Document:

Exhibit 10.103

 

CATALYST SEMICONDUCTOR, INC.

 

SEVERANCE AGREEMENT

 

This Severance Agreement (the “Agreement”)
is made and entered into by and between [Employee Name] (“Employee”) and Catalyst Semiconductor, Inc.,
a Delaware Corporation (the “Company”),
effective as of [DATE] (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 Employee and can
cause 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 Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control.

 

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

 

3.             The
Board believes that it is imperative to provide Employee with certain benefits
upon Employee’s termination of employment without cause or following a Change
of Control.  These benefits will provide
Employee with enhanced financial security and incentive and encouragement to
remain with the Company.

 

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 will
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 Employee
acknowledge that Employee’s employment is and will 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 Employee (an “Employment
Agreement”).  If Employee’s employment terminates for any
reason, Employee will not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement, including any
payments or benefits Employee would otherwise be entitled to under his or her
Employment Agreement.

 

 

 

3.             Termination
Benefits.

 

(a)           Involuntary
Termination other than for Cause, Death or Disability Prior to a Change of
Control or after Twelve Months Following a Change of Control.  If, prior to a Change of Control or after
twelve (12) months following a Change of Control, the Company (or any parent or
subsidiary of the Company employing Employee) terminates Employee’s employment
with the Company (or any parent or subsidiary of the Company) without Employee’s
consent and for a reason other than (x) Cause, (y) Employee becoming
Disabled or (z) Employee’s death, (any such termination, an “Involuntary
Termination”) and Employee signs,
delivers and does not revoke a separation agreement and release of claims in a
form satisfactory to the Company (the “Release”) within the time period
required by the Release (but in no event later than two and one-half (21⁄2)
months following the end of the calendar year in which the Involuntary
Termination occurs), then following such termination of employment, or, if
later, the effective date of the Release, Employee will receive the following
payments and other benefits from the Company:

 

(i)         Accrued
Compensation.  Employee will be
entitled to receive all accrued vacation, expense reimbursements and any other
benefits due to Employee through the date of termination of employment in
accordance with the Company’s then existing employee benefit plans, policies
and arrangements.

 

(ii)        Severance.  Subject to Section 9(a), Employee will
be entitled to receive continued payments of Employee’s base salary (as in
effect immediately prior to such termination) for a period of [six (6) / nine (9)] months (the “Severance
Period”), less applicable withholding payable in accordance with the Company’s
normal payroll policies.  Notwithstanding
the foregoing and except as provided by the following sentence, if during the Severance Period Employee engages in
Competition or breaches the covenants in Section 6 or in the Release, all
payments pursuant to this subsection will immediately cease effective as of the
first date that constitutes engagement in Competition or a breach of the
applicable covenants (the “Breach Date”). 
Notwithstanding the preceding sentence, if payment of the severance
amounts is delayed in accordance with Section 9(a) of this Agreement,
the Company’s obligation to make severance payments to Executive during the
Severance Period shall not terminate pursuant to the preceding sentence (i.e.,
upon the Breach Date) with respect to any severance payments that have been
accrued prior to the Breach Date in accordance with Section 9(a) of
this Agreement and such accrued severance payments shall be paid in a lump sum
payment on the date six (6) months and one (1) day following the date
of Executive’s termination of employment (or such earlier date as provided in Section 9(a) of
this Agreement).

 

(iii)       Continued
Employee Benefits.  The Company will reimburse Employee for
premiums paid for the continuation
of benefits Employee timely elects pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)  for Employee and Employee’s eligible dependents
under the Company’s Benefit Plans for a period of [six (6) / nine (9)]
months following Employee’s termination of employment; provided, however, that
if during such period Employee engages in Competition or breaches the covenants
in Section 6 or in the Release, all Company-reimbursements pursuant to
this subsection will immediately cease.  

 

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Employee
will be solely responsible for electing such continuation coverage for Employee
and Employee’s eligible dependents.

 

(iv)       Options.  With respect to all of Employee’s options
(the “Options”) to purchase Company common stock outstanding on
the date of such termination (whether granted on, before or after the date of
this Agreement), Employee will have the period following such termination of
employment to exercise such Options that is specified in the stock plans, if
any, under which the Options were granted and in any applicable agreements
between the Company and Employee; provided, however, to the extent that,
pursuant to the provisions of such stock plans and applicable agreements, such
Options continue to vest during the period, if any, that Employee provides
consulting services to the Company pursuant to Section 3(a)(ii) or
otherwise, then Employee will have the period following the termination of such
consulting services to exercise such Options that is specified in such stock
plans and applicable agreements; provided further, however, that all Options
will immediately terminate and Employee will have no further rights with
respect to such Options in the event Employee engages in Competition or
breaches the covenants in Section 6 or in the Release during such
period.  In all other respects, such
Options will continue to be subject to the terms and conditions of the stock
plans, if any, under which they were granted and any applicable agreements
between the Company and Employee.

