Attached files
file | filename |
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10-Q - STANDARD MICROSYSTEMS CORP | v170384_10q.htm |
EX-31.1 - STANDARD MICROSYSTEMS CORP | v170384_ex31-1.htm |
EX-32.1 - STANDARD MICROSYSTEMS CORP | v170384_ex32-1.htm |
EX-10.7 - STANDARD MICROSYSTEMS CORP | v170384_ex10-7.htm |
EX-31.2 - STANDARD MICROSYSTEMS CORP | v170384_ex31-2.htm |
Exhibit
10.6
STANDARD
MICROSYSTEMS CORPORATION
EXECUTIVE SEVERANCE
PLAN
WHEREAS,
Standard Microsystems Corporation ("SMSC" or the “Company”) maintains the
Standard Microsystems Corporation Severance Plan (the "Severance Plan"
and
WHEREAS,
SMSC acknowledges that the Severance Plan is a "welfare plan" as defined under
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); and
WHEREAS,
SMSC wishes to divide the Severance Plan effective as of November 3, 2009 into
two plans, one for executives (the “Executive Severance Plan”) and one for all
other eligible employees (the “Non-Executive Severance Plan”), for business
reasons; and
WHEREAS,
SMSC intends that this document shall constitute the Executive Severance
Plan;
NOW,
THEREFORE, the Executive Severance Plan is amended and restated as
follows:
1.
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Effective
Date. The Executive Severance Plan became effective as
of November 3, 2009.
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2.
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Executive Severance Plan
Year. The Executive Severance Plan Year shall be the
calendar year.
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3.
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General
Definitions.
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a.
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"Base Salary" shall mean
an Employee's regular salary as determined in accordance with SMSC's
payroll records, excluding any bonuses, commissions, taxable or
non-taxable fringe benefits, car or other allowances, and any other forms
of compensation.
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b.
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"Cause" shall mean any
material violation of the terms of any of SMSC's personnel policies or
procedures, provided the Employee has been given notice of the violation
and a reasonable opportunity to cure such violation; any material
misstatement contained in the Employee’s employment application;
commission by the Employee of any crime or fraud against SMSC or its
property or any crime involving moral turpitude or reasonably likely to
bring discredit upon SMSC; or gross negligence or willful misconduct in
the performance of the Employee’s
duties.
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c.
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“Code” shall mean the
Internal Revenue Code of 1986, as
amended.
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d.
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“Committee” means the
Section 401(k) Committee established for purposes of the SMSC Section
401(k) Savings Plan.
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1
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e.
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“Disability” means an
Employee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment, which can be
expected to result in death or can be expected to last for a continuous
period of not less than 12 months, as determined by an independent third
party physician, selected within the discretion of the
Committee. The determination of whether an Employee is Disabled
shall be determined by the Committee, in its sole discretion, but subject
to the provisions of Section 409A of the
Code.
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f.
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"Employee" shall mean
any individual employed directly by SMSC or any Related Company, excluding
the Chief Executive Officer of SMSC, who (i) is in Salary Grade 14 or
above (or any subsequent similar designation), (ii) all officers in the
Executive Salary Grade (or any subsequent similar designation), and (iii)
any other key employees specifically identified in writing by SMSC to
receive benefits under this plan.
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g.
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“Key Employee” means an
individual as described in Section 416(i) of the Code, determined without
regard to Section 416(i)(5)
thereof.
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h.
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"Related Company" means
any entity that is within SMSC's "controlled group", as defined under
Section 1563 of the Code and located in the United
States.
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i.
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“Separation from Service”
shall have the meaning set forth in Section 409A of the Code and the
regulations thereunder. Consistent with Final Treasury
Regulation Section 1.409A-1(h), or any subsequent guidance under Section
409A of the Code, no Separation from Service shall occur if an Employee
continues to perform services as a consultant or an employee of the
Company or a Related Company in accordance with the following
rules:
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i.
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Leave of
Absence. For purposes of Section 409A of the Code, the
employment relationship is treated as continuing in effect while an
Employee is on military leave, sick leave, or other bona fide leave of
absence, as long as the period of leave does not exceed 6 months, or if
longer, as long as the Employee’s right to reemployment with the Employer
provided either by statute or contract. Otherwise, after a 6
month leave of absence, the employment relationship is deemed
terminated.
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ii.
