FORM OF
STAY INCENTIVE AND SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the 28th day of July, 1997, by and
between General Semiconductor, Inc. (the "Corporation"),_____________ and (the
"Executive").
WHEREAS, the Board of Directors of the Corporation (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter defined)
exists and that the threat or the occurrence of a Change in Control can result
in significant distraction of the Corporation's key management personnel because
of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in
the best interest of the Corporation and its stockholders for the Corporation to
retain the services of the Executive in the event of a threat or occurrence of a
Change in Control and to ensure the Executive's continued dedication and efforts
in such event without undue concern for the Executive's personal financial and
employment security; and
WHEREAS, in order to induce the Executive to remain in the
employ of the Corporation, particularly in the event of a threat or the
occurrence of a Change in Control, the Corporation desires to enter into this
Agreement with the Executive to provide the Executive with certain benefits in
the event the Executive's employment is terminated under circumstances described
herein.
NOW, THEREFORE, in consideration of the respective agreements of
the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of July
28, 1997 (the "Effective Date"), and shall continue in effect until December 31,
1999 (the "Term"); provided, however, that on January 1, 1999, and on each
January 1 thereafter, the Term shall automatically be extended for one (1) year
unless either the Executive or the Corporation shall have given written notice
to the other at least ninety (90) days prior thereto that the Term shall not be
so extended; provided, further, however, that following the occurrence of a
Change in Control, the Term shall not expire prior to the expiration of
twenty-four (24) months after such occurrence.
2. Stay Incentive. If the Executive remains employed by the
Corporation until May 31, 1998, the Executive will receive a stay incentive in
the amount of $__________ (the "Stay Incentive"). The Stay Incentive will be
paid in a single lump sum within ten days of May 31, 1998. The Stay Incentive
will also be paid to the Executive if the Executive's employment with the
Corporation is terminated by the Corporation other than for Cause (as defined in
Section 14.6) any time after the Effective Date and prior to May 31, 1998, in
which case the Stay Incentive will be paid upon the Executive's termination of
employment.
3. Termination of Employment. If, during the Term, the
Executive's employment with the Corporation and its Affiliates shall be
terminated within twenty-four (24) months following a Change in Control, the
Executive shall be entitled to the following compensation and benefits:
(a) If the Executive's employment with the Corporation and
its Affiliates shall be terminated (1) by the Corporation for Cause or
Disability, (2) by reason of the Executive's death, or (3) by the Executive
other than for Good Reason, the Corporation shall pay to the Executive his
Accrued Compensation. In addition to the foregoing, if the Executive's
employment is terminated by the Corporation for Disability or by reason of the
Executive's death, the Corporation shall pay to the Executive or his
beneficiaries a Pro Rata Bonus. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the
Corporation's employee benefits plans and other applicable programs and
practices then in effect.
