstanding the foregoing, a transaction
shall not constitute a “Change in Control” if its sole purpose is to change the
state of the Company’s incorporation, or to create a holding company that will
be owned in substantially the same proportions by the persons who hold the
Company’s securities immediately before such transaction.  Further
notwithstanding the foregoing, a “Change in Control” must also constitute a
“change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5).
 
(c) Change in Control Period.  “Change in Control Period” means the twelve (12)
month period of time commencing upon a Change in Control.

--

| ||
 
4

--------------------------------------------------------------------------------

 

 

 
(d) Constructive Termination.  “Constructive Termination” means Executive’s
resignation from employment with the Company after the occurrence, without
Executive’s written consent, of any of the following: (i) a material reduction
in Executive’s job responsibilities or duties, provided, however, that neither a
mere change in title alone, nor reassignment following the consummation of a
Change in Control to a position substantially similar to the position held prior
to the transaction, shall constitute a material reduction in job
responsibilities or duties; (ii) a reduction by the Company in Executive’s base
salary of more than fifteen percent (15%) from Executive’s base salary in effect
immediately prior to such reduction, except in connection with a reduction in
salary affecting all senior management employees of the Company; (iii) the
Company’s material breach of any of its obligations under Executive’s offer
letter; or (iv) a material relocation of Executive’s office to a place more than
fifty (50) miles from its then present location (which relocation shall be
deemed to be material), except that required travel on the Company’s business to
an extent substantially consistent with Executive’s business travel obligations
as of immediately prior to the date of the Change in Control shall not be
considered a relocation.  Notwithstanding the foregoing, a resignation shall not
constitute a “Constructive Termination” unless the event or condition giving
rise to such resignation continues more than thirty (30) days following
Executive’s written notice of such condition provided to the Company within
ninety (90) days of the first occurrence of such event or condition and such
resignation is effective within thirty (30) days following the end of such
notice period.
 
(e) Covered Termination.  “Covered Termination” shall mean Executive’s
Constructive Termination or the termination of Executive’s employment by the
Company other than for Cause.
 
9. 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 9(a) or which
becomes bound by the terms of this Agreement by operation of law.
 
(b) Executive’s Successors.  The terms of this Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
 
10. Notices.  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 one day following mailing via Federal Express or similar
overnight courier service.  In the case of Executive, mailed notices shall be
addressed to Executive at Executive’s home address that the Company has on file
for Executive.  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 General Counsel.

--

| ||
 
5

--------------------------------------------------------------------------------

 

 

 
11. Confidentiality; Non-Solicitation.
 
(a) Confidentiality.  While Executive is employed by the Company, and
thereafter, Executive shall not directly or indirectly disclose or make
available to any person, firm, corporation, association or other entity for any
reason or purpose whatsoever, any Confidential Information (as defined
below).  Upon termination of Executive’s employment with the Company, all
Confidential Information in Executive’s possession that is in written or other
tangible form (together with all copies or duplicates thereof, including
computer files) shall be returned to the Company and shall not be retained by
Executive or furnished to any third party, in any form except as provided
herein; provided, however, that Executive shall not be obligated to treat as
confidential, or return to the Company copies of any Confidential Information
that (i) was publicly known at the time of disclosure to Executive, (ii) becomes
publicly known or available there­after other than by any means in violation of
this Agreement or any other duty owed to the Company by any person or entity, or
(iii) is lawfully disclosed to Executive by a third party.  For purposes of this
Agreement, the term “Confidential Information” shall mean information disclosed
to Executive or known by Executive as a consequence of or through his or her
relation­ship with the Company, about the customers, employ­ees, business
methods, public relations methods, organization, procedures or finances,
including, without limitation, information of or relating to customer lists, of
the Company and its affiliates.  In addition, Executive shall continue to be
subject to the Confidential Information and Invention Assignment Agreement
entered into between Executive and the Company (the “Confidential Information
Agreement”).
 
(b) Non-Solicitation of Employees or Customers.  Executive acknowledges that as
a member of senior management of the Company he has had access to information
concerning the Company’s organizational structure and performance evaluations of
Company key employees.  During his employment with the Company and for one year
thereafter, Executive shall not utilize any Trade Secrets of the Company to
solicit any of its employees or contractors to discontinue working for the
Company or to provide service to any other person or entity in competition with
the Company without the Company’s written consent. Furthermore, beginning on the
last day of his employment with the Company and for one year thereafter,
Executive shall not utilize any Trade Secrets of the Company to solicit,
contact, attempt to contact or meet with the Company’s current customers for
purposes of offering or accepting goods or services similar to or competitive
with those offered by the Company. As used in this Agreement, the term “Trade
Secrets” shall mean information that (a) derives economic value from not being
known to the general public or others who can obtain economic value from its
disclosure or use and (b) is the subject of reasonable efforts on the part of
the Company to maintain its secrecy.  Executive acknowledges and agrees that
Trade Secrets are also Confidential Information and that he is under at least
the same confidentiality obligations in relation to Trade Secrets as he is in
relation to Confidential Information.
 
