Exhibit 10.3

EXECUTION COPY

TRANSITION AND RELEASE AGREEMENT

This Transition and Release Agreement (the “Agreement”) is entered into as of
October 23, 2012, by and among InvenSense, Inc. (the “Company”) and Steven
Nasiri (“Executive”) (collectively, the “Parties”).

1. Resignation as Chief Executive Officer. Executive shall resign from his
positions as the Company’s President, Chief Executive Officer and Secretary and
as a member of the boards of directors of subsidiaries of the Company effective
on October 23, 2012 (the “Effective Date”).

2. Equity. On the Effective Date, Executive shall vest in that number of options
in which Executive would vest over the 12 month period following the Effective
Date and such options shall be fully exercisable. The exercise period for each
of Executive’s vested option grants shall expire on the earlier of the date that
is 12 months following the Service Termination Date (as defined below) or the
expiration date set forth in Executive’s applicable option agreement. For
avoidance of doubt, the Parties acknowledge that this accelerated vesting shall
apply to options to purchase 150,000 shares of common stock. Schedule 1 to this
Agreement sets forth a complete statement of Executive’s existing exercisable
options and options which shall be vested as a result of the execution and
performance of this Agreement and Executive’s provision of services to the
Company through the Service Termination Date. Each option will continue to be
governed by all other terms and conditions of the applicable option agreement,
except as expressly modified hereby. Executive acknowledges that the outstanding
options which were originally intended to qualify as incentive stock options, as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, will
cease to so qualify upon the Effective Date.

3. Transitional Assistance. The Parties have agreed that after the Effective
Date, Executive shall serve the Company as an employee with the title of
Technical Adviser or such other title, if any, that may be mutually agreed,
reporting to the Chief Executive Officer of the Company, through December 31,
2012 (the “Service Termination Date”) at which time his employment with the
Company shall terminate. During the period between the Effective Date and the
Service Termination Date (the “Transition Period”), Executive shall provide
transitional support to the Chief Executive Officer and other members of
management. During the Transition Period, Executive will continue to receive his
current base salary and continue to vest in existing options held by him.
Employee shall not accrue any right to receive additional compensation in the
form of a performance or other bonus during the Transition Period. On the
Service Termination Date, Executive shall receive payment of his accrued but
unused vacation time. Except as specifically provided herein, all benefits and
perquisites of employment will cease as of the Service Termination Date or any
earlier decision by Executive to terminate his services as an employee of the
Company (in which case, such earlier date shall be considered the Service
Termination Date for purposes of this Agreement). The Parties specifically
acknowledge and agree that the level of services to be provided by Executive
during the Transition Period is intended to equal at least fifty percent
(50%) of the average level of bona fide services performed by Executive over the
thirty-six (36) month period preceding the Effective Date, and thus the
Executive will not, as of the Effective Date, incur a “separation from

 

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service” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and all regulations, guidance, and other
interpretative authority issued thereunder (collectively, “Section 409A”)

4. Board of Directors. Executive will continue to serve as a member of the Board
of Directors of the Company through the expiration of his current term in 2014,
or at such earlier time as he may choose to resign from the Board or that he is
removed from the Board by action of the stockholders of the Company as provided
by law. Executive shall not be entitled to receive additional compensation from
the Company by reason of such service on the Board, other than reimbursement of
any expenses incurred by Executive pursuant to the Company’s then current
policies for reimbursement of expenses to Board members.