(b) If the Executive's employment with the Corporation and
its Affiliates shall be terminated for any reason other than as specified in
Section 3(a), the Executive shall be entitled to the following
(1) the Corporation shall pay the Executive all
Accrued Compensation and a Pro Rata Bonus;
(2) the Corporation shall pay the Executive as
severance pay and in lieu of any further compensation for periods subsequent to
the Termination Date, an amount equal to times the sum of (A) the Executive's
Base Amount and (B) the Executive's Bonus Amount;
(3) for _____ months after such termination (the
"Continuation Period"), the Corporation shall at its expense continue on behalf
of the Executive and his dependents and beneficiaries the life insurance,
disability, medical, dental and hospitalization coverages and benefits provided
to the Executive immediately prior to the Change in Control or, if greater, the
coverages and benefits provided at any time thereafter. The coverages and
benefits (including deductibles and costs) provided in this Section 3(b)(3)
during the Continuation Period shall be no less favorable to the Executive and
his dependents and beneficiaries, than the most favorable of such coverages and
benefits referred to above. The Corporation's obligation hereunder with respect
to the foregoing coverages and benefits shall be reduced to the extent that the
Executive obtains any such coverages and benefits pursuant to a subsequent
employer's benefit plans, in which case the Corporation may reduce any of the
coverages or benefits it is required to provide the Executive hereunder so long
as the aggregate coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits required to be
provided hereunder. This Section 3(b)(3) shall not be interpreted so as to limit
any benefits to which the Executive, his dependents or beneficiaries may be
entitled under any of the Corporation's employee benefit plans, programs or
practices following the Executive's termination of employment, including without
limitation, retiree medical and life insurance benefits;
(4) If, at the end of the Continuation Period, the
Executive is not employed by another employer (including self-employment), the
Executive will receive for up to six months, an amount equal to one-twelfth
(1/12) of the sum of (A) the Executive's Base Amount and (B) the Executive's
Bonus Amount, payable at the end of each of the six (6) calendar months
following the end of the Continuation Period; provided, however, that such
payments will immediately cease upon the Executive's employment (including
self-employment) by a subsequent employer. In addition, the coverages and
benefits described in Section 3(b)(3) shall be continued until the earlier of
(x) six (6) months after the end of the Continuation Period or (y) such time
that the Executive obtains any such coverages or benefits pursuant to a
subsequent employer's benefit plans;
(5) the Corporation shall pay or reimburse the
Executive for the costs, fees and expenses of outplacement assistance services
(not to exceed twenty-five (25%) of the sum of (A) the Executive's Base Amount
and (B) the Executive's Bonus Amount) provided by any outplacement agency
selected by the Executive;
(6) the Corporation shall pay or reimburse the
Executive up to $2,000 for tax and financial planning services in respect of the
calendar year in which the payments provided for in Section 3(b)(2) are paid to
the Executive; and
(7) the Corporation shall pay or reimburse the
Executive for the cost of relocation (in accordance with the Corporation's
relocation policy) to the Executive's place of residence immediately prior to
any relocation the Executive made for purposes of employment by the Corporation
or General Instrument Corporation after July 1, 1995.
(c) If the Executive's employment is terminated by the
Corporation without Cause (1) within six (6) months prior to a Change in Control
or (2) at any time prior to the date of a Change in Control but the Executive
reasonably demonstrates that such termination (A) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a "Third Party") and who effectuates a Change in
Control or (B) otherwise arose in connection with, or in anticipation of, a
Change in Control which has been threatened or proposed and which actually
occurs, such termination shall be deemed to have occurred after a Change in
Control, provided a Change in Control shall actually have occurred.
(d) (1) Gross-Up Payment. In the event it shall be
determined that any payment (other than the payment provided for in this Section
3(d)) or distribution of any type to or for the benefit of the Executive, by the
Corporation, any Affiliate of the Corporation, any Person who acquires ownership
or effective control of the Corporation or ownership of a substantial portion of
the Corporation's assets (within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder)
or any Affiliate of such Person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), is or will be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any income tax, employment tax or
Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments
(2) Determination By Accountant. All mathematical
determinations, and all determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code), that
are required to be made under this Section 3(d), including determinations as to
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
amounts relevant to the last sentence of this Section 3(d)(2), shall be made by
an independent accounting firm selected by the Executive from among the six (6)
largest accounting firms in the United States (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter, both to the Corporation and the Executive by no later
than ten (10) days following the Termination Date, if applicable, or such
earlier time as is requested by the Corporation or the Executive (if the
Executive reasonably believes that any of the Total Payments may be subject to
the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive and the Corporation with an