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Part-Time
Status. Whether or not a termination of employment
occurs is determined based upon all facts and
circumstances. However, in the event that services provided by
an Employee are insignificant, a Separation from Service shall be deemed
to have occurred. For purposes of Section 409A of the Code, if
an Employee is providing services to SMSC or any Related Entities at a
rate that is at least equal to 20% of the services rendered, on average,
during the immediately preceding 3 full calendar years of employment (or
such lesser period), and the annual compensation for such services is at
least 20% of the average annual compensation earned during the final 3
full calendar years of employment (or such lesser period), no termination
shall be deemed to have occurred since such services are not
insignificant.
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iii.
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Consulting
Services. Where an Employee continues to provide
services to SMSC or any Related Entities in a capacity other than as an
employee, a Separation from Service shall not be deemed to have occurred
if the Employee is providing services at an annual rate that is 50% or
more of the services rendered, on average, during the immediately
preceding 3 full calendar years of employment (or such lesser period) and
the annual remuneration for such services is 50% or more of the annual
remuneration earned during the final 3 full calendar years of employment
(or such lesser period).
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j.
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“Service Date” means an
Employee’s initial date of hire or any re-hire date, if
later. In certain instances (which must be approved in writing
by the CEO or the Vice President of Human Resources of SMSC), Employees
may be granted past service credit with former employers. In
this event, the Service Date may be determined prior to an Employee’s date
of hire or re-hire with SMSC, within SMSC’s discretion or the provisions
of any acquisition or other
agreement.
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k.
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“Specified Employee”
means a Key Employee who is employed by SMSC or any Related Entities which
has its stock publicly traded on an established securities
market. For purposes of the Executive Severance Plan, the
Specified Employee Identification Date shall be each December 31, and the
Specified Employee Effective Date shall be the first day of the fourth
month following the Specified Employee Identification Date (i.e., each
April 1). Specified Employees shall be determined by an officer
of SMSC on an annual basis for purposes of all nonqualified deferred
compensation plans and any other programs in accordance with the
provisions of Section 409A of the
Code
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4.
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Eligibility for the Basic
Severance Benefit. All Employees (other than excluded
employees) of SMSC and any Participating Companies are eligible for the
Basic Severance Benefit described in Section 5 (the "Basic Severance
Benefit"), unless benefits are otherwise precluded under the terms of this
Executive Severance Plan. Notwithstanding any provision to the
contrary, however, in no event shall any Basic Severance Benefits under
the Executive Severance Plan be provided to individuals who are hired as
temporary employees for a specified period of time; are offered but refuse
to accept another suitable position within the organization; or who are
provided the opportunity to be retained for any length of time by any
successor employer or entities. Nor shall any Basic Severance Benefits be
payable to any Employees who are eligible for any Executive Benefits or
who have a separately negotiated employment or severance agreement with
SMSC, to the extent that such Executive Benefits or benefits under a
separately negotiated employment or severance agreement equal or exceed
the Basic Severance Benefit
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3
5.
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Basic Severance
Benefits.
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a.
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Cash
Benefits. Employees shall be entitled to a severance
benefit equal to ½ of a week's base pay for each 6 months of Continuous
Service measured from an Employee's Service Date (the “Basic
Benefit”). The Basic Benefit shall be increased by a multiplier
of one and one half (1.5) only for Continuous Service by an Employee
between five (5) and ten (10) years of service. The Basic
Benefit shall be further increased by a multiplier of two (2) only for
Continuous Service by an Employee after their tenth year. To illustrate
the above formula, an Employee with thirteen (13) years of Continuous
Service would receive a severance benefit equal to 18.5 weeks of base pay
calculated as follows:
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(i)
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½ week of base pay x
2 x 5 years (Years 1 to 5) =
5
weeks.
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(ii)
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½ week of base pay x
2 x 5 years (Years 5 to 10)
x 1.5 = 7.5
weeks.
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(iii)
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½ week of base pay x
2 x 3 years (Years 10 to 13)
x 2 = 6
weeks.
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(iv)
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Total
Cash Benefit is 18.5 weeks of base
salary.
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Notwithstanding
anything to the contrary in this Executive Severance Plan, the maximum benefit
that any Employee shall receive under the Executive Severance Plan, exclusive of
employees receiving benefits under Section 8, shall be a maximum benefit of 26
weeks for any Employees. In determining Continuous Service for
purposes of computing severance benefits, all periods of time from an
individual's Service Date during which an Employee is “actively at work” shall
be taken into consideration, regardless of the actual hours worked in any period
of time, plus any leave time taken under the Family Medical Leave
Act. Thus, any periods during which an Employee is absent from work,
other than Family Medical Leaves, shall not be considered in determining
Continuous Service. No severance benefits shall be paid under the
Executive Severance Plan for any partial periods.