5. Severance.

(a) In accordance with the terms and conditions of Section 2(a) of the Change in
Control and Severance Agreement agreed to by and between the Company and
Executive, Executive is entitled to receive severance payments equal to
(i) twelve (12) months of Executive’s current base salary paid according to the
Company’s regular payroll schedule over the 12 month period following the date
of his termination, subject to Section 5(b) below, and (ii) a lump sum cash
payment (less applicable withholding taxes) in an amount equal to the lesser of
Executive’s target bonus for the Company’s fiscal year ending March 31, 2013 and
the amount paid to Executive as his bonus for the Company’s fiscal year ending
April 2, 2012. With respect to the payment described in Section 5(a)(ii), the
Parties have agreed that the amount payable in satisfaction of this obligation
will be $300,000. In addition, the Company has agreed to provide Executive with
an additional four months of continued base salary following the expiration of
the initial twelve (12) month period described in Section 5(a)(ii), resulting in
a total of 16 months of continued base salary which will be paid according to
the Company’s regular payroll schedule over the 16 month period following the
date of his termination, subject to Section 5(b). For the avoidance of doubt,
the Parties acknowledge that the total of all severance payments paid pursuant
to this paragraph will equal Eight Hundred Thousand Dollars ($800,000), less
applicable tax withholdings.

(b) Each payment and benefit payable under this Agreement is intended to
constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the
Treasury Regulations. Notwithstanding anything to the contrary in this
Agreement, the severance benefits set forth in Sections 5(a) and 6 will not be
considered due or payable until Executive has a “separation from service” within
the meaning of Section 409A. Further, because Executive will be a “specified
employee” within the meaning of Section 409A at the time of his separation from
service, the severance benefits payable to Executive pursuant to Section 5(a) on
or within the six month period following his separation from service will accrue
during such six month period and will become payable in a lump sum payment (less
applicable withholding taxes) on the first payroll date that occurs on or after
the date six months and one day following the date of Executive’s separation
from service. All subsequent severance payments will be payable in accordance
with the payment schedule applicable to each payment or benefit. If Executive
dies following his separation from service but prior to the six month
anniversary of his date of separation, then any payments delayed in accordance
with this paragraph will be payable in a lump sum (less applicable withholding
taxes) to Executive’s estate as soon as administratively

 

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practicable after the date of his death and all other severance payments and
benefits will be payable in accordance with the payment schedule applicable to
each payment or benefit. The foregoing provisions are intended to comply with
the requirements of Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional tax imposed
under Section 409A, and any ambiguities herein will be interpreted to so comply.
The Company and Executive agree to work together in good faith to consider
amendments to this Agreement and to take such reasonable actions which are
necessary, appropriate or desirable to avoid imposition of any additional tax or
income recognition prior to actual payment to Executive under Section 409A.

6. COBRA. If the Executive and any other person who is a spouse, domestic
partner, or dependent of Executive (“Family Members”) has coverage on the
Service Termination Date under a group health plan sponsored by the Company, the
Company agrees to pay for health continuation coverage premiums for Executive
and such Family Members at the same level of health coverage as in effect on the
day immediately preceding the Service Termination Date, as applicable; provided,
however, that (1) Executive constitutes a qualified beneficiary, as defined in
Section 4980(B)(g)(1) of the Internal Revenue Code of 1986, as amended (the
“Code”); and (2) Executive elects continuation coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
within the time period prescribed pursuant to COBRA. The Company will pay such
COBRA premiums to provide for continuation benefits on behalf of the Executive
and such Family Members for 18 months following the Service Termination Date.
Executive will thereafter be responsible for the payment of COBRA premiums
(including, without limitation, all administrative expenses) for any remaining
COBRA period.

7. Release of Claims. In exchange for the benefits provided herein, and as
required as a condition to receipt of such benefits by the Executive Employment
Agreement dated April 14, 2004 to which Executive and the Company are a party,
and by the Company’s policies concerning severance and change in control
payments payable to executive officers of the Company, Executive completely
releases the Company and its subsidiary corporations, and its and their present
and former directors, officers, and employees from, and agrees not to file,
cause to be filed, or otherwise pursue, any and all claims Executive may now
have or has ever had against any of them, including but not limited to claims
for compensation, bonuses, severance pay, stock options, and all claims arising
from Executive’s employment or the termination of that employment (including,
without limitation, any claims arising under the Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, the WARN Act or any state
counterpart, the California Fair Employment and Housing Act, or any other claims
for violation of any federal, state, or municipal statutes), and any and all
claims for attorneys’ fees and costs.