 

(v)        Payments
or Benefits Required by Law. 
Employee will receive such other compensation or benefits from the
Company as may be required by law (for example, “COBRA” coverage under Section 4980B
of the Internal Revenue Code of 1986, as amended (the “Code”)).

 

(b)           Involuntary Termination other than for Cause,
Death or Disability or Termination for Good Reason within Twelve Months of a
Change of Control.  If (i) within twelve (12) months
following a Change of Control (A) Employee terminates his or her
employment with the Company (or any parent or subsidiary of the Company) for
Good Reason or (B) the Company (or any parent or subsidiary of the
Company) terminates Employee’s employment for other than (x) Cause, (y) Employee
becoming Disabled or (z) Employee’s death (any such termination pursuant
to (A) or (B), a “Change of Control Termination”) and (ii) Employee signs, delivers and
does not revoke a Release within the time period required by the Release (but
in no event later than two and one-half (21⁄2) months following the end of the
calendar year in which the Involuntary Termination occurs), then promptly following
such termination of employment, or, if later, the effective date of the
Release, Employee will receive the following payments and other benefits from
the Company:

 

(i)         Accrued
Compensation.  Employee will be
entitled to receive all accrued vacation, expense reimbursements and any other
benefits due to Employee through the date of termination of employment in
accordance with the Company’s then existing employee benefit plans, policies
and arrangements.

 

(ii)        Severance.  Subject to Section 9(a), Employee will
be entitled to receive continued payments of Employee’s base salary (as in
effect immediately prior to such termination) for a period of [nine (9) / twelve (12)] months (the “Post-Change
of Control Severance Period”), less applicable withholding, payable in
accordance with the Company’s normal payroll policies.  Notwithstanding the foregoing and except as
provided by the following sentence, if during the Post-Change
of Control Severance Period Employee
engages in Competition or breaches the 

 

3

 

covenants
in Section 6 or in the Release, all payments pursuant to this subsection
will immediately cease effective as of the Breach Date.  Notwithstanding the preceding sentence, if
payment of the severance amounts is delayed in accordance with Section 9(a) of
this Agreement, the Company’s obligation to make severance payments to
Executive during the
Post-Change of Control
Severance Period shall not terminate pursuant to the preceding sentence (i.e.,
upon the Breach Date) with respect to any severance payments that have been
accrued prior to the Breach Date in accordance with Section 9(a) of
this Agreement and such accrued severance payments shall be paid in a lump sum
payment on the date six (6) months and one (1) day following the date
of Executive’s termination of employment (or such earlier date as provided in Section 9(a) of
this Agreement).

 

(iii)       Options,
Restricted Stock and Restricted Stock Units.  100% of the unvested shares subject to all of
Employee’s Options, 100% of the unvested shares subject to all of Employee’s
restricted stock units (“RSUs”) and 100% any of Employee’s shares of Company
common stock subject to a Company repurchase right upon Employee’s termination
of employment for any reason (the “Restricted
Stock”) whether acquired by
Employee on, before or after the date of this Agreement, will immediately vest
upon such termination.  With respect to
all of Employee’s Options outstanding on the date of such termination (whether
granted on, before or after the date of this Agreement), Employee will have the
period following such termination of employment to exercise such Options that
is specified in the stock plans, if any, under which the Options were granted
and in any applicable agreements between the Company and Employee; provided,
however, that all Options will immediately terminate and Employee will have no
further rights with respect to such Options in the event Employee engages in
Competition or breaches the covenants in Section 6 or in the Release
during such period.  In all other
respects, such Options will continue to be subject to the terms and conditions
of the stock plans, if any, under which they were granted and any applicable
agreements between the Company and Employee.

 

(iv)       Continued
Employee Benefits.  The Company will reimburse Employee for
premiums paid for the continuation
of benefits Employee timely elects pursuant
to the COBRA  for Employee and Employee’s eligible dependents under
the Company’s Benefit Plans for a period of [nine (9) / twelve (12)]
months following Employee’s termination of employment; provided, however, that
if during such period Employee engages in Competition or breaches the covenants
in Section 6 or in the Release, all Company-reimbursements pursuant to this
subsection will immediately cease.  Employee will be solely responsible for
electing such continuation coverage for Employee and Employee’s eligible
dependents.

 

(v)        Payments
or Benefits Required by Law. 
Employee will receive such other compensation or benefits from the
Company as may be required by law (for example, “COBRA” coverage under Section 4980B
of the Code).

 

(c)           Other Terminations.  If
Employee voluntarily terminates Employee’s employment with the Company or any
parent or subsidiary of the Company (other than for Good Reason within twelve
(12) months of a Change of Control) or if the Company (or any parent or
subsidiary of the Company employing Employee) terminates Employee employment
with the Company (or any parent or subsidiary of the Company) for Cause, then
Employee will (i) receive his or her earned but unpaid base salary through
the date of termination of employment, (ii) receive all accrued vacation,
expense reimbursements and any other benefits due to Employee through the date
of termination of employment in accordance with established Company plans,
policies and 

 

4

 

arrangements, and (iii) not be entitled to any
other compensation or benefits (including, without limitation, accelerated vesting
of Options or Restricted Stock) from the Company except to the extent provided
under the applicable stock option agreement(s) or as may be required by
law (for example, “COBRA” coverage under Section 4980B of the Code).

