Document:

Exhibit 10.1

 

 

Mr. Raymond J. Wilson

1431 Hampton Drive

Downingtown, PA 19335

 

Dear Ray:

 

This letter
agreement (the “Release Agreement”) confirms that your employment with
Innovative Solutions and Support, Inc. (the “Company”), and its
affiliated entities was terminated effective September 8, 2008.  You and the Company agreed to the following
terms:

 

1.                                       Effective
Date.

 

(a)                                  Your employment with the Company
and its affiliated entities terminated on September 8, 2008 (“Separation
Date”).  You hereby agree to resign
as a member of the Board of Directors of the Company, effective as of the date
hereof, and acknowledge and agree that such resignation is irrevocable and not
subject to the provisions of Section 3(v) of this Release agreement.

 

(b)                                 Except for the provisions of Section 10,
Section 11 and Section 12.11 thereof, the Employment Agreement
between you and the Company, dated as of January 21, 2008 (the “Employment
Agreement”), terminated on the Separation Date.  Capitalized terms used in this Release Agreement
but not defined herein will have the meanings given to such terms in the
Employment Agreement.

 

2.                                       Payments
and Benefits.

 

(a)                                  Provided that you execute and do
not revoke this Release Agreement pursuant to Section 3(v) hereof and
you continue to comply with Section 11 of the Employment Agreement, the
terms of which are incorporated herein by reference, you will receive a payment
of $90,000 (including $39,039 in moving expense reimbursement to be paid upon
receipt of an executed copy of this document) plus your Base Salary ($400,000
per annum – see attached Exhibit A for detailed calculation) for the
remainder of the Term of Employment (through December 31, 2009) as a
result of your termination by the Company without Cause.

 

(b)                                 The Company shall reimburse you
for the cost of COBRA health care continuation coverage (less the portion you
would have been required to pay had you continued to be employed) for you and
your family, provided you timely elect such coverage, until the earlier of December 30,
2008 or your departure from the United States (such reimbursement to be made no
later than the end of the calendar month following the calendar month during
which you incur such costs).

 

720
Pennsylvania Drive   Exton,
Pennsylvania  19341   USA  
610-646-9800   Fax  610-646-0149

 

 

(c)                                  Please be aware
that in order for you to avoid a 20% penalty tax imposed by Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), on
certain payments to be made pursuant to this Section 2, such payments shall,
to the extent necessary to avoid such penalty tax, be delayed until the first
payroll date after March 8, 2009, with the first such payment to include
all payments that would otherwise have been made had such delay not been
imposed.

 

3.                                       Release.  You, for yourself, your heirs, assigns,
successors, executors, and administrators, in consideration of the promises and
covenants set forth herein, hereby fully release and discharge (A) the
Company and its affiliates, and (B) the Company’s officers, directors,
members, shareholders, successors, partners, principals, employees, agents,
representatives, attorneys, and/or any other individual connected with each of
the foregoing (the “Individual Released Parties”), forever and
unconditionally from any and all manner of action, claim, demand, damages,
cause of action, debt, sum of money, contract, covenant, controversy,
agreement, promise, judgment, and demand whatsoever, in law or equity, known or
unknown, existing or claimed to exist (hereinafter, collectively referred to as
“Claims”) arising from the beginning of time through the execution of
this Release Agreement, including without limitation, all Claims relating to or
arising out of the Employment Agreement, your employment and/or termination of
employment with the Company, your service as a director of the Company, payment
of base salary, bonus and/or employee benefits and/or any discrimination claim
based on race, religion, color, national origin, age, sex, sexual orientation
or preference, disability, retaliation, or any cause of action under the
following in each case as amended: the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Civil Rights Act of 1866, the Equal Pay Act of 1963, the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Worker
Adjustment and Retraining Notification Act, the Employee Retirement Income
Security Act of 1974 (except any valid claim to recover vested benefits, if
applicable), any Pennsylvania anti-discrimination statutes and regulations,
and/or any other federal, state or local law, rule, regulation, constitution or
ordinance, or under any public policy or common law or arising under any
practices or procedure of the Company or under the Employment Agreement or any
equity incentive plan of the Company, and/or any claim for wrongful
termination, back pay, future wage loss, injury subject to relief under the
Workers’ Compensation Act, any other claim, whether in tort, contract or
otherwise, or any claim for costs, fees or other expenses, including attorneys’
fees, provided, however, that nothing herein shall be deemed to
release any claims that you may have arising from a breach by the Company of
its obligations set forth in this Release Agreement, any rights and claims that
you may have which arise after the date you execute this Release Agreement and
any rights and claims you may have for indemnification pursuant to Section 10
of the Employment Agreement, which is incorporated herein by reference.