Notwithstanding
any provision to the contrary, all Employees shall be paid a "Minimum Benefit"
equal to 2 weeks of base pay. This Minimum Benefit is inclusive
of the severance benefit determined above, based upon an Employee’s Continuous
Service, and shall not be paid in addition to any benefits based upon Continuous
Service.
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b.
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COBRA
Benefits. As an additional severance benefit, whether an
Employee receives the Basic Severance Benefit or the Executive Benefit,
SMSC shall also pay for 100% of the cost of any continuation health
coverage if elected under COBRA, by the Employee or any qualified
beneficiaries, for coverage in existence at the time of any qualifying
event, for a period equal to the number of weeks of severance to which the
Employee is entitled following termination of their employment
plus an additional period of time until the end of the calendar month in
which the severance period ends. Using the above example in
Section 5.a., if the Employee is entitled to receive 18.5 weeks of
severance, then SMSC shall pay 100% of the cost of any continuation health
coverage if elected under COBRA for 18.5 weeks following the termination
of the Employee plus the number of
days left in the month that is 18.5 weeks after the Employee’s last date
of employment. Notwithstanding
the foregoing, each Employee shall receive a minimum benefit of three
months paid COBRA coverage. The payment of any COBRA premiums
shall not extend the period of any COBRA entitlement, and shall only apply
for coverage in effect at the time of a termination, for which COBRA
election rights exist. The Employee and any qualified
beneficiaries may thereafter continue COBRA benefits at their own cost for
any remaining periods of coverage. However, COBRA coverage
shall be terminated when any subsequent coverage is obtained and the
Employee shall notify SMSC when such subsequent coverage
commences.
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c.
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No Deferred
Compensation. The continuation of benefits under COBRA
and other benefits must be incurred and paid by December 31 of the second
calendar year following the calendar year in which a separation from
service occurs. To the extent that any benefits would extend
beyond this period, a single lump cash payment will be made as of the
applicable December 31, in order to avoid any further deferrals of
compensation.
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d.
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Other
Benefits. Other than medical coverage (including dental,
vision, prescription drug and similar coverage), all other benefits, such
as group-term life insurance, long-term disability, short-term disability
and other welfare benefits, shall be terminated in accordance with the
provisions of all plans, with any applicable individual conversion
rights.
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6.
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Entitlement to Basic Severance
Benefits. An Employee shall be entitled to the Basic
Severance Benefits if an Employee's employment is involuntarily terminated
by SMSC, unless such termination is for “Cause. In the event of
a termination for “Cause”, no Basic Severance Benefits shall be
paid.
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7.
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Eligibility for the Executive
Severance Benefit. Employees may be eligible for the
Executive Severance Benefit (the "Executive
Benefit"). Employees in Salary Grade 14 shall receive “Salary
Grade 14 Severance Benefits” as set forth below; all employees in the
Executive Salary Grade shall receive “Executive Salary Grade Severance
Benefits” as set forth below; and key employees specifically identified in
writing by SMSC to receive an Executive Benefit shall receive the level of
benefit set forth in their written
designation. SMSC retains the discretion to
identify any employees for the Executive Benefit who are employed by SMSC
or any Related Entities as a result of any
acquisitions. However, to the extent any executives are covered
under any separately written negotiated employment or severance agreements
that provide for any severance benefits, such individuals shall be
excluded from participation in the Executive Benefit, and the Executive
Severance Plan, until such individuals are informed, in writing by the
SMSC Chief Executive Officer, of their eligibility for participating in
the Executive Severance Plan. Individuals who are specifically
excluded from the
benefits as of the effective date of this amended and restated Executive
Severance Plan are identified in separate corporate records and
agreements.
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5
Notwithstanding
any provisions to the contrary, in no event shall any benefits under the
Executive Severance Plan be provided to any individuals who are offered but
refused to accept another suitable position within SMSC, or who are provided the
opportunity to be retained for any length of time by any successor employer,
joint venturer, etc., except as outlined in Section 8 of this Executive
Severance Plan.
8.