 

(d)           Termination due to Death or Disability.  If
Employee’s employment with the Company (or any parent or subsidiary of the
Company) is terminated due to Employee’s death or Employee’s becoming Disabled,
then Employee or Employee’s estate (as the case may be) will (i) receive
the earned but unpaid base salary through the date of termination of
employment, (ii) receive all accrued vacation, expense reimbursements and
any other benefits due to Employee through the date of termination of
employment in accordance with Company-provided or paid plans, policies and
arrangements, and (iii) not be entitled to any other compensation or
benefits from the Company except to the extent required by law (for example, “COBRA”
coverage under Section 4980B of the Code).

 

(e)           Exclusive
Remedy.  In the event of a
termination of Employee’s employment with the Company (or any parent or
subsidiary of the Company), the provisions of this Section 3 are intended
to be and are exclusive and in lieu of any other rights or remedies to which
Employee or the Company may otherwise be entitled (including any contrary
provisions in the Employment Agreement), whether at law, tort or contract, in
equity, or under this Agreement. 
Employee will be entitled to no benefits, compensation or other payments
or rights upon termination of employment other than those benefits expressly
set forth in this Section 3.

 

4.             Limitation
on Payments.  In the event that the
severance and other benefits provided for in this Agreement or otherwise
payable to Employee (i) constitute “parachute payments” within the meaning
of Section 280G of the Code and (ii) but for this Section 4,
would be subject to the excise tax imposed by Section 4999 of the Code,
then Employee’s severance benefits under Section 4(a)(i) will be
either:

 

(a)           delivered in full, or

 

(b)                                 delivered as to
such lesser extent which would result in no portion of such severance benefits
being subject to excise tax under Section 4999 of the Code,

 

whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the
excise tax imposed by Section 4999, results in the receipt by Employee on
an after-tax basis, of the greatest amount of severance benefits,
notwithstanding that all or some portion of such severance benefits may be
taxable under Section 4999 of the Code. 
Unless the Company and Employee otherwise agree in writing, any
determination required under this Section 4 will be made in writing by BDO Seidman or by
a national “Big Four” accounting firm (the “Accountants”), whose determination will be
conclusive and binding upon Employee and the Company for all purposes.  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 Employee will furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this 

 

5

 

Section. 
The Company will 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 will have the following meanings:

 

(a)           Benefit
Plans.  “Benefit Plans” means
plans, policies or arrangements that the Company sponsors (or participates in)
and that immediately prior to Employee’s termination of employment provide
Employee and/or Employee’s eligible dependents with medical, dental, and/or
vision benefits.  Benefit Plans do not
include any other type of benefit (including, but not by way of limitation,
disability, life insurance or retirement benefits). A requirement that the
Company provide Employee and Employee’s eligible dependents with coverage under
the Benefit Plans will not be satisfied unless the coverage is no less
favorable than that provided to Employee and Employee’s eligible dependents
immediately prior to Employee’s termination of employment.

 

(b)           Cause.  “Cause” means (i) a willful failure by
Employee to substantially perform Employee’s duties as an employee, other than
a failure resulting from the Employee’s complete or partial incapacity due to
physical or mental illness or impairment, (ii) a willful act by Employee
that constitutes gross misconduct and that is injurious to the Company, (iii) circumstances
where Employee willfully imparts material confidential information relating to
the Company or its business to competitors or to other third parties other than
in the course of carrying out Employee’s duties, (iv) a material and
willful violation by Employee of a federal or state law or regulation
applicable to the business of the Company that is injurious  to the
Company, or (v) Employee’s
conviction or plea of guilty or no contest to a felony, which the Company reasonably believes has or
will negatively reflect on the Company’s business or reputation.  No
act or failure to act by Employee will be considered “willful” unless committed
without good faith and without a reasonable belief that the act or omission was
in the Company’s best interest.

 

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

 

(i)         the
sale, lease, conveyance or other disposition of all or substantially all of the
Company’s assets to any “person” (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended), entity or group of persons
acting in concert;

 

(ii)        any
person or group of persons becoming the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s
then outstanding voting securities;

 

(iii)       a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation that 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 or its controlling entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity (or its controlling entity) outstanding immediately after such merger or
consolidation; or

 

6

 

(iv)       a
contest for the election or removal of members of the Board that results in the
removal from the Board of at least 50% of the incumbent members of the Board.

 

(d)           Competition.  “Competition” will mean Employee’s direct or indirect
engagement in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), or ownership interest in or
participation in the financing, operation, management or control of, any
person, firm, corporation or business that competes with Company or is a
customer of the Company.

 

(e)           Disability.  “Disability” will mean that Employee has been unable to
perform the principal functions of Employee’s duties due to a physical or
mental impairment, but only if such inability has lasted or is reasonably
expected to last for at least six months. 
Whether Employee has a Disability will be determined by the Board based
on evidence provided by one or more physicians selected by the Board.