 

By signing
this Release Agreement, you acknowledge that:

 

 

(i)                                     you
have read and fully understand the terms of this Release Agreement;

 

(ii)                                  you
have been advised and urged to consult with your attorneys, concerning the
terms of this Release Agreement;

 

(iii)                               you
have agreed to this Release Agreement knowingly and voluntarily and were not
subjected to any undue influence or coercion in agreeing to its terms;

 

(iv)                              you
have been given 21 days to consider this Release Agreement, and acknowledge
that in the event that you execute this Release Agreement prior to the
expiration of the 21 day period, you hereby waive the balance of said period;

 

(v)                                 you
will have seven (7) days following your execution of this Release
Agreement to revoke this Release Agreement and this Release Agreement shall not
become effective or enforceable until the revocation period has expired;
provided, however, that the provisions of this Section 3 (v) shall
not apply to your resignation as a member of the Board of Directors of the
Company, which resignation shall remain in effect if you revoke this Release
Agreement.  Any revocation within this
seven (7) day period must be submitted in writing and personally
delivered, or mailed on the 7th day following your execution of this
Release Agreement to Geoff Hedrick, Chairman & CEO, Innovative
Solutions & Support, Inc., 720 Pennsylvania Drive, Exton, PA
19341.  No payment provided for in Section 2
or otherwise in this Release Agreement will be made until after the seven (7) day
period has expired and this Release Agreement has become effective.  If this Release Agreement is revoked by you
then you shall forfeit the payment and benefits provided in this Release
Agreement and the Company shall not be required to provide any such payment,
benefits or other consideration; and

 

(vi)                              you
and the Company have agreed that no provision of this Release Agreement may be
modified, changed, waived or discharged unless such waiver, modification,
change or discharge is agreed to in writing and signed by you and the Company.

 

4.                                       Future
Cooperation.  You agree to cooperate
with any reasonable request by the Company, and will assist the Company, in
connection with any matter with which you were involved or any existing or
potential claim, investigation, audit, administrative proceeding, lawsuit or
other legal or business matter that arose during your employment by the
Company.  Such cooperation shall (i) be
at a time and place convenient to you, (ii) be completed by telephone to
the extent reasonably possible, and (iii) not interfere with your ability
to carry on your business after the Separation Date.  Any costs incurred by

 

 

you in connection with this Section 4 shall be
reimbursed promptly.  In addition, you
agree to immediately return to the Company the leased automobile, mobile
communications device and personal computer provided to you by the Company
during the term of your employment and to deliver, prior to December 31,
2009, appropriate receipts documenting your expenses in relocating from the
vicinity of Exton, Pennsylvania to the United Kingdom.

 

5.                                       Employee
Breach.  You acknowledge that upon
any breach by you of any of the terms of this Release Agreement, the Company
shall have the right to seek any legal or equitable relief that may be
available.

 

6.                                       Withholding.  The Company may withhold from any amounts
payable or provided under this Release Agreement all Federal, state, local or
other taxes as the Company is required to withhold pursuant to any applicable
law, regulation or ruling.  You agree
that the liability for full payment and satisfaction of any and all taxes of
any kind and all other tax attributes arising out of or relating to any amounts
payable or provided under this Release Agreement or otherwise by the Company is
solely the responsibility and liability of you.

 

7.                                       Entire
Agreement.  You understand that this
Release Agreement fully and completely waives and gives up all claims you may
have against the Company excepting only claims arising out of this Release
Agreement.  This Release Agreement
contains the entire understanding between you and the Company, and supersedes
any and all other prior agreements, understandings, discussions, negotiations
whether written or oral between you and the Company, except for those provisions
of the Employment Agreement that are incorporated by reference herein.  You acknowledge that neither the Company nor
any representative of the Company has made any representation or promise to you
other than set forth herein.

 

8.                                       Governing
Law; Disputes.  This Release
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania,
excluding conflicts of law principles. 
Any disputes arising hereunder shall be settled by arbitration pursuant
to Section 12.11 of the Employment Agreement.

 

9.                                       Severability.  If any of the provisions of this Release
Agreement shall be held invalid, the remainder of this Release Agreement shall
not be affected thereby, and shall remain in full force and effect.

 

10.                                 No
Admissions.  It is understood and
agreed that this Release Agreement does not constitute an admission by the
Company or you that any action either party has taken was unlawful or wrongful,
or that any action constituted a breach of contract or violated any federal,
state, or local law, policy, rule or regulation.

 

 

11.                                 No
Mitigation; No Offset.  You shall be
under no obligation to seek other employment and there shall be no offset
against any amounts due to you under this Agreement or otherwise on account of
any remuneration attributable to any subsequent employment that you may obtain
or business activities that you are engaged in hereafter.