Notwithstanding the foregoing, the Company is not released from any obligations
(whether under its Certificate of Incorporation, Bylaws, applicable state law,
any indemnification agreement or otherwise) to indemnify and defend Executive
from and against all claims brought against Executive by stockholders or third
parties, including without limitation any stockholder derivative suit, by reason
of his status as an officer or director of the Company or the actions of the
Company or the Board of Directors of the Company while he was an officer
(collectively “Indemnification Claims”.) As such, any obligations of Company
under any Indemnification Agreement between Company and Executive shall continue
to be in effect with respect to such Indemnification Claims and with respect to
Executive’s continued service as a member of the Board of Directors.

 

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Executive acknowledges that he has 21 days to consider this Agreement (but may
elect to sign it at any time beforehand), and may consult an attorney in doing
so. Executive also acknowledges that he may revoke this Agreement within 7 days
of signing it by sending a certified letter to that effect to InvenSense, Inc.,
1197 Borregas, Sunnyvale, California 94089 Attention: Chief Financial Officer.
Executive understands and agrees that this Agreement shall not become effective
or enforceable and no payments or benefits will be provided hereunder until the
7-day revocation period has expired.

8. Waiver of Unknown Claims. Executive agrees that because the foregoing release
specifically covers known and unknown claims, Executive waives any rights under
Section 1542 of the California Civil Code, or under any comparable law of any
other jurisdiction. Section 1542 states: “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or his favor
at the time of executing the release, which if known by him or his must have
materially affected his or his settlement with the debtor.”

9. Non-Disclosure of Company Information. Executive agrees to keep confidential
and not to disclose any and all trade secrets or confidential information of the
Company and/or its customers. Executive acknowledges his continuing obligations
under the Proprietary Rights and Information Agreement that he signed with the
Company.

10. Dispute Resolution. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein being released, shall be subject to final and binding arbitration in
Santa Clara, California before the American Arbitration Association under its
Commercial Arbitration Rules In any such arbitration, the prevailing party shall
be entitled to injunctive relief in any court of competent jurisdiction to
enforce the arbitrator’s award and shall be awarded its reasonable attorney’s
fees and costs.

11. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Parties, supersedes and replaces any and all prior
agreements and understandings between them, and shall not be modified in any way
except in writing executed by all Parties. The Parties further agree that, if
any term or portion contained herein shall be found to be unenforceable under
applicable law, such finding shall not invalidate the whole Agreement, but the
Agreement shall be construed as not containing the particular term or portion
held to be invalid and the rights and obligations of the Parties shall be
construed and enforced accordingly. This Agreement shall be governed by
California law.

12. Counterparts. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.

13. Acknowledgement. The Parties acknowledge that (i) they have read and
understand the Agreement and they are fully aware of its legal effect; (ii) they
have had an opportunity to consult with counsel in regard to this Agreement; and
(iii) they are entering into this Agreement freely and voluntarily, and based on
each Party’s own judgment and not on any representations or promises made by any
other Party, other than those contained in this Agreement.

 

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The parties have duly executed this Agreement as of the date(s) indicated below.

 

EXECUTIVE:    

/s/ Steven Nasiri

    Date: October 23, 2012 Steven Nasiri    

 

COMPANY:     InvenSense, Inc.    

 

By:  

/s/ Amit Shah

    Date: October 23, 2012 Name: Amit Shah     Title: Director    

 

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SCHEDULE 1

OPTIONS

 

Option Number    Type      Exercisable Shares     Exercise Price/Share  

Currently exercisable

  

    

180

     NQSO         964,714      $ 0.70   

181

     ISO         400,000      $ 0.70   

612

     NQSO         75,000      $ 7.32   

Accelerated

       

612

     NQSO         150,000      $ 7.32   

Vesting from Effective Date through Service Termination Date

  

 

612

     NQSO         37,500 (1)    $ 7.32   

 

(1) 12,500 shares on each of November 1, December 1, and December 31, 2012.

 

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