 

(f)            Good Reason.  “Good Reason” means the occurrence of any of the following without the Employee’s
consent: (i) a material diminution in Employee’s Base Salary, except for
reductions that are in proportion to any salary reduction program approved by
the Board that affects a majority of the senior executives of the Company; (ii) a
material diminution in Employee’s authority, duties, or responsibilities; (iii) a
material diminution in the authority, duties, or responsibilities of the
supervisor to whom Employee is required to report, including a requirements
that Employee report to a corporate officer or employee instead of reporting
directly to the Board; (iv)  a material change in the geographic location
at which Employee must perform his services of not less than fifty (50) miles
from the Company’s primary place of business immediately prior to such
relocation; or (v) any other action or inaction that constitutes a
material breach by the Company of this Agreement; provided, however, that
Employee must provide written notice to the Board of the condition that could
constitute a “Good Reason” event within ninety (90) days of the initial
existence of such condition and such condition must not have been remedied by
the Company within thirty (30) days (the “Cure Period”) of such written
notice.  A termination will not be deemed
to be for “Good Reason” unless such termination occurs within ninety (90) days
following the end of the Cure Period.

 

(g)           Section 409A Limit.  “Section 409A Limit” means the lesser of two (2) times:
(i) Employee’s annualized compensation based upon the annual rate of pay
paid to Employee during the Company’s taxable year preceding the Company’s
taxable year of Employee’s termination of employment as determined under
Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue
Service guidance issued with respect thereto; or (ii) the maximum amount
that may be taken into account under a qualified plan pursuant to Section 401(a)(17)
of the Code for the year in which Employee’s employment is terminated.

 

6.             Non-Solicitation.  For a period beginning on the Effective Date
and ending six (6) months after Employee ceases to be employed by the
Company (the “Non-Solicitation Period”), Employee, directly or indirectly, whether as
employee, owner, sole proprietor, partner, director, member, consultant, agent,
founder, co-venturer or otherwise, will not: (i) solicit, induce or
influence any person to leave employment with the Company; or (ii) directly
or indirectly solicit business from any of the Company’s customers and users on
behalf of any business that directly competes with the 

 

7

 

principal business of the Company; provided,
however, that the Non-Solicitation Period shall end [six (6) / nine (9) ]
months after Employee ceases to be employed by the Company in the event
Employee’s employment is terminated pursuant to an Involuntary Termination;
provided further, however, that the Non-Solicitation Period shall end [twelve
(12) / fifteen (15) ] months after Employee ceases to be employed by the
Company in the event Employee’s employment is terminated pursuant to a Change
of Control Termination.

 

7.             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 will 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” will include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement
described in this Section 7(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 Employee hereunder will inure to the benefit
of, and be enforceable by, Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

 

8.             Notice.

 

(a)           General.  Notices and all other communications
contemplated by this Agreement will be in writing and will be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.  In the case of Employee, mailed notices will
be addressed to him or her at the home address which he or she most recently
communicated to the Company in writing. 
In the case of the Company, mailed notices will be addressed to its
corporate headquarters, and all notices will be directed to the attention of
its President.

 

(b)           Notice
of Termination.  Any termination by
the Company for Cause or by Employee for Good Reason or as a result of a voluntary
resignation will be communicated by a notice of termination to the other party
hereto given in accordance with Section 8(a) of this Agreement.  Such notice will indicate the specific
termination provision in this Agreement relied upon, will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and will specify the termination
date (which will be not more than thirty (30) days after the giving of such
notice).  The failure by Employee to
include in the notice any fact or circumstance which contributes to a showing
of Good Reason will not waive any right of Employee hereunder or preclude
Employee from asserting such fact or circumstance in enforcing his or her
rights hereunder.

 

9.             Miscellaneous
Provisions.

 

(a)           Code
Section 409A.  Notwithstanding anything to the contrary in
this Agreement, if Employee is a “specified employee” within the meaning of Section 409A
of the Code 

 

8

 

and any final regulations and guidance promulgated
thereunder, as
they each may be amended from time to time (“Section 409A”) at the time of Employee’s termination
other than due to Employee’s death (provided that such termination is a “separation
from service” within the meaning of Section 409A, as determined by the
Company), then only that portion of the cash
severance and shares subject to accelerated RSUs payable to Employee pursuant
to this Agreement, if any, and any other severance payments or separation
benefits, in each case which may be considered deferred compensation under Section 409A
(together, the “Deferred Compensation
Separation Benefits”),
which (when considered together) do not exceed the Section 409A Limit (as
defined herein) may be made within the first six (6) months following
Employee’s termination of employment in accordance with the payment schedule
applicable to each payment or benefit.  Any portion of the Deferred
Compensation Separation Benefits in excess of the Section 409A Limit
otherwise due to Employee on or within the six (6) month period following
Employee’s termination will accrue during such six (6) month period and
will become payable in a lump sum payment on the date six (6) months and
one (1) day following the date of Employee’s termination of
employment.  All subsequent Deferred
Compensation Separation Benefits, if any, will be payable in accordance with
the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the
contrary, if Employee dies following his termination but prior to the six month
anniversary of his date of termination, then any payments delayed in accordance
with this paragraph will be payable in a lump sum as soon as administratively
practicable after the date of Employee’s death and all other Deferred
Compensation Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit. 
It is the intent of this Agreement 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.