 

 

If the terms
of this Release Agreement are acceptable to you, please sign and date the
enclosed copies of this Release Agreement and return one fully executed copy to
the undersigned.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  INNOVATIVE SOLUTIONS & SUPPORT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geoffrey S.M. Hedrick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its: Chairman and Chief Executive Officer

  
	
  ACCEPTED AND AGREED: 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Raymond J. Wilson

  	
   

  
	
  Raymond J. Wilson

  	
   

  
	
  Dated: November 10, 2008

  	
   

  

 

 

EXHIBIT A

 

Innovative
Solutions & Support, Inc.

Severance
calculation - Ray Wilson

 

	
  Annual salary

  	
   

  	
   

  	
  $

  	
  400,000

  	
   

  	
   

  	
   

  
	
  Payday salary

  	
   

  	
   

  	
  $

  	
  15,385

  	
   

  	
   

  	
   

  
	
  Weekly salary

  	
   

  	
   

  	
  $

  	
  7,692

  	
   

  	
   

  	
   

  
	
  Daily salary

  	
   

  	
   

  	
  $

  	
  1,538

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/9/08 -9/12/08

  	
   

  	
   

  	
  $

  	
  6,154

  	
   

  	
  ($7,692.31-$1,538.46

  	
  )

  
	
  W/E :

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19-Sep-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  26-Sep-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  3-Oct-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  10-Oct-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  17-Oct-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  24-Oct-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  31-Oct-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  7-Nov-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  14-Nov-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  21-Nov-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  28-Nov-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  5-Dec-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  12-Dec-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  19-Dec-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
  26-Dec-08

  	
   

  	
  7,692

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Remaining salary FY 2008

  	
   

  	
   

  	
  $

  	
  121,538

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Calendar year 2009

  	
   

  	
   

  	
  400,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bbase salary due

  	
   

  	
   

  	
  $

  	
  521,538Exhibit 10.1

 

EXECUTIVE
RETENTION AGREEMENT

 

THIS EXECUTIVE
RETENTION AGREEMENT (this “Agreement”) dated as of November 10, 2008 is
made by and between John W. Hohener (“Executive”) and MICROSEMI CORPORATION, a
Delaware corporation (“Company”).

 

NOW, THEREFORE, for
good and valuable considerations, receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.             Term.  The term of this Agreement shall commence on
the date hereof.  The term of this
Agreement shall be renewed automatically on a daily basis so that the
outstanding term is always two (2) year(s) after the date on which
notice of non-renewal or termination of this Agreement is given by the
Executive to the Company or by the Company to the Executive.  This Agreement relates to Executive’s
employment with the Company, or any subsidiary, successor, assign or affiliate
of the Company, under any written or oral agreement.  For purposes of the following provisions “Date
of Termination” means the effective date of termination of Executive’s
employment with any of the entities described above, after notice and lapse of
the notice period as required herein.

 

2.             Terminations
by Executive.

 

a.             Executive
will be entitled to the applicable benefits described in Section 3 if,
during the term of this Agreement provided in Section 1, Executive’s
employment is terminated in any of the following circumstances:

 

(i)                                     Prior to a Change in Control (as defined below), the Company terminates
the Executive’s employment for any reason other than Cause (as defined below).

 

(ii)                                  Upon or following a Change in Control, the Company terminates the
Executive’s employment for any reason.

 

(iii)                               Prior to a Change in Control, the Executive terminates his employment
with the Company upon not less than five (5) days’ written notice to the
Company given within ninety (90) days following the date on which the Executive
becomes aware of a Good Reason (as defined below) to terminate his employment.

 

(iv)                              Upon or following a Change in Control, the Executive terminates his
employment with the Company upon not less than five (5) days’ written
notice to the Company given within ninety (90) days following the date on which
the Executive becomes aware of a Good Reason (as defined below) to terminate
his employment.

 

b.             Good
Reason.  For purposes of this
Agreement, “Good Reason” means the occurrence of any of the following events:

 

(i)                                     any  reduction in, or limitation
upon, the compensation, reimbursable expenses or other benefits provided to
Executive, other than (A) as generally effected by valid public law or
regulation or (B) as results from change in the amount of the incentive
compensation pool if not resulting from changes in the incentive pool formula
or allocations and not resulting from accounting or operational effects of the
acquisition;

 

(ii)                                  any change in assignment of Executive’s primary duties to a work
location more than 50 miles from the Company’s principal executive office at
2381 Morse Avenue, Irvine, California 92614, without Executive’s prior written
consent;

 

(iii)                               any failure by the Company to obtain the assumption of this Agreement by
any successor or assign of the Company;

 

(iv)                              any material breach by the Company of any provision of this Agreement;

 

(v)                                 the assignment to Executive, without his consent, of duties inconsistent
with Executive’s position so as to constitute a diminution of status with the
Company, including an assignment of Executive to a position other than Chief
Financial Officer of the ultimate parent company in the event the Company is
acquired by, or otherwise becomes a subsidiary of, another company; or

 

(vi)                              any action taken by the Board or a standing Committee of the Board in
connection with, or the formation of a special Committee of the Board for the
purpose of, effecting any of the events listed in subparagraphs (i) through
(v) immediately above.