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Executive Severance
Benefit. (a) Salary Grade 14
Benefits. Employees eligible for the Salary Grade 14
Severance Benefit (“Salary Grade 14 Employees”) shall receive an Executive
Benefit equal to three (3) months of Base Salary upon the occurrence of
required “Relocation” as defined in Section 9(a) of this Executive
Severance Plan or the occurrence of an “Involuntary Termination” as
defined in Section 9(c) of this Executive Severance Plan. Upon the
occurrence of one of the events enumerated in subsections (i) through (iv)
of Section 9(b) of this Executive Severance Plan following a
“Change in Control” as defined in Section 9(b) of this Executive Severance
Plan, a Salary Grade14 Employee will be entitled to an
Executive Benefit equal to six (6) months of Base
Salary.
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The above
Salary Grade 14 Severance Benefit shall be provided in lieu of the Basic
Severance Benefit provided under the Executive Severance Plan based upon an
employee's Years of Continuous Service with SMSC, and in no event shall be paid
in addition to any other severance benefits under the SMSC Executive Severance
Plan or any individually negotiated employment or severance
agreements. If an employee eligible for the Salary Grade 14 Severance
Benefit is entitled to a greater benefit under an individually negotiated
written employment or severance agreement then the employee shall receive the
greater benefit in lieu of the Salary Grade 14 Severance
Benefit. Furthermore, under the Executive Benefit, no "Minimum
Benefits" shall exist, such as the 2 week Minimum Benefit provided under the
Basic Severance Benefit. However, in the event the Basic Severance
Benefit for any Employee under this Executive Severance Plan is greater than the
Executive Benefit, an Employee shall be entitled to the greater of such
benefits.
(b) Executive Salary Grade
Benefits. Employees eligible for the Executive Salary Grade
Severance Benefit (“Executives”) shall receive an Executive Benefit in the
amount and type for each applicable event as set forth in the table
below:
Position
Title
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“Relocation”
as defined in Section 9(a) of this Executive Severance Plan or the
occurrence of “Involuntary Termination” as defined in Section
9(c).
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Change
in Control” as defined in Section 9(b) of this Executive Severance Plan
coupled with one of the events set forth in subsections (i)-(iv) of
Section 9(b) of this Executive Severance Plan.
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Vice
President and Above in Greater Than Salary Grade 14
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A
termination payment equal to (i) one year base salary plus (ii) the
employee’s target bonus amount for the fiscal year in which they were
terminated.
All
equity based instruments, including without limitation stock options,
restricted stock, stock appreciation rights, and restricted stock units,
that would have vested within one year of the event shall immediately vest
on the date of the event.
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A
termination payment equal to (i) one year base salary plus (ii) the
employee’s target bonus amount for the fiscal year in which they were
terminated.
All
equity based instruments, including without limitation stock options,
restricted stock, stock appreciation rights, and restricted stock units,
shall immediately vest on the date of the
event.
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Notwithstanding
the foregoing or any other provision of this Executive Severance Plan to the
contrary, the vesting of any equity based instrument shall not accelerate as set
forth above if the terms of the relevant plan document prohibit such accelerated
vesting; in such an event the accelerated vesting shall be limited to the
maximum number of shares or other applicable units permitted by the relevant
plan. In addition to the foregoing benefits, SMSC shall also pay for
100% of the cost of any continuation health coverage if elected under COBRA, by
the Employee or any qualified beneficiaries, for coverage in existence at the
time of any qualifying event, for a period equal to the number of weeks of
severance to which the Employee is entitled following termination of their
employment plus an additional period of time until the end of the calendar month
in which the severance period ends. Furthermore, unless
otherwise provided for in a separate written agreement with SMSC, no Employee
will be eligible to receive an annual cash bonus under the applicable cash
incentive plans of SMSC for the year in which such Employee’s employment with
SMSC terminates.
9.
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Entitlement to Executive
Benefits. The provisions of the Executive Severance Plan
shall be controlling with regard to the entitlement of any Executive
Benefits. Therefore, no Employee who is terminated for “Cause”
shall be entitled to receive any benefits. However, Employees
shall be entitled to the Executive Benefit upon the occurrence of any of
the following events:
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a.
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Relocation. If
an Employee is required without consent to relocate to a new position that
is more than 50 miles from the location of the employee's employment prior
to such written required relocation, the employee may, within 90 days from
receipt of such notification and prior to receipt of any relocation
expenses by SMSC, inform SMSC, in writing, of the employee's desire to
terminate employment with SMSC or any Related Company, and to receive the
Executive Benefit.