 

(b)           No
Duty to Mitigate.  Employee will not
be required to mitigate the amount of any payment contemplated by this
Agreement, nor will any such payment be reduced by any earnings that Employee
may receive from any other source.

 

(c)           Waiver.  No provision of this Agreement will be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by Employee and by an authorized officer of the
Company (other than Employee).  No waiver
by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party will be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

 

(d)           Headings.  All captions and section headings used in
this Agreement are for convenient reference only and do not form a part of this
Agreement.

 

(e)           Entire Agreement.  This
Agreement constitutes the entire agreement of the parties hereto and supersedes
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, including (without
limitation) the Employment Agreement). 
No future agreements between the Company and Employee may supersede this
Agreement, unless they are in writing and specifically mention this
Agreement.  With respect to equity awards granted on or after
the date hereof, the acceleration of vesting provided herein will apply to such
awards except to the 

 

9

 

extent otherwise explicitly provided in the
applicable equity award agreement, which provision must include a reference to
this Agreement.

 

(f)            Choice
of Law.  The laws of the State of
California (without reference to its choice of laws provisions) will govern the
validity, interpretation, construction and performance of this Agreement.

 

(g)           Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement will not affect the validity or
enforceability of any other provision hereof, which will remain in full force
and effect.

 

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

 

(i)            Counterparts.  This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

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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

  	
  CATALYST SEMICONDUCTOR, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTIVE

  	
  [EMPLOYEE NAME]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

11Exhibit 10.1

 

SEPARATION AGREEMENT

 

 

This Separation Agreement (“Agreement”)
dated as of February 29, 2008 is by and between Force Protection, Inc.,
a Nevada corporation (the “Company” or “Force Protection”), and Michael Durski
(the “Executive”).

 

IT IS HEREBY AGREED AS
FOLLOWS:

 

1.                                       The payments and benefits under this
Agreement are in consideration of the Executive’s waiver and release in Section 9
hereof and covenants in Section 13 hereof.

 

2.                                       The Executive and the Company agree that
the Executive’s last day of employment with the Company will be on February 29,
2008 (the “Date of Termination”), whether or not Executive revokes this
Agreement pursuant to paragraph 11 below.

 

3.                                       The Company will pay the Executive, on a
bi-weekly basis, commencing on the first business day following the Effective
Date (after the expiration of the Revocation Period as defined in Section 11),
a severance amount equal to his current annual basis salary for a period of one
year (26 bi-weekly payments), reduced by applicable tax withholding (“Severance
Benefits”).

 

4.                                       The Company will pay the Executive any
accrued and unpaid vacation pay, in the amount of $10,000, reduced by
applicable tax withholding, in the next regular payroll after the Date of
Termination. Further, Executive agrees to cooperate with the Company to
facilitate the removal of certain security equipment installed at the home of
the Executive with ADT at a mutually agreed to date and time.

 

5.                                       The Executive will receive separate
written notice of his right to elect continuation coverage under the Company’s
medical, dental and vision insurance plans, subject to the terms and conditions
of COBRA and the applicable plan(s) in effect for active employees from
time to time. If Executive timely elects continuation coverage under COBRA,
then, subject to Executive’s execution and non-revocation of this Agreement,
the Company will pay the employer portion of the premium cost of such insurance
for a one year period following the Date of Termination. Notwithstanding the
foregoing, in the event Executive becomes reemployed with another employer and
becomes eligible to receive welfare benefits from such employer, then the
benefits described above shall be secondary to such benefits during the period
of Executive’s eligibility.

 

6.                                       The Company and the Executive agree that
as of the Date of Termination there are no other amounts or benefit due to the
Executive through such date or thereafter from or under any other plan, program
(including gainsharing), policy or agreement of the Company, as well as any
other individual employment agreement with the Executive. Except as otherwise
provided in this Agreement, the Executive acknowledges that he has been paid
all wages or other compensation and benefits due him in connection with his
employment and that he has received any paid or unpaid leave that he has
requested.

 

 

1

 

7.                                       Effective as of the Date of Termination,
the Executive hereby resigns as a member of the board of directors of all subsidiaries
or affiliates of the Company as well as any other positions held with such
subsidiaries or affiliates effective as of the Date of Termination and agrees
to execute such other documents as may be requested by the Company to implement
such resignations.

 

8.                                       The Company shall indemnify the Executive
to the extent provided pursuant to the Company’s First Amended and Restated
By-Laws and Articles of Incorporation, as in effect on the Date of Termination,
and the Executive shall not be entitled to any other rights to indemnification
by the Company other than as set forth therein.