 

c.             Change
of Control.  For purposes of this
Agreement, “Change in Control” means the occurrence of any of the following
events:

 

 

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

 

(ii)           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-one percent (51%) 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 the
stockholders of the Company approving a plan of complete liquidation of the
Company or a consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets.

 

d.             Cause.  For purposes of this Agreement, “Cause” means
that the Board, based on the information available to it, reasonably
determines that any of the following events or contingencies exists or has
occurred:

 

(i)            Executive is convicted of, or pleads guilty or nolo contendre to, a felony (whether or not involving the
Company or any of its affiliates); or

 

(ii)           Executive commits an
act of willful and material misconduct involving the Company or any of its
affiliates; or

 

(iii)          Executive willfully and repeatedly fails or refuses to
perform his duties to the Company and its affiliates; or

 

(iv)          the willful and material violation by Executive of any
written rule, regulation or policy of the Company; or

 

(v)           a material breach by Executive of any
provision of this Agreement.

 

However,
no act or failure to act, on Executive’s part shall be considered “willful”
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive’s action or omission was in the best
interest of the Company, and in the case of clauses (ii) through (v) of
the foregoing definition, there shall be no determination of Cause hereunder
unless Executive shall have received written notice from the Board stating the
nature of the act or omission asserted to constitute Cause and affording
Executive at least ten (10) days to correct such act or omission.

 

e.             Other
Terminations of Employment.  This
Agreement does not limit the Company’s or the Executive’s ability to terminate
Executive’s employment in any other circumstances; provided that the applicable
benefits specified in Section 3 shall be provided only for a termination
of employment described in Section 2(a) above.

 

3.             Severance
Benefits.

 

a.             Subject
to Section 3(c), Executive shall be entitled to the following severance
benefits if the Executive’s employment terminates in the circumstances
described in Section 2(a)(i) or 2(a)(iii):

 

(i)            Salary.  Executive or his estate shall be entitled to
payment, to be received (subject to Section 3(e) below) during the
month following the month in which Executive’s Separation from Service occurs,
of an amount equal to 1.0 multiplied by Executive’s annualized base salary as
of the Date of Termination.

 

(ii)           Incentive Compensation.  Executive or his estate will be
entitled to receive (subject to Section 3(e) below) during the month
following the month in which Executive’s Separation from Service occurs, an
incentive compensation payment of 1.0 multiplied by the highest annual
incentive compensation amount paid during any of the preceding three (3) full
plan years.  In addition, Executive or
his estate will be entitled to receive a pro-rated share of his annual incentive compensation
amount otherwise payable to Executive for the period from the beginning of the
fiscal year in which the Date of Termination occurs through the Date of
Termination, such amount to be determined based on such fiscal year and to be
paid at the same time annual incentive compensation payments are paid generally
to the Company’s active executives.

 

(iii)          Car
Allowance.  Executive or his estate
will be entitled to receive (subject to Section 3(e) below) during
the month following the month in which Executive’s Separation from Service occurs,
an amount equal to 1.0 times his annual car allowance in effect as of the Date
of Termination.

 

(iv)          Equity
Awards.  The restriction or
forfeiture period on any restricted stock (which term shall include for
purposes of this Agreement any restricted stock units) granted by the Company
to Executive under all plans and all stock options and general stock
appreciation rights granted by the Company to Executive shall lapse or
accelerate, as the case may be, and become fully vested and exercisable on the
Date of Termination, and shall remain exercisable for a period of one (1) year
following the Date of Termination, subject to the latest expiration date
specified in the restricted stock or option agreements.

 

2

 

(v)           Medical
and Life Insurance.  Payment of
premiums for medical, dental and vision insurance and life insurance by the
Company shall continue on and subject to the terms of this Agreement for a
period of one (1) year following the Date of Termination, subject to
termination under Section 7.  To the extent that the payment of any
premiums pursuant to this subparagraph (v) is taxable to Executive, any
such payment shall be paid to Executive on or before the last day of Executive’s
taxable year following the taxable year in which the related expense was
incurred.  Executive’s right to payment
of such premiums is not subject to liquidation or exchange for another benefit
and the amount of such benefits that Executive receives in one taxable year
shall not affect the amount of such benefits that Executive receives in any
other taxable year.

