Exhibit 10.14
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 David Schwartz (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 shareholders
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
shareholders 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 shareholders.
C.The Board believes that it is important 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 6
below.
E.    The Executive and Company entered into a Change in Control and Severance
Agreement dated June 23, 2011 (the “Previous Change in Control Agreement”).
The parties hereto agree as follows:
1.Termination of Previous Agreement. The Previous Change in Control Agreement is
hereby terminated and replaced in its entirety with this Agreement.
2.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.
3.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

    

 

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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.
4.Covered Termination During a Change in Control Period or Change of CEO Period.
If Executive experiences a Covered Termination during a Change in Control Period
or during a Change of CEO 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 to the sum
equal to (i) twelve (12) months of Executive’s base salary at the rate in effect
immediately prior to Executive’s termination of employment payable in a cash
lump sum, less applicable withholdings, plus (ii) a pro-rated portion of the
Executive’s targeted annual bonus through the date of Executive’s termination of
employment, 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)    Acceleration. 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 the date of the Covered Termination assuming
Executive’s employment had continued during such twenty-four (24) month period.
In all other respects the equity awards shall continue to be bound by and
subject to the terms of their respective agreements.
(c)    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.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 during a Change in Control Period, 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.

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6.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 5 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.
7.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

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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 of CEO Period. “Change of CEO Period” means the eighteen (18)
month period of time commencing upon the date that Raymond D. Zinn is no longer
the Chief Executive Officer of the Company.
(d)     Change in Control Period. “Change in Control Period” means the twelve
(12) month period of time commencing upon a Change in Control.
(e)     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; or (iii) 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.

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(f)     Covered Termination. “Covered Termination” shall mean Executive’s
Constructive Termination or the termination of Executive’s employment by the
Company other than for Cause.
8.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.
9.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.
10.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

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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 at all times
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 at all times 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 9 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 9 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.
11.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

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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.
12.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 3 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.
(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.

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(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)    

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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: Chairman of the Board, President and Chief Executive Officer
Date: July 16, 2012

EXECUTIVE
/s/ David Schwartz
David Schwartz
    
Date: 7/14/12

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