 

9.                                       (a)           Executive,
for himself and for Executive’s heirs, dependents, assigns, agents, executors,
administrators, trustees and legal representatives (collectively, the “Releasors”)
hereby forever releases, waives and discharges the Released Parties (as defined
below) from each and every claim, demand, cause of action, fee, liability or
right of any sort (based upon legal or equitable theory, whether contractual,
common-law, statutory, federal, state, local or otherwise), known or unknown,
which Releasors ever had, now have, or hereafter may have against the Released
Parties by reason of any actual or alleged act, omission, transaction,
practice, policy, procedure, conduct, occurrence, or other matter from the
beginning of the world up to and including the Effective Date (as defined
below), including without limitation, those in connection with, or in any way
related to or arising out of, Executive’s employment or termination of employment
or any other agreement, understanding, relationship, arrangement, act, omission
or occurrence, with the Released Parties.

 

(b)                                 Without limiting the generality of the
previous paragraph, this general release is intended to and shall release the
Released Parties from any and all claims, whether known or unknown, which
Releasors ever had, now have, or may hereafter have against the Released
Parties including, but not limited to: (1) any claim of discrimination or
retaliation under the Age Discrimination in Employment Act of 1967, 29 U.S.C.
§§ 621-634, as amended by the Older Workers’ Benefit Protection Act, P.L.
101-433 (“ADEA”), including, but not limited to, all claims of age
discrimination in employment and all claims of retaliation in violation of the
ADEA and any state — statute or local ordinance barring age discrimination,
Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the
Employee Retirement Income Security Act of 1974, as amended (excluding claims
for accrued, vested benefits under any employee benefit or pension plan of the
Released Parties subject to the terms and conditions of such plan and
applicable law); (2) any claim under the South Carolina Human Affairs Law
and the South Carolina Wage Payment Statute (3) any other claim (whether
based on federal, state or local law or ordinance, statutory or decisional)
relating to or arising out of Executive’s employment, the terms and conditions
of such employment, the termination of such employment and/or any of the events
relating directly or indirectly to or surrounding the termination of such
employment, including, but not limited to, breach of contract (express or
implied), 

 

 

2

              tort, wrongful discharge, detrimental
reliance, defamation, emotional distress or compensatory or punitive damages,
any other claim of employment discrimination, retaliation, infliction of
emotional distress, defamation, invasion of privacy, tortious interference with
contractual relations, wrongful termination, outrage, promissory estoppel, or
other liabilities, suits, debts, claims for back pay, front pay, compensatory
or punitive damages, injunctive relief, severance pay, costs, reinstatement,
business expenses, commissions, bonuses, incentive compensation plans, or
payment or reimbursement under any health insurance or other employee benefit
plan, insurance premiums or other sums of money, grievances, expenses, demands,
controversies of every kind and description, whether liquidated or
unliquidated, contingent or otherwise and whether specifically mentioned or
not, that exist or might be claimed to exist at or prior to the date of this
Agreement; and (4) any claim for attorney’s fees, costs, disbursements and
the like.

 

(c)                                  The foregoing general release does not in
any way affect: (1) Executive’s rights of indemnification to which
Executive was entitled immediately prior to the Date of Termination; (2) the
right of Executive to take whatever steps may be necessary to enforce the terms
of this Agreement, (3) any claims arising after the Effective Date, (4) or
any claims that may not be released by law.

 

(d)                                 For purposes of this general release, the
“Released Parties” means the Company, all current and former parents,
subsidiaries, related companies, partnerships, joint ventures and employee
benefit programs (and the trustees, administrators, fiduciaries and insurers of
such programs), and, with respect to each of them, their predecessors and
successors, and, with respect to each such entity, all of its past, present,
and future employees, officers, directors, members, stockholders, owners,
representatives, assigns, attorneys, agents, insurers, and any other person
acting by, through, under or in concert with any of the persons or entities
listed in this paragraph, and their successors (whether acting as agents for
such entities or in their individual capacities).

 

10.                                 Executive represents and warrants that,
as of the Effective Date of this Agreement, Executive has not filed or
commenced any suit, claim, charge, complaint, action, arbitration, or legal
proceeding of any kind against the Company or its subsidiaries or affiliates.
Nothing in this Agreement shall be construed to affect the Equal Employment
Opportunity Commission’s (the “Commission”) or any state agency’s independent
right and responsibility to enforce the law, nor does this Agreement affect
Executive’s right to file a charge or participate in an investigation or
proceeding conducted by either the Commission or any such state agency,
although this Agreement does bar any claim that Executive might have to receive
monetary damages in connection with any Commission or state agency proceeding
concerning matters covered by this Agreement.