 

(vi)          Retirement
Plans; Unvested Company Contribution. 
The Executive shall be entitled to receive, not later than the fifteenth
(15th) day following the Date of Termination (or, if so required under the
provisions of the applicable plan, program or arrangement and/or to comply with
Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), not later than the fifteenth (15th) day following Executive’s
Separation from Service), all benefits payable to him upon or on account of
termination under any of the Company’s tax-qualified employee benefit plans and
any other plan, program or arrangement relating to deferred compensation,
retirement or other benefits including, without limitation, any profit sharing,
401(k), employee stock ownership plan, or any plan established as a supplement
to any of the aforementioned plans.  The
Company shall also pay Executive, during the month following the month in which
Executive’s Separation from Service occurs, an amount equal to all unvested
Company contributions credited to the Executive’s account under any
tax-qualified employee benefit plan maintained by the Company as of the Date of
Termination. In the event that this subparagraph (vi) should conflict with
the provisions of any of the Company’s tax-qualified employee benefit plans and
any other plan, program or arrangement relating to deferred compensation,
retirement or other benefits including, without limitation, any profit sharing,
401(k), employee stock ownership plan, or any plan established as a supplement
to any of the aforementioned plans, then the provisions of the plan shall
govern, provided that the Company’s contribution shall vest pursuant to this
subparagraph (vi) to the maximum extent permissible.

 

(vii)         Vacation
and Sick Leave.  The Company shall
also pay Executive, not later than the second day following the Date of
Termination, a pro rata amount of his base salary under his employment
agreement, in effect on the Date of Termination, for each day of vacation leave
which has accrued as of the Date of Termination, but which is unpaid as of such
date, to which Executive is entitled under the Company’s vacation leave
policy.  The Company shall be required to
pay for sick leave days only to the extent that Executive has taken sick leave
on or prior to the Date of Termination to which Executive is entitled under the
Company’s sick leave policy.

 

(viii)        General.  Executive or his estate shall also be
entitled to any other amounts then owing or accrued but unpaid to the Executive
pursuant to any plans or arrangements of the Company.

 

b.             Executive
shall be entitled to the following severance benefits if the Executive’s
employment terminates in the circumstances described in Section 2(a)(ii) or
2(a)(iv):

 

(i)            Salary.  Executive or his estate shall be entitled to
payment, to be received (subject to Section 3(e) below) not later
than the fifteenth (15th) day following Executive’s Separation from Service, of
an amount equal to 2.0 multiplied by Executive’s annualized base salary as of
the Date of Termination.

 

(ii)           Incentive
Compensation.  Executive or his
estate will be entitled to receive, not later than (subject to Section 3(e) below)
the fifteenth (15th) day following Executive’s Separation from Service, an
incentive compensation payment of 2.0 multiplied by the highest annual
incentive compensation amount paid during any of the preceding three (3) full
plan years.

 

(iii)          Car
Allowance.  Executive or his estate
will be entitled to receive, not later than 
(subject to Section 3(e) below) the fifteenth (15th) day
following Executive’s Separation from Service, a lump-sum amount equal to 2.0
times his annual car allowance in effect as of the Date of Termination.

 

(iv)          Equity
Awards.  The restriction or
forfeiture period on any restricted stock granted by the Company to Executive
under all plans and all stock options and general stock appreciation rights
granted by the Company to Executive shall lapse or accelerate, as the case may
be, and become fully vested and exercisable on the Date of Termination, and
shall remain exercisable for a period of two (2) years following the Date
of Termination, subject to the latest expiration date specified in the
restricted stock or option agreements.

 

(v)           Medical
and Life Insurance.  Payment of
premiums for medical, dental and vision insurance and life insurance by the
Company shall continue on and subject to the terms of this Agreement for a
period of two (2) years following the Date of Termination, subject to
termination under Section 7.  To the extent that the payment of any
premiums pursuant to this subparagraph (v) is taxable to Executive, any
such payment shall be paid to Executive on or before the last day of Executive’s
taxable year following the taxable year in which the related expense was
incurred.  Executive’s right to payment
of such premiums is not subject to liquidation or exchange for another benefit
and the amount of such benefits that Executive receives in one taxable year
shall not affect the amount of such benefits that Executive receives in any
other taxable year.

 

3

 

(vi)          Retirement
Plans; Unvested Company Contribution. 
The Executive shall be entitled to receive, not later than the fifteenth
(15th) day following the Date of Termination (or, if so required under the
provisions of the applicable plan, program or arrangement and/or to comply with
Section 409A of the Code, not later than the fifteenth (15th)
day following Executive’s Separation from Service), all benefits payable to him
upon or on account of termination under any of the Company’s tax-qualified
employee benefit plans and any other plan, program or arrangement relating to
deferred compensation, retirement or other benefits including, without
limitation, any profit sharing, 401(k), employee stock ownership plan, or any
plan established as a supplement to any of the aforementioned plans.  The Company shall also pay Executive, not
later than the fifteenth (15th) day following the Date of Termination, an
amount equal to all unvested Company contributions credited to the Executive’s
account under any tax-qualified employee benefit plan maintained by the Company
as of the Date of Termination. In the event that this subparagraph (vi) should
conflict with the provisions of any of the Company’s tax-qualified employee
benefit plans and any other plan, program or arrangement relating to deferred
compensation, retirement or other benefits including, without limitation, any
profit sharing, 401(k), employee stock ownership plan, or any plan established
as a supplement to any of the aforementioned plans, then the provisions of the
plan shall govern, provided that the Company’s contribution shall vest pursuant
to this subparagraph (vi) to the maximum extent permissible.

