ex10_1.htm


    EXHIBIT
      10.1

     

    MICROCHIP
      TECHNOLOGY INCORPORATED

     

    CHANGE
      OF CONTROL SEVERANCE AGREEMENT

    
      


       

      This
        Change of Control Severance Agreement (the “Agreement”) is made and entered into
        by and between _____________________ (the “Employee”) and Microchip Technology
        Incorporated (the “Company”), effective as of ____________________ (the
“Effective Date”).

    

     

    RECITALS

     

        1.           It
      is expected that the Company from time to time will consider the possibility
      of
      an acquisition by another company or other 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.  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
      the Employee, notwithstanding the possibility, threat or occurrence of a Change
      of Control (as defined herein) of the Company.

     

        2.           The
      Board believes that it is in the best interests of the Company and its
      stockholders to provide the Employee with an incentive to continue his or her
      employment and to motivate the Employee to maximize the value of the Company
      upon a Change of Control for the benefit of its stockholders.

     

        3.           The
      Board believes that it is imperative to provide the Employee with certain
      benefits upon a Change of Control and certain benefits upon the Employee’s
      termination of employment following a Change of Control.  These
      benefits will provide the Employee with enhanced financial security and
      incentive and encouragement to remain with the Company notwithstanding the
      possibility of a Change of Control.

     

        4.           Certain
      capitalized terms used in the Agreement are defined in Section 5
      below.

    


    AGREEMENT

    


    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein, the
      parties hereto agree as follows:

     

    1.           Term
      of Agreement.  This Agreement shall terminate upon the date that
      all of the obligations of the parties hereto with respect to this Agreement
      have
      been satisfied.

     

    2.           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, except as may otherwise be specifically provided under the
      terms
      of any written formal employment agreement or offer letter between the Company
      and the Employee (an “Employment Agreement”).  If the Employee’s
      employment terminates prior to the Change of Control Period, the Employee shall
      not be entitled to any payments, benefits, damages, awards or compensation
      other
      than as provided by this Agreement, or under his or her Employment Agreement
      if
      any exists in writing, or as may otherwise be available in accordance with
      the
      Company’s established employee plans.


    
      
        
        

      

      
        
        

        
          

        

      

       

    

          
      3.           Benefits.

     

    (a)           Benefits
      Upon a Change of Control.  Immediately prior to consummation of a
      Change of Control the Employee shall receive the following benefit:

    


    (i)           Equity
      Compensation Acceleration.  One hundred percent (100%) of the
      Employee’s outstanding stock options, stock appreciation rights, restricted
      stock units and other Company equity compensation awards (the “Equity
      Compensation Awards”) shall immediately vest and become
      exercisable.  Any Company stock options and stock appreciation rights
      shall remain exercisable following the Employee’s employment termination for the
      period prescribed in the respective option and stock appreciation right
      agreements.

     

    (b)           Termination
      Other than for Cause During the Change of Control Period.  If
      within the three-month period preceding or any time following a Change of
      Control (the “Change of Control Period”), the Employee ceases to be employed
      with the Company (or any parent or subsidiary of the Company) for any reason
      other than “Cause” (as defined herein), and the Employee signs, and does not
      revoke, a standard release of claims with the Company in a form acceptable
      to
      the Company (the “Release”), then the Employee shall receive the following
      severance from the Company:

     

    (i)                 Severance
      Payment.  The Employee shall be entitled to receive a lump-sum
      severance payment (less applicable withholding taxes) equal to [one hundred/two
      hundred percent (100/200%)] of the Employee’s annual base salary (as in effect
      immediately prior to (A) the Change of Control, or (B) the Employee’s
      termination of employment, whichever is greater) plus [one hundred/two hundred
      percent (100/200%)] of the Employee’s target bonuses for which Employee was or
      would have been eligible (for the fiscal year in which the Change of Control
      or
      the Employee’s termination occurs, whichever is greater.) 100%/200% (one
      hundred/two hundred percent)

     

    (ii)                 Continued
      Employee Benefits.  Reimbursement of Employee’s health, dental,
      vision, and life insurance coverage at the same level of coverage premiums
      as
      was provided to such Employee immediately prior to termination and at the same
      ratio of Company premium payment to Employee premium subsidy as was in effect
      immediately prior to termination (the “Company-Paid Coverage”).  If
      such coverage included the Employee’s eligible dependents immediately prior to
      termination, such dependents shall also be covered at Company
      expense.  Company-Paid Coverage shall continue until the earlier of
      (A) [12 (twelve)/ 24 (twenty-four)] months from the date of termination, or
      (B) the date upon which the Employee and his dependents become covered under
      another employer’s group health, dental, vision, long-term disability or life
      insurance plans that provide Employee and his dependents with comparable
      benefits and levels of coverage; provided, however that if such reimbursement
      results in the imposition of additional taxes to Employee under Section 409A
      of
      the Internal Revenue Code of 1986, as amended (the “Code”), Employee shall be
      paid an additional full gross-up for such additional taxes, so that Employee
      is
      in the same position, on an after-tax basis, as if such taxes did not
      apply.  For purposes of Title X of to the Consolidated Budget
      Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying event” for
      Employee and his or her dependents shall be the date upon which the Company-Paid
      Coverage terminates. Coverage in this Section is dependent on the valid and
      timely election of continued COBRA coverage under applicable law.