 

11.                                 By signing this Agreement, Executive
expressly acknowledges and agrees that: (a) Executive has carefully read
it and fully understands what it means; (b) Executive has discussed this
Agreement with an attorney of Executive’s choosing before signing it; (c) 

 

 

3

 

              Executive has been given at least
twenty-one (21) calendar days to consider whether to sign this Agreement; (d) Executive
has agreed to this Agreement knowingly and voluntarily and was not subjected to
any undue influence or duress; (e) the consideration provided Executive
under this Agreement is sufficient to support the releases provided by
Executive under this Agreement; (f) Executive may revoke Executive’s
execution of this Agreement within seven (7) days after Executive signs it
by sending written notice of revocation as set forth below (“Revocation Period”);
and (g) on the eighth day after Executive executes this Agreement (the “Effective
Date”), this Agreement becomes effective and enforceable, provided that
Executive does not revoke this Agreement during the revocation period. Any
revocation of Executive’s execution of this Agreement must be submitted, in
writing, to Force Protection, Inc. 9801 Highway 78, Building No. 1,
Ladson, South Carolina 29456-3802, to the attention of the Co-General Counsel,
stating “I hereby revoke my execution of the Agreement.” The revocation must be
personally delivered to the Co-General Counsel or mailed to the Co-General
Counsel and postmarked within seven (7) days of Executive’s execution of
this Agreement. If the last day of the Revocation Period is a Saturday, Sunday
or legal holiday, then the revocation period will be extended to the following
day which is not a Saturday, Sunday or legal holiday. Executive agrees that if
Executive does not execute this Agreement or, in the event of revocation,
Executive will not be entitled to receive any of the payments or benefits under
this Agreement (other than provided for in paragraph 4). Executive must execute
this Agreement on or before 21 days after the Date of Termination.
Notwithstanding the foregoing, if Executive revokes this Agreement pursuant to
this paragraph 11 the provisions of paragraph 2 shall survive such revocation.

 

12.                                 The Executive agrees that in exchange for
a portion of the Severance Benefits (which the Executive agrees constitutes
consideration for all commitments made herein in addition to anything of value
to which he is already entitled).

 

13.                                 In consideration of the Severance
Benefits, the Executive agrees to the following covenants:

 

(a)                                  Non-Compete. 
For a 12-month period after the Date of Termination, the Executive shall
not directly or indirectly (without the prior written consent of the Company):

 

i.                                          hold a 5% or greater equity (including
stock options whether or not exercisable), voting or profit participation
interest in a Competitive Enterprise, or

 

ii.                                       associate (including as an officer,
employee, partner, consultant, agent or advisor) with a Competitive Enterprise and
in connection with the Executive’s association engage, or directly or
indirectly manage or supervise personnel engaged, in any activity:

 

 

4

 

(A)                              that is substantially related to any
activity that the Executive was engaged in with the Company or its affiliates
during the 12 months prior to the Date of Termination (excluding as a
director),

 

(B)                                that is substantially related to any
activity for which the Executive had direct or indirect managerial or
supervisory responsibility with the Company or its affiliates during the 12
months prior to the Date of Termination, or

 

(C)                                that calls for the application of
specialized knowledge or skills substantially related to those used by the
Executive in his activities with the Company or affiliates during the 12 months
prior to the Date of Termination.

 

For purposes of this Agreement, “Competitive
Enterprise” means any business enterprise anywhere worldwide that
either (A) engages in the manufacture and sale of blast- and
ballistic-protected wheeled vehicles for the US or foreign militaries or (B) holds
a 5% or greater equity, voting or profit participation interest in any
enterprise that engages in such a competitive activity.

 

(b)                                 Non-Solicit. 
For a 12-month period after the Date of Termination, the Executive shall
not, in any manner, directly or indirectly (without the prior written consent
of the Company): (i) solicit any Client to transact business with a
Competitive Enterprise or to reduce or refrain from doing any business with the
Company, (ii) transact business with any Client that would cause the
Executive to be engaged in a Competitive Enterprise, (iii) interfere with
or damage any relationship between the Company and a Client or (iv) solicit
anyone who is then an employee of the Company to resign from the Company or to
apply for or accept employment with any other business or enterprise.

 

(c)                                  For purposes of this Agreement, a “Client” means any client or prospective client of the
Company or its affiliates to whom the Executive provided services, or for whom
the Executive transacted business, or whose identity became known to the
Executive in connection with his relationship with or employment by the Company
or its affiliates, and “Solicit” means
any direct or indirect communication of any kind, regardless of who initiates
it, that in any way invites, advises, encourages or requests any person to take
or refrain from taking any action.

 

(d)                                 Confidential Information. 
The Executive hereby acknowledges that, as an employee of the Company,
he had access to confidential information of a special and unique nature and
value relating to the Company and its strategic plan and financial operations.
The Executive further recognizes and acknowledges that all such confidential
information is the exclusive property of the Company, is material and
confidential, and is critical to the successful conduct of the business of the
Company. Accordingly, the Executive hereby covenants and agrees that he 

 

 

5

 

 

              shall not at any time, directly
or indirectly, divulge, reveal or communicate any such confidential information
to any person, firm, corporation or entity whatsoever, or use any such
confidential information for his own benefit or for the benefit of others.
Notwithstanding the foregoing, the Executive shall be authorized to disclose
confidential information (i) as may be required by law or legal process
after providing the Company with prior written notice and an opportunity to
respond to such disclosure (unless such notice is prohibited by law), (ii) in
any criminal proceeding against him after providing the Company with prior
written notice and an opportunity to seek protection for such confidential
information, and (iii) with the prior written consent of the Company.