opinion reasonably acceptable to the Executive and the Corporation that no
Excise Tax is payable (including the reasons therefor) and that the Executive
has substantial authority not to report any Excise Tax on his federal income tax
return. If a Gross-Up Payment is determined to be payable, it shall be paid to
the Executive within twenty (20) days after the Determination (and all
accompanying calculations and other material supporting the Determination) is
delivered to the Corporation by the Accounting Firm. Any determination by the
Accounting Firm shall be binding upon the Corporation and the Executive, absent
manifest error. As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Corporation
should have been made ("Underpayment"), or that Gross-Up Payments will have been
made by the Corporation which should not have been made ("Overpayments"). In
either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an Underpayment,
the amount of such Underpayment (together with any interest and penalties
payable by the Executive as a result of such Underpayment) shall be promptly
paid by the Corporation to or for the benefit of the Executive. In the case of
an Overpayment, the Executive shall, at the direction and expense of the
Corporation, take such steps as are reasonably necessary (including the filing
of returns and claims for refund), follow reasonable instructions from, and
procedures established by, the Corporation, and otherwise reasonably cooperate
with the Corporation to correct such Overpayment, provided, however, that (i)
the Executive shall not in any event be obligated to return to the Corporation
an amount greater than the net after-tax portion of the Overpayment that he has
retained or has recovered as a refund from the applicable taxing authorities and
(ii) this provision shall be interpreted in a manner consistent with the intent
of Section 3(d)(1), which is to make the Executive whole, on an after-tax basis,
from the application of the Excise Tax, it being understood that the correction
of an Overpayment may result in the Executive repaying to the Corporation an
amount which is less than the Overpayment. The fees and expenses of the
Accounting Firm shall be paid by the Corporation.
(e) The amounts provided for in Sections 3(a) and 3(b)(1)
and (2) shall be paid in a single lump sum cash payment within ten (10) days
after the Executive's Termination Date (or earlier, if required by applicable
law).
(f) The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Sections 3(b)(3) and 3(b)(4).
(g) The severance pay and benefits provided for in this
Section 3 shall be in lieu of any other severance pay to which the Executive may
be entitled under any severance plan or any other plan, agreement or arrangement
of the Corporation or any of its Affiliates.
4. Notice of Termination. Following a Change in Control, any
intended termination of the Executive's employment by the Corporation shall be
communicated by a Notice of Termination from the Corporation to the Executive,
and any intended termination of the Executive's employment by the Executive for
Good Reason shall be communicated by a Notice of Termination from the Executive
to the Corporation.
5. Fees and Expenses. The Corporation shall pay all legal fees
and related expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (a) the termination
of the Executive's employment by the Corporation or by the Executive for Good
Reason (including all such fees and expenses, if any, incurred in contesting,
defending or disputing the basis for any such termination of employment), (b)
the Executive's hearing before the Board of Directors of the Corporation as
contemplated in Section 14.6 of this Agreement or (c) the Executive seeking to
obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Corporation under which the
Executive is or may be entitled to receive benefits.
6. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including any Notice of
Termination) shall be in writing, shall be signed by the Executive if to the
Corporation or by a duly authorized officer of the Corporation if to the
Executive, and shall be deemed to have been duly given when personally delivered
or sent by certified mail, return receipt requested, postage prepaid, addressed
to the respective addresses last given by each party to the other, provided that
all notices to the Corporation shall be directed to the attention of the Board
with a copy to the Secretary of the Corporation. All notices and communications
shall be deemed to have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice of change of
address shall be effective only upon receipt.
7. Nature of Rights. Except as provided in Section 3(g), nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Corporation or any Affiliate of the Corporation and for which the
Executive may qualify, nor shall anything herein limit or reduce such rights as
the Executive may have under any other agreements with the Corporation or any
Affiliate of the Corporation. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Corporation or any Affiliate of the Corporation shall be payable in accordance
with such plan or program, except as explicitly modified by this Agreement.
8. Settlement of Claims. The Corporation's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, defense, recoupment, or other
right which the Corporation may have against the Executive or others.
9. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and the Corporation. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not expressly set
forth in this Agreement.
10. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall inure
to the benefit of the Corporation and its respective Successors and Assigns. The
Corporation shall require its respective Successors and Assigns to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in the State of New York.
12. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior agreements,
understandings and arrangements, oral or written, between the parties hereto,
with respect to the subject matter hereof, including, without limitation, the