     

    (c)           Timing
      of Severance Payments.  Except as otherwise provided herein, the
      severance payment to which Employee is entitled shall be paid by the Company
      to
      Employee in cash and in full, not later than ten (10) calendar days after the
      effective date of the Release.  If the Employee should die before all
      amounts have been paid, such unpaid amounts
      shall be paid in a lump-sum payment (less any withholding taxes) to the
      Employee’s designated beneficiary, if living, or otherwise to the personal
      representative of the Employee’s estate.


    
      
        
        

      

      
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    (d)           Termination
      for Cause; Termination Prior to Change of Control Period.  In the
      event the Employee’s employment is terminated for Cause, or for any reason prior
      to the Change of Control Period, then the Employee shall not be entitled to
      receive severance and any other benefits except as may then be established
      under
      the Company’s existing written severance and benefits plans and practices or
      pursuant to other written agreements with the Company.

     

    (e)           Internal
      Revenue Code Section 409A.  Notwithstanding any other provision of
      this Agreement, if the Employee is a “key employee” under Code Section 409A and
      a delay in making any payment or providing any benefit under this Agreement
      is
      required by Code Section 409A and any Treasury Regulations, and IRS guidance
      thereunder, or necessary in the good faith judgment of the Company, to avoid
      the
      Employee incurring additional tax under Section 409A, such payments shall not
      be
      made until the end of six (6) months following the date of the Employee’s
      separation from service in accordance with Code Section 409A.

     

    4.           Golden
      Parachute Excise Tax.

     

    (a)           Parachute
      Payment Full Gross-Up.  In the event that the benefits provided
      for in this agreement or otherwise payable to Employee, including vesting
      acceleration upon a change of control pursuant to Company equity plans or any
      Employment Agreement which may exist (i) constitute “parachute payments”
within the meaning of Section 280G of the Code, (ii) are subject to the
      excise tax imposed by Section 4999 of the Code, then (A) the benefits shall
      be
      delivered in full, and (B) the Employee shall receive a payment from the Company
      sufficient to pay such excise tax plus an additional payment from the company
      sufficient to pay the excise tax and federal and state income taxes arising
      from
      the payments made by the Company to Employee pursuant to this
      sentence.

     

    (b)           280G
      Determinations.  Unless the Company and the Employee otherwise
      agree in writing, the determination of Employee’s excise tax liability and the
      amount required to be paid under this Section 4 shall be made in writing by
      a
      national “Big Four” accounting firm selected by the Company (the
“Accountants”).  For purposes of making the calculations required by
      this Section 4, 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 4.

     

    5.           Definition
      of Terms.  The following terms referred to in this Agreement shall
      have the following meanings:

     

    (a)           Cause.  “Cause”
      shall mean (i) a willful act of personal dishonesty taken by the Employee
      in connection with his responsibilities as an employee and intended to result
      in
      substantial personal enrichment of the Employee, (ii) Employee being
      convicted of, or pleading nolo contendere to, a felony that is materially and
      demonstrably injurious to the
      Company, and (iii) following delivery to the Employee of a written demand
      for performance from the Company which describes the basis for the Company’s
      reasonable belief that the Employee has not substantially performed his duties,
      continued violations by the Employee of the Employee’s obligations to the
      Company which are demonstrably willful and deliberate on the Employee’s
      part.


    
      
        
        

      

      
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    For
      the
      purposes of this Section 5(a), no act or failure to act shall be considered
      “willful” unless done or omitted to be done in bad faith and without reasonable
      belief that the act or omission was in or not opposed to the best interests
      of
      the Company.  Any act or failure to act based upon authority given
      pursuant to a resolution duly adopted by the Board of Directors of the Company
      or based upon the advice of counsel for the Company shall be conclusively
      presumed to be done or omitted to be done in good faith and in the best
      interests of the Company.  Notwithstanding anything herein to the
      contrary, the Employee shall not be deemed to have been terminated for Cause
      unless and until there shall have been delivered to the Employee a copy of
      a
      resolution duly adopted by the affirmative vote of not less than three-quarters
      of the entire membership of the Board of Directors of the Company at a meeting
      of the Board called and held for the purpose (after reasonable notice to the
      Employee and an opportunity for the Employee with Employee’s counsel to be heard
      before the Board) finding that in the good faith opinion of the Board the
      Employee was properly terminated for Cause.