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b.
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Change in
Control. Upon the occurrence of a "Change in Control" of
SMSC, including any Related Company, in which the Employee is employed,
followed by (i)(A) a material reduction (i.e. 5% or more) in
the Employee’s Base Salary or the targeted incentive compensation or
bonuses of such Employee, (i.e., as a percentage of Base Salary) or (B) a
material diminution in the authority, duties or responsibilities of the
Employee, including without limitation, a demotion from, or loss of, the
position held by the Employee immediately prior to the Change in Control
(ii) an involuntary termination of the employee's employment, other than
for "Cause" (iii) retirement or Disability or (iv) a Relocation as defined
above, in each case, within the twelve month period on and immediately
following such Change in Control, an Employee shall be entitled to an
Executive Benefit, subject to Section 9(d) if
applicable.
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A "Change
in Control" of SMSC shall be deemed to have occurred upon the first to
occur of any event described as either a change in ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company, as defined under Section 409A of the Code.
The
events set forth in Sections 9 (a) and (b)(i) of this Executive Severance Plan
shall be considered “Good Reason” terminations as further described
below.
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c.
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Involuntary
Termination. Employees shall also be entitled to the
Executive Benefits on any involuntary termination of employment without
Cause.
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d.
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Good Reason
Termination. Section 9 (a) and (b)(i) provide that an
Employee who is an executive may terminate the Employee’s employment for
“Good Reason”.
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In order
to comply with the safe harbor “Good Reason” provisions contained in Final
Treasury Regulation Section 1.409A-1, the Employee’s Separation from Service
shall be “treated” as an involuntary termination if the following “safe harbor”
events occur to ensure that a “Good Reason” termination exists:
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i.
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The
Employee must separate from service within a limited period of time, not
to exceed 60 days following the reason for the “Good Reason”
termination.
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ii.
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The
amount, time and form of payment upon a voluntary separation from service
for “Good Reason” shall be identical to the amount, time and form of
payment upon an involuntary Separation from
Service.
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iii.
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The
Employee must provide notice of the existence of the “Good Reason”
condition within a period not to exceed 30 days of its initial
existence.
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iv.
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The
Company shall be provided a period of 30 days during which it may remedy
the condition entitling the Employee to terminate employment for “Good
Reason”.
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10.
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Payment of
Benefits. All benefits shall be paid in a single lump
sum payment within thirty (30) days after execution of a Release and the
expiration of any revocation period as provided in Section 14 of this
Executive Severance Plan. Payment shall commence no later than
March 15 of the calendar year following the Executive Severance Plan Year
in which a Separation from Service occurs, provided the Employee executes
and returns a Release within the applicable time limitations prior to such
date. However, any severance benefits shall be reduced to the
extent of any advance payment under any sales or commission program, for
any excess expense reimbursements, and for any amounts owed to SMSC by the
Employee (to the extent permitted under state
law). Furthermore, payment of any severance benefits is
contingent upon the return of any SMSC property in the possession of the
Employee, including personal computers (“PCs”), fax machines, scanners,
copiers, building access passes and keys, cellular phones, SMSC credit
cards, and any SMSC documents, correspondence, proprietary information and
related corporate materials or
equipment.
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Notwithstanding
any provisions to the contrary, if the period during which the Employee
has discretion to consider and revoke the Release straddles two taxable
years of the Employee, then the Company shall make the payments to which
the Employee is entitled under the Executive Severance Plan in the second
of such taxable years, regardless of the taxable year during which the
Employee actually delivers the executed Release to the
Company.
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a.
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Section
409A. In the event that any termination would cause any
payments to be paid beyond 2½ months following the end of the Executive
Severance Plan Year in which a termination occurs, a final payment equal
to the balance owed shall be made prior to the 2½ month period following
Separation from Service, in order to rely upon the “short-term deferral
rule” under Section 409A of the Code to avoid any unintended form of
deferred compensation.
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b.