 

(vii)         Vacation
and Sick Leave.  The Company shall
also pay Executive, not later than the second day following the Date of
Termination, a pro rata amount of his base salary under his employment
agreement, in effect on the Date of Termination, for each day of vacation leave
which has accrued as of the Date of Termination, but which is unpaid as of such
date, to which Executive is entitled under the Company’s vacation leave
policy.  The Company shall be required to
pay for sick leave days only to the extent that Executive has taken sick leave
on or prior to the Date of Termination to which Executive is entitled under the
Company’s sick leave policy.

 

(viii)        General.  Executive or his estate shall also be
entitled to any other amounts then owing or accrued but unpaid to the Executive
pursuant to any plans or arrangements of the Company.

 

c.             Release.  This Section 3(c) shall
apply notwithstanding anything else contained in this Agreement or any stock
option or other equity-based award agreement to the contrary.  As a condition precedent to any Company
obligation to Executive pursuant to Section 3(a) or any other
obligation to accelerate vesting of any equity-based award in connection with
the termination of the Executive’s employment under the circumstances described
in Section 2(a)(i) or Section 2(a)(iii), Executive shall, upon
or promptly following his last day of employment with the Company, provide the
Company with a valid, executed general release agreement in a form acceptable
to the Company, and such release agreement shall have not been revoked by
Executive pursuant to any revocation rights afforded by applicable law.

 

d.             Separation
from Service.  As used herein, a “Separation from Service” occurs
when Executive dies, retires, or otherwise has a termination of employment with
the Company that constitutes a “separation from service” within the meaning of
Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional
alternative definitions available thereunder.

 

e.             Specified
Employees.  Notwithstanding any provision of this
Agreement to the contrary, if Executive is a “specified employee” within the
meaning of Treasury Regulation Section 1.409A-1(i) as of the date of
Executive’s Separation from Service, Executive shall not be entitled to any
payment or benefit pursuant to this Section 3 until the earlier of (i) the
date which is six (6) months after Executive’s Separation from
Service for any reason other than death, or (ii) the date of Executive’s
death.  Any amounts otherwise payable to
Executive upon or in the six (6) month period following Executive’s
Separation from Service that are not so paid by reason of this Section 3(e) shall
be paid as soon as practicable (and in all events within thirty (30) days)
after the date that is six (6) months after Executive’s Separation
from Service (or, if earlier, as soon as practicable, and in all events within
thirty (30) days, after the date of Executive’s death) and, in the event
of such a delay, the amount of the benefit that is so delayed shall include
interest from the date the amount was otherwise payable (but for such delay)
through the date upon which payment is actually made.  For this purpose, interest shall be simple
interest calculated using a rate equal to 200% of the Short-term Applicable
Federal Rate (annual compounding) published by the Internal Revenue Service for
the month in which the Executive’s Separation from Service occurs.  The provisions of this Section 3(e) shall
only apply if, and to the extent, required to avoid the imputation of any tax,
penalty or interest pursuant to Section 409A of the Code.

 

4.             Other
Benefits Following Termination. 
Executive shall also be entitled to the following additional benefits
upon or following any such termination following a Change in Control as
described in Section 3:

 

a.             COBRA.  To the extent required by law, Executive
shall have the rights under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), or any successor statute.

 

5.             Indemnification.  For at least ten (10) years following
the Date of Termination for any reason, Executive shall continue to be
indemnified under the Company’s Certificate of Incorporation and Bylaws at
least to the same extent indemnification was available prior to the Date of
Termination and permitted by law, and Executive shall be insured under the
directors’ and officers’ liability insurance, the fiduciary liability insurance
and the professional liability insurance policies that are the same as, or
provide coverage at least equivalent to, those applicable or made available by
the Company to the then members of senior management of the Company.
Independent of such provision, if at any time Executive is made, or threatened
to be made, a party to any legal action or proceeding, whether civil or
criminal, by reason of the fact that Executive is or was a director 

 

4

 

or officer of the Company or serves or served any other corporation
fifty percent (50%) or more owned or controlled by the Company in any capacity
at the Company’s request, Executive shall be indemnified by the Company, and
the Company shall pay Executive’s related expenses when and as incurred, all to
the full extent permitted by law.