     

    (b)           Change
      of Control.  “Change of Control” means the occurrence of any of
      the following:

     

    (i)                 Any
      “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in
      Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
      representing fifty percent (50%) or more of the total voting power represented
      by the Company’s then outstanding voting securities; or

    


    (ii)                A
      change in the composition of the Board of Directors of the Company as a result
      of which fewer than a majority of the directors are “Incumbent
      Directors.”  “Incumbent Directors” shall mean directors who either (A)
      are directors of the Company as of the date hereof, or (B) are elected, or
      nominated for election, to the Board of Directors with the affirmative votes
      (either by a specific vote or by approval of the proxy statement of the Company
      in which such person is named as a nominee for election as a director without
      objection to such nomination) of at least three-quarters of the Incumbent
      Directors at the time of such election or nomination (but shall not include
      an
      individual whose election or nomination is in connection with an actual or
      threatened proxy contest relating to the election of directors of the Company);
      or

     

    (iii)                The
      consummation 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) at least 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; or

     

    (iv)                The
      consummation of the sale, lease or other disposition by the Company of all
      or
      substantially all the Company’s assets.


    
      
        
        

      

      
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           6.           Successors.

     

    (a)           The
      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 6(a) or which becomes bound by the terms of this Agreement by operation
      of law.

     

    (b)           The
      Employee’s Successors.  The terms of this Agreement and all rights
      of the Employee hereunder shall inure to the benefit of, and be enforceable
      by,
      the Employee’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees, devisees and legatees.

     

    7.           Notice.

     

    (a)           General.  All
      notices and other communications required or permitted here­under shall be
      in writing, shall be effective when given, and shall in any event be deemed
      to
      be given upon receipt or, if earlier, (i) five (5) days after deposit
      with the U.S. Postal Service or other applicable postal service, if delivered
      by
      first class mail, postage prepaid, (ii) upon delivery, if delivered by
      hand, (iii) one (1) business day after the business day of deposit with
      Federal Express or similar overnight courier, freight prepaid or
      (iv) one (1) business day after the business day of facsimile
      transmission, if delivered by facsimile transmission with copy by first class
      mail, postage prepaid, and shall be addressed (A) if to Employee, at
      his or her last known residential address and (B) if to the Company, at the
      address of its principal corporate offices (attention:  Secretary), or
      in any such case at such other address as a party may designate by ten (10)
      days’ advance written notice to the other party pursuant to the provisions
      above.

     

    (b)           Notice
      of Termination.  Any termination by the Company for Cause or as a
      result of a voluntary resignation shall be communicated by a notice of
      termination to the other party hereto given in accordance with Section 7(a)
      of
      this Agreement.  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 thirty (30) days after the giving of such notice).

     

    8.           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, except as set forth in Section 3(b)(ii)(B).

     

    (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 the
      Employee and by an authorized officer of the Company (other than the
      Employee).  Employee and the Company agree to work in good faith to
      consider amendments to this 

      
        
          
          

        

        
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    Agreement
      which are necessary or appropriate to avoid imposition of any additional tax
      or
      income recognition under Section 409A prior to the actual payment of amounts
      to
      the Employee. The parties agree to cooperate with each other and to take
      reasonably necessary steps in this regard. 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)           Headings.  All
      captions and section headings used in this Agreement are for convenient
      reference only and do not form a part of this Agreement.

     

    (d)           Entire
      Agreement.  This Agreement, along with other written agreements
      relating to the subject matter hereof between Employee and a duly authorized
      Company officer constitute the entire agreement of the parties hereto and
      supersede in their entirety all prior representations, understandings,
      undertakings or agreements (whether oral or written and whether expressed or
      implied) of the parties with respect to the subject matter hereof.

     

    (e)           Choice
      of Law; Arbitration.  The validity, interpretation, construction
      and performance of this Agreement shall be governed by the laws of the State
      of
      Arizona.  Any dispute or controversy arising under or in connection
      with this Agreement shall be settled exclusively by arbitration in Phoenix,
      Arizona, by three arbitrators in accordance with the then current rules of
      the
      American Arbitration Association. The prevailing party in any arbitration shall
      be entitled to injunctive relief to enforce the arbitration award. The parties
      agree to waive their right to have any dispute regarding this Agreement resolved
      in a court of law by judge or jury.  The Judgment may be entered on
      the arbitrator’s award in any court having jurisdiction.  This Section
      shall not prevent either party from seeking injunctive relief (or any other
      provisional remedy) relating to employee’s obligations under this Agreement. The
      Company shall bear the costs and expenses arising out of or in connection with
      any arbitration pursuant to this Section 8(e), including Employee’s costs and
      reasonable attorney’s fees.

     

    (f)           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.

     

    (g)           Withholding.  All
      payments made pursuant to this Agreement will be subject to withholding of
      applicable income and employment taxes.

     

    (h)           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.


    
      
        
        

      

      
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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.

     

    


    
      	
              COMPANY

            	
              MICROCHIP
                TECHNOLOGY INC.

            
	 	
               

              By:

            	 
	 	
              Title:

            	 
	 	 	 
	
              EMPLOYEE

            	
               

              By:

            	 
	 	
              Title:

            	 


    

     

    


    



    
      
        
        

      

      
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