(c) Survival of Provisions.  The provisions of this Section 11 shall survive the
termination or expiration of the applicable Executive’s employment with the
Company and shall be fully enforceable thereafter.  If it is determined by a
court of competent jurisdiction in any state that any restriction in this
Section 11 is excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to
the maximum extent permitted by the law of that state.

--

| ||
 
6

--------------------------------------------------------------------------------

 

12. Dispute Resolution.  To ensure the timely and economical resolution of
disputes that arise in connection with this Agreement, Executive and the Company
agree that any and all disputes, claims, or causes of action arising from or
relating to the enforcement, breach, performance or interpretation of this
Agreement, Executive’s employment, or the termination of Executive’s employment,
shall be resolved to the fullest extent permitted by law by final, binding and
confidential arbitration, by a single arbitrator, in Santa Clara County,
California, conducted by Judicial Arbitration and Mediation Services, Inc.
(“JAMS”) under the applicable JAMS employment rules.  By agreeing to this
arbitration procedure, both Executive and the Company waive the right to resolve
any such dispute through a trial by jury or judge or administrative
proceeding.  The arbitrator shall:  (i) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would
otherwise be permitted by law; and (ii) issue a written arbitration decision, to
include the arbitrator’s essential findings and conclusions and a statement of
the award.  The arbitrator shall be authorized to award any or all remedies that
Executive or the Company would be entitled to seek in a court of law.  The
Company shall pay all JAMS’ arbitration fees in excess of the amount of court
fees that would be required if the dispute were decided in a court of
law.  Nothing in this Agreement is intended to prevent either Executive or the
Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such arbitration.  Notwithstanding the foregoing,
Executive and the Company each have the right to resolve any issue or dispute
over intellectual property rights by Court action instead of arbitration.
 
13. Miscellaneous Provisions.
 
(a) Section 409A.
 
(i)           Separation from Service.  Notwithstanding any provision to the
contrary in this Agreement, no amount deemed deferred compensation subject to
Section 409A of the Code shall be payable pursuant to Section 4 or 5 unless
Executive’s termination of employment constitutes a “separation from service”
with the Company within the meaning of Section 409A of the Code and the
Department of Treasury regulations and other guidance promulgated thereunder
(“Separation from Service”) and, except as provided under Section 13(a)(ii) of
this Agreement, any such amount shall not be paid, or in the case of
installments, commence payment, until the sixtieth (60th) day following
Executive’s Separation from Service.  Any installment payments that would have
been made to Executive during the sixty (60) day period immediately following
Executive’s Separation from Service but for the preceding sentence shall be paid
to Executive on the sixtieth (60th) day following Executive’s Separation from
Service and the remaining payments shall be made as provided in this Agreement.
 
(ii)           Specified Employee.  Notwithstanding any provision to the
contrary in this Agreement, if Executive is deemed at the time of his separation
from service to be a “specified employee” for purposes of Section
409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion
of the benefits to which Executive is entitled under this Agreement is required
in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of
the Code, such portion of Executive’s benefits shall not be provided to
Executive prior to the earlier of (a) the expiration of the six (6)-month period
measured from the date of the Executive’s Separation from Service or (b) the
date of Executive’s death.  Upon the first business day following the expiration
of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred
pursuant to this Section 13(a)(ii) shall be paid in a lump sum to Executive, and
any remaining payments due under this Agreement shall be paid as otherwise
provided herein.

--

| ||
 
7

--------------------------------------------------------------------------------

 

 

 
(iii)           Expense Reimbursements.  To the extent that any reimbursements
payable pursuant to this Agreement are subject to the provisions of Section 409A
of the Code, any such reimbursements payable to Executive pursuant to this
Agreement shall be paid to Executive no later than December 31 of the year
following the year in which the expense was incurred, the amount of expenses
reimbursed in one year shall not affect the amount eligible for reimbursement in
any subsequent year, and Executive’s right to reimbursement under this Agreement
will not be subject to liquidation or exchange for another benefit.
 
(iv)           Installments.  For purposes of Section 409A of the Code
(including, without limitation, for purposes of Treasury Regulation Section
1.409A-2(b)(2)(iii)), Executive’s right to receive any installment payments
under this Agreement shall be treated as a right to receive a series of separate
payments and, accordingly, each such installment payment shall at all times be
considered a separate and distinct payment.
 
(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 Executive and by an authorized officer of the Company (other than
Executive).  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.  This Agreement and the Confidential Information Agreement
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and supersede all prior arrangements and understandings
regarding same, including, without limitation, any accelerated vesting
provisions of Executive’s offer letter agreement and/or stock option 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.
 
(Signature page follows)

--

| ||
 
8

--------------------------------------------------------------------------------

 

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 set forth
below.
 

 
MICREL, INCORPORATED

By: /s/ Raymond D. Zinn                                                       
        Raymond D. Zinn
 
Title: President and Chief Executive
Officer
 
Date:March 1, 2011
 

 

 
EXECUTIVE
 
/s/ Mansour Izadinia                                                       
Mansour Izadinia

 
Date:March 1, 2011
 

--

| ||
 
9