 

(e)                                  Survival. 
Any termination of this Agreement (or breach of this Agreement by the
Executive or the Company) shall have no effect on the continuing operation of
this Section 13.

 

(f)                                    Validity. 
The terms and provisions of this Section 13 are intended to be
separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the
enforceability of any other provision of this Agreement shall thereby be
affected. The parties hereto acknowledge that the potential restrictions on the
Executive’s future employment imposed by this Section 13 are reasonable in
both duration and geographic scope and in all other respects. If for any reason
any court of competent jurisdiction shall find any provisions of this Section 13
unreasonable in duration or geographic scope or otherwise, the Executive and
the Company agree that the restrictions and prohibitions contained herein shall
be effective to the fullest extent allowed under applicable law in such jurisdiction.

 

(g)                                 Consideration. 
The parties acknowledge that this Agreement would not have been entered
into and the benefits described in Section 3 would not have been promised
in the absence of the Executive’s promises under this Section 13.

 

14.                                 This Agreement constitutes the entire
agreement between the parties and supersedes any and all prior contemporaneous,
oral or written agreements or understandings between the parties. No
representation, promise, inducement or statement of intention has been made by the
Released Parties that is not embodied in this Agreement. No party shall be
bound by or liable for any alleged representation, promise, inducement, or
statement of intention not contained in this Agreement. This Agreement cannot
be amended, modified, or supplemented in any respect except by subsequent
written agreement signed by all parties hereto.

 

15.                                 Executive agrees to indemnify and hold
the Released Parties harmless from and against any and all loss, cost, damage,
or expense, including, but not limited to, reasonable attorneys’ fees, incurred
by the Released Parties arising out of any action at law or equity, or any
other proceeding, they find necessary to enforce any of the terms, covenants or
conditions of the Agreement or due to a breach of this Agreement by Executive.
In the event a court determines that Executive has breached this Agreement,
specifically 

 

6

 

              including (but not limited to)
reinstating or instituting any legal or administrative proceeding against the
Released Parties in violation of any provision of this Agreement (other than
proceedings brought pursuant to the ADEA), Executive specifically acknowledges
that he will return to the Company: (i) the Severance Benefit, less $500;
and (ii) any recovery Executive obtains as a result of legal or
administrative proceedings brought against the Released Parties in violation of
this Agreement.

 

16.                                 The Released Parties will have all of the
rights and remedies available at law and equity to enforce their rights under
this Agreement. Should it be held at any time by a court of competent
jurisdiction that any of the obligations, covenants or agreements set forth in
this Agreement are illegal, invalid or unenforceable, the validity of the
remaining parts, terms, or provisions shall not be affected thereby and any
illegal, invalid or unenforceable parts, terms or provisions shall be deemed
not to be a part of this Agreement.

 

17.                                 This Agreement shall be interpreted and
enforced in accordance with the laws of the State of South Carolina. Executive
consents to the exclusive jurisdiction of courts located in Charleston, South
Carolina, agreeing to waive any argument of lack of personal jurisdiction or
forum non-conveniens with respect to any claim or controversy arising out of or
relating to this Agreement, Executive’s employment with the Company, Executive’s
separation from that employment, and any other contact or communication
involving Executive and the Company.

 

18.                                 Unless the context otherwise requires,
when used in this Agreement, the singular shall include the plural, the plural
shall include the singular, and all nouns, pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, as the identity
of the person or persons may require.

 

PLEASE READ CAREFULLY

 

I, MICHAEL DURSKI,
EXPRESSLY ACKNOWLEDGE, REPRESENT AND WARRANT THAT I HAVE CAREFULLY REVIEWED
THIS AGREEMENT; THAT I FULLY UNDERSTAND THE TERMS, CONDITIONS AND SIGNIFICANCE
OF THIS AGREEMENT; THAT I HAVE HAD AMPLE TIME TO CONSIDER THIS AGREEMENT; THAT
THE COMPANY HAS ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY CONCERNING
THIS AGREEMENT; THAT I HAVE HAD A FULL OPPORTUNITY TO REVIEW THIS AGREEMENT
WITH AN ATTORNEY AND HAVE DONE SO OR HAVE DECLINED TO DO SO; AND THAT I HAVE
EXECUTED THIS AGREEMENT KNOWINGLY, VOLUNTARILY, AND WITH SUCH ADVICE FROM AN
ATTORNEY AS I DEEMED APPROPRIATE.

 

7

 

 

IN WITNESS WHEREOF, the
Executive has hereunto set the Executive’s hand and the Company has caused this
Agreement to be executed in its name and on its behalf, all as of the date
first written above.

 

	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   /s/ Michael Durski

  
	
   

  	
   

  	
  Michael Durski

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Force
  Protection, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Michael Moody

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Michael Moody

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Interim CEO &
  President

  

 

8

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