 

6.             Obligatory
Restrictions on Executive.  In
addition to any and all other similar restrictions and limitations on Executive
pursuant to law, other agreements and policies of the Company, Executive agrees
that following a termination of a kind described in Section 2(a) for
which the Company is obligated to pay benefits as described in Section 3,
except as provided below or with the Company’s written consent, Executive will
be bound by the following restrictive covenants during the period commencing on
the Date of Termination and extending, in the case of a termination described
in Section 2(a)(i) or Section 2(a)(iii), for one (1) year
or, in the case of a termination described in Section 2(a)(ii) or
2(a)(iv), for two (2) years:

 

a.             Non-Competition.  Executive will not, directly or indirectly,
engage for his own account in, or own, manage, operate, control, be employed as
an employee or consultant, buy, participate in, or be connected in any manner
with the ownership, management, operation or control of any firm, corporation,
association, or other business entity which is in competition with the business
of the Company; provided that Executive may invest in a business competitive
with the Company to an extent not exceeding five percent (5%) of the total
outstanding shares at the time of such investment in each one or more
companies.  A business will be considered
for this purpose in competition with the Company if and only if the products of
such business include more than one-third of the Company’s products as of
immediately prior to the Change in Control.

 

b.             No
Solicitation of Employees.  Executive
will not solicit or, with the exception of any persons related to Executive by
blood, marriage, or adoption, not more remote than first cousin, employ any
current or future employee of the Company and will not intentionally disparage
the Company, its management or its products.

 

c.             Consideration.  Executive’s obligations are made in
consideration of the severance benefits paid or committed to be paid by the
Company following the Date of Termination. 
The restrictive covenants on the part of Executive set forth in this Section 6
shall survive the termination of this Agreement, and the existence of any
claims or cause of action by Executive against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense in the
enforcement of these covenants.  In the
event of a breach or threatened breach by Executive of the provisions of this Section 6,
the Company shall be entitled to an injunction restraining Executive from
violating the provisions of this Section.

 

7.             Termination
of Certain Benefits Following New Employment.  If Executive accepts a substantial engagement
or employment (“New Employment”) with any other corporation, partnership,
trust, government or other entity at any time during the term of benefit
continuation referred to above, the Company may elect that Executive cease to
be entitled to car allowance or medical, dental or vision insurance benefits
effective upon the commencement of such other engagement or employment.  However, Executive shall nevertheless
continue to be entitled to the other benefits of this Agreement and shall
continue to be bound by the provisions of this Agreement for any remaining
duration of any period then applicable to Executive.  For the purposes of this provision, “employment”
or “engagement” shall exclude (i) service as an officer or director of a
personal investment holding company, (ii) service as a director on the
Board of a corporation or nonprofit organization, (iii) engagement as a
bona fide part-time consultant, or (iv) self-employment or engagement as
an officer or director of an operating corporation or enterprise (as opposed to
a personal investment holding company) founded or controlled by Executive and
which has (and only so long as it continues to have) revenues of less than $25
million per year.

 

8.             No
Mitigation by Executive Required. 
Company recognizes that because of Executive’s special talents, stature
and opportunities in the electronics industry, in the event of termination by
the Company or Executive before the end of the agreed term, the parties
acknowledge and agree that the provisions of this Agreement regarding further
payment of base salary, bonuses, and the exercisability of stock options and
lapse of the restrictive or forfeiture period on restricted stock constitute
fair and reasonable provisions for the consequences of such termination, do not
constitute a penalty, and such payments and benefits shall not be limited or
reduced by amounts Executive might earn or be able to earn from any other
employment or ventures during the remainder of the agreed term of this
Agreement.  Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise.

 

9.             Binding
Agreement.  This Agreement shall be
binding upon and inure to the benefit of Executive, his heirs, distributees and
assigns, and the Company, its successors and assigns. Executive may not,
without the express written permission of the Company, assign or pledge any
rights or obligations hereunder to any person, firm or corporation. Such
permission shall not be unreasonably withheld. If the Executive should die
while any amount would still be payable to Executive if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with this Agreement to the Executive’s estate.

 

10.           No
Attachment.  Except as required by
law, no right to receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge or hypothecation or to execution, attachment, levy or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.

 

11.           Assignment
and Other Rights.  The Company will
require any successor (whether direct or indirect, by operation of law, by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the 

 

5

 

Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled hereunder, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be the Date of Termination.  As used in this Agreement, “Company” shall
mean the Company as defined above and any successor to its business and/or
assets that assumes and agrees to perform this Agreement by operation of law,
or otherwise.

 

12.           Waiver.  No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

 

13.           Notice.  For the purposes of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Executive at his home address appearing in the records of the Company, in
the case of the Executive, and in the case of the Company, to the attention of
the Chairman of the Board at the principal executive offices of the Company, or
to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt. Acceptance by Executive of benefits of
participation shall constitute a certification by Executive of his continued
eligibility for participation.

 

14.           Governing
Law.  This Agreement shall be
governed and construed in accordance with the laws of the State of California.