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Delay in Payment for Specified
Employees. To the extent that an Employee would receive
any payment hereunder that would violate Section 409A of the Code, in no
event shall any such payment be made within 6 months after the Employee’s
Separation from Service. Any and all payments that are required
to be made within such 6 month period shall be delayed until the first day
of the 6 months after a Separation from Service occurs and shall
retroactively be paid to make the Employee whole for any lost
benefits. To the extent that an Employee is required to pay for
the cost of any health or other benefits to keep them in full force and
effect during the 6 month delay period for Employees, the Employee shall
also be reimbursed for such out-of-pocket expenses as of the first day of
the 6 months after a Separation from Service, retroactively, to make the
Employee whole for any out-of-pocket costs. To the extent any
payments are delayed for any Employees, they shall receive interest on
such delayed payments equal to the prime rate determined as of the first
day of the month in which a Separation from Service shall occur, plus
2%.
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c.
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Exception for Specified
Employees. Notwithstanding any provision to the
contrary, in accordance with the Final Regulations issued under Section
409A of the Code, to the extent that the severance benefits to a Specified
Employee do not exceed the lesser of the Specified Employee salary for the
past 2 years or the Section 401(a) (17) limitations, such amount shall be
paid within the 6 month period of time during which benefits may generally
not be paid to Specified Employees. To the extent benefits
exceed such limitations (which is a maximum of $460,000 in 2008 and
$490,000 in 2009), the balance of any payments shall be made following the
expiration of the 6 month period following a Separation of Service in a
single lump sum payment on the first day of the 6 months following a
Separation from Service, with interest equal to prime plus 2% for the
delay in making payments as required under the Executive Severance
Plan. To the extent SMSC must allocate the payments to be made
from this Executive Severance Plan and the Company’s Supplemental
Executive Retirement Plan (the “SERP”) to comply with the above limits,
the Company shall first make all payments due under this Executive
Severance Plan and then make all payments due under the SERP, all subject
to the foregoing limits.
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d.
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Notwithstanding
anything to the contrary in this Executive Severance Plan, in the event
that: (i) the aggregate payments of benefits to be made or afforded to any
employee under this Executive Severance Plan (the "Termination Benefits")
would be deemed to include an "excess parachute payment" under Section
280G of the Code or any successor thereto; and (ii) if such Termination
Benefits were reduced to an amount (the "Non-Triggering Amount"), the
value of which is $1 less than an amount equal to the total amount of any
payments permissible (e.g., not triggering any excise tax or loss of
deduction) under Section 280G of the Code or any successor thereto; then
the Termination Benefits to be paid to any employee shall be so reduced so
as to be a Non-Triggering Amount. Any allocations of any
reductions required hereby among the Termination Benefits, shall be
determined by SMSC, within its
discretion.
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11.
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Covenant Not to
Compete. In order to be eligible to receive
benefits hereunder, Employees shall agree that during a period equal to
the number of weeks of base salary received by the Employee as an
Executive Benefit (the “Non-Compete Time Period”) after an employee’s
Separation from Service, the employee shall not, directly or indirectly,
through any other person, firm, corporation or other entity, be employed
by or engaged as a consultant or independent contractor to any business
entity engaged in a business that is a competitor of SMSC, or any related
entities, anywhere in the United States. For example, an
Employee that received one year’s base salary as an Executive Benefit
would have a one year Non-Compete Time Period after their Separation from
Service. For purposes of this Executive Severance Plan, a
business entity shall be considered to be a competitor with SMSC, and all
related entities, if it is engaged in any of the following activities: the
marketing, sale, design, development, manufacture or assembly of any
integrated circuit or related product competing with an integrated circuit
or related product then offered by SMSC without written consent which will
not be unreasonably withheld if it is a non-competitive
situation.
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Employees
shall acknowledge in the Release required under Section 14 that the scope of
this covenant not to compete is reasonable. In the event that any
aspect of this covenant is deemed to be unreasonable by a court, an Employee
shall submit to the reduction of either the time or territory to such an area or
period as the court will deem reasonable. In the event an Employee
violates this covenant, then the time limitation shall be extended for a period
of time equal to the pendency of such proceedings, including
appeals.
12.
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Nonsolicitation of
Clients. In order to be eligible to receive benefits
hereunder, for a period of 1 year after the Employee’s Separation from
Service, the Employee shall not, directly or indirectly, through any other
person, firm, corporation or other entity, solicit any customers or
clients of SMSC.
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10
Employees
shall acknowledge that the scope of this nonsolicitation provision is
reasonable. In the event that any aspect of this provision is deemed to be
unreasonable by a court, an Employee shall submit to any reductions as the court
shall deem reasonable. In the event the Employee violates this
provision, then the time limitations shall be extended for a period of time
equal to the pendency of such proceedings, including appeals.
13.
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No Solicitation of
Employees. During the course of an Employee's employment
with the Company, the Employee shall come into contact and became familiar
with the Company's employees, their knowledge, skills, abilities,
salaries, commissions, draws, benefits, and/or other matters with respect
to such employees, all of which information is not generally known to the
public, but has been developed, acquired or compiled by the Company at its
great effort and expense. In order to be eligible to
receive benefits hereunder, the Employee shall agree that any
solicitation, luring away or hiring of such employees of the Company shall
be highly detrimental to the business of the Company and may cause serious
loss of business and great and irreparable harm. Consequently,
Employees shall agree that for a period of 1 year after the Employee’s
Separation from Service, the Employee shall not, directly or indirectly,
whether on behalf of the Employee or others, solicit, lure or hire away
any employees of the Company or assist or aid in any such
activity.
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14.
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Conditions for
Payment. As a condition precedent to the payment of any
Basic or Executive Benefits, inclusion of the 2 week "Minimum Payment"
and any COBRA coverage, SMSC shall require an Employee to sign a Severance
Agreement and General Release (the "Release") within 21 or 45 days of the date of
the Employee’s Separation from Service (the “Release Period”), as provided
in Section 15. The Release shall require the Employee to agree
to release SMSC, any Related Companies, and the employees and directors of
any and all Related Companies, from all claims or demands the Employee may
have based on employment with SMSC, including claims of which the Employee
is unaware and claims which are not specifically released and identified
below. These claims include, but are not limited to, claims
arising under the Constitution of the United States, a release of any
rights or claims the Employee may have under the Age Discrimination in
Employment Act of 1967 as amended, 29 U.S.C. 621 et seq., which prohibits
age discrimination in employment; Title VII of the Civil Right Act of
1964, as amended, 42 U.S.C. 2000(e) et seq., which prohibits
discrimination in employment based on race, color, national origin,
religion or sex; the Civil Rights Act of 1966, 42 U.S.C. 1981 et seq.; the
Equal Pay Act, which prohibits paying men and women unequal pay for equal
work; or any other federal, state or local laws or regulations prohibiting
employment discrimination; Employee Retirement Income Security Act, 29
U.S.C. 1001 et seq.; Executive Orders 11246 and 11141; the Constitution of
the State of New York or any other states in which the Employee resides or
works; any New York or other state laws against discrimination; any
express or implied contracts with SMSC or any Related Company; any federal
or state common law and any federal, state or local statutes, ordinances
and regulations. The Release may include other provisions not
stated herein. Any payment that otherwise would be made to the
Employee prior to his delivery of such executed release shall be paid to
the Employee on the first business day following the conclusion of the
Release Period.
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11
The
Release shall not include, however, a release of (a) the Employee's right, if
any to any other pension, health or similar benefits under SMSC's standard
policy and procedures programs; (b) the Employee's right to individual
conversion privileges under any medical, dental, long-term disability, life
insurance or any other welfare programs, or (c) any right of the Employee to be
indemnified by SMSC.
15.
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Older Workers Benefits
Protection Act. With regard to each individual Severance Agreement
and General Release required under Section 14, SMSC shall give
consideration to requiring either a 21 day review period for individual
and independent terminations, or use of a 45 day review period for
significant reductions in force. Separate Severance Agreements
and General Release forms may be used with different employees in order to
effectuate the intent of the Executive Severance Plan and/or to provide
additional severance benefits in order to accommodate the unique
circumstances of any individual
terminations.
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16.
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Violation of Section
409A. All Employees shall be informed that in the event
of any violation of Section 409A of the Code, severance and other payments
may be subject to income taxes, a 20% excise tax, and underpayment of
interest penalties. However, the Executive Severance Plan and
any Release are intended to comply with Section 409A of the Code and shall
be interpreted consistent with the provisions of Section 409A of the
Code.
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17.
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Executive Severance Plan
Unfunded Top-Hat Plan. The Executive Severance Plan
shall be unfunded for purposes of the Code and Title I of ERISA, and no
assets shall be set aside for the payment of benefits under the Executive
Severance Plan. All Employees are general creditors of SMSC for
the payment of any benefits. This Plan is intended to be a
“top-hat" pension benefit plan within the meaning of U.S. Department of
Labor Regulation Section 2520.104-23 covering a select group of management
or highly compensated employees.
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18.
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Amendment and
Termination. The Executive Severance Plan may be
amended, modified, or terminated at any time, by action of the
Compensation Committee of the Board of Directors of the Company, except
that the benefits payable to Employees upon the events set forth in this
Executive Severance Plan may not be reduced, eliminated or diminished
without their written consent.
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19.
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Nonassignability. No
benefits provided under the Executive Severance Plan may be assigned or
transferred, and no benefits are subject to
attachment. However, in the event of death of an Employee
receiving severance benefits, the benefits shall continue to be paid to
the Employee’s spouse, or if no spouse exists, the Employee’s
estate as income in respect of the
decedent.
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20.
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Executive Severance Plan
Interpretation. SMSC shall have complete discretion to
interpret all provisions of the Executive Severance Plan and to establish
reasonable rules and procedures to facilitate the administration of the
Executive Severance Plan.
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21.
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Withholding of
Taxes. SMSC shall deduct from all severance payments
made to any Employee all applicable federal, state or local taxes required
by law to be withheld from such
payments.
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12
22.
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Retirement and Other
Benefits. Severance benefits shall not be treated as
"Compensation" under the terms of any qualified retirement
plans. Nor shall the payment of any severance benefits be
treated as extending any individual's employment, for any employee benefit
or employment purposes.
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23.
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Other
Covenants. Notwithstanding any provisions to the
contrary, to the extent that any longer periods are used for any covenants
not to compete or solicit customers or employers, within any other
employment agreements, severance agreements, or offer letters, the longer
period shall be controlling for purposes of any
Employee.
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24.
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Employment and Severance
Agreements, and Offer Letters. Sections 4 and 7 of the
Executive Severance Plan provide that to the extent an Employee is
entitled to any severance benefits under any separately written negotiated
agreements, no benefits are payable under the Executive Severance
Plan. Notwithstanding any provisions in this Executive
Severance Plan to the contrary, if any Employee is entitled to any
severance benefits under any separately written negotiated employment or
severance agreements, or offer letters, no benefits shall be payable under
the Executive Severance Plan unless provided otherwise in any such
separate written agreement or letter. However, in the event
that any separate written agreement or letter provides for any additional
benefits, including benefits provided under the Executive Severance Plan,
in no event shall any Employee receive benefits which are determined to be
duplicative, within the discretion of the Committee. In the
event of any conflict in benefits, the Committee, within its discretion,
shall provide an Employee with the greater of the benefits provided under
the Executive Severance Plan or any separately written negotiated
agreement or letter.
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25.
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Form of
Communication. Any election, claims, notice or other
communication required or permitted to be made by or to an Employee under
this Executive Severance Plan shall be made in writing and in such form as
shall be prescribed by SMSC. Such communication shall be
effective upon receipt by SMSC, if hand delivered or sent by first class
mail, postage pre-paid, return receipt requested to the Vice President of
Human Resources, Standard Microsystems Corporation, 80 Arkay Drive,
Hauppauge, New York 11788.
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26.
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Severability. The
invalidity of any portion of this Executive Severance Plan shall not
invalidate the remainder, and the remainder of the Executive Severance
Plan shall continue in full force and
effect.
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27.
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No Future Application for
Employment. An Employee agrees not to apply for any new
positions with SMSC or any Related Entities following any Separation from
Service if so provided in the Employee’s Severance Agreement, within the
discretion of SMSC.
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28.
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No Release of Future
Claims. This Executive Severance Plan does not waive or
release any rights or claims that the Employee may have under the Age
Discrimination in Employment Act which arises after the effective date of
the Executive Severance Plan, if
applicable.
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29.
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Reference. Reference
inquiries from prospective employers shall be handled by only verifying
the Employee's dates of employment, last position held and level of
compensation.
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13
30.
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Captions. The
captions at the head of a paragraph of this Executive Severance Plan are
designed for convenience of reference only and are not to be resorted to
for the purpose of interpreting any provision of this Executive Severance
Plan.
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31.
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Gender and
Number. The masculine gender, where appearing herein,
shall be deemed to include the feminine gender, and the singular shall be
deemed to include the plural, unless the context clearly indicates to the
contrary.
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32.
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Governing Laws. The
Executive Severance Plan shall be governed and construed in accordance
with the laws of the State of New
York.
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STANDARD
MICROSYSTEMS CORPORATION
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||
January
7, 2010
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/s/ Christine King
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Date
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Christine
King
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President and
Chief Executive
Officer
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14