 

15.           Costs.  Each of the parties shall pay its own
expenses, including attorneys’ fees, in the negotiation and preparation of this
Agreement.

 

16.           Severability.  If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect.  If any provision of this Agreement shall be
held invalid in part, such invalidity shall in no way affect the rest of such
provision not held so invalid, and the rest of such provision, together with
all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect. 
If this Agreement is held invalid or cannot be enforced, then to the full
extent permitted by law, any prior agreement between the Company (or any
predecessor thereof) and Executive shall be deemed reinstated as if this
Agreement has not been executed.

 

17.           Arbitration.

 

a.             Any
disagreement, dispute, controversy or claim arising out of or in any way
related to this Agreement or the subject matter thereof or the interpretation
hereof or any arrangements relating hereto or contemplated herein or the
breach, termination or invalidity hereof shall be settled exclusively and
finally by arbitration.

 

b.             The
arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the
“Arbitration Rules”) of the American Arbitration Association (the “AAA”). The
arbitral tribunal shall consist of one arbitrator.

 

c.             The
Company shall pay all of the fees, if any, and expenses of such arbitration,
and shall also pay all Executive’s expenses, including attorneys’ fees,
incurred in connection with the arbitration regardless of the final outcome of
such arbitration.

 

d.             The
arbitration shall be conducted in Orange County, California, or in any other
city or county in the United States of America as the parties to the dispute
may designate by mutual written consent.

 

e.             Any
decision or award of the tribunal shall be final and binding upon the parties
to the arbitration proceeding.  The
parties hereto hereby waive to the extent permitted by law any rights to appeal
or to review such award by any court or tribunal.  The parties hereto agree that the award may
be enforced against the parties to the arbitration proceeding or their assets
wherever the award may be entered in any court having jurisdiction thereof.

 

f.              The
parties stipulate that discovery may be held in any such arbitration proceeding
as provided in Section 1283.05 of the California Code of Civil Procedure,
as may be amended or revised from time to time.

 

g.             During
the period until the dispute is finally resolved in accordance with this
Section, the Company will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, base salary) and continue the Executive as a participant in all
compensation, employee benefit and insurance plans, programs, arrangements and
perquisites in which the Executive was participating or entitled when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section 17. Amounts paid under this
subparagraph g shall be repaid to the Company or be offset against or reduce
any other amounts due the Executive under this Agreement, as appropriate, only
upon the final resolution of the dispute.

 

6

 

18.           Entire
Agreement.  As of the date hereof,
all previous agreements relating to the employment of Executive, however
styled, are hereby superseded to the extent inconsistent herewith, and,
excepting Executive’s present participation in Company stock and/or other
benefit plans or programs and the agreements thereunder, which are hereby
reaffirmed in all respects by both parties thereto except as expressly modified
by this Agreement, this Agreement embodies all agreements, contracts, and
understandings by and between the parties hereto.  In addition, this Agreement supersedes and amends
any subsequent employment agreement between Executive and the Company except to
the extent such subsequent agreement expressly provides or provides benefits in
excess of those herein provided.  Should
any other agreement, plan or arrangement between Company and Executive or other
officers or employees of the Company provide for greater benefits upon a change
in control, the terms of such other agreement, plan or arrangement shall apply
to Executive on a “most favored” basis. 
This Agreement may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.

 

19.           Withholding.  All payments or benefits under this Agreement
are subject to, and the net payment to Executive will be reduced by, any
applicable payroll tax withholding requirements, and will be payable net of
appropriate amounts properly credited to the payment of income taxes of the
Executive.  The determination of the
amount of any such withholding shall be made or confirmed by the independent
accounting firm then employed by the Company.

 

20.           Separate
Counsel.  The Company has been
represented by counsel in the negotiation and execution of this Agreement. The
Executive has been invited and given opportunity to engage counsel
independently to review or negotiate this Agreement, and Executive has had an
adequate opportunity to do so and has either done so or chosen not to engage
counsel.

 

21.           Construction.  It is intended that any
amounts payable under this Agreement shall either be exempt from or comply with
Section 409A of the Code (including the Treasury regulations and other
published guidance relating thereto) so as not to subject Executive to payment
of any additional tax, penalty or interest imposed under Code Section 409A.  The provisions of this Agreement shall be
construed and interpreted to avoid the imputation of any such additional tax,
penalty or interest under Code Section 409A yet preserve (to the nearest
extent reasonably possible) the intended benefit payable to Executive.

 

IN WITNESS WHEREOF,
the parties have executed this Executive Retention Agreement as of the day and
year first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
  MICROSEMI
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  J. Peterson

  
	
   

  	
  Name:

  	
  James J.
  Peterson

  
	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ John W.
  Hohener

  
	
   

  	
  Name: John
  W. Hohener

  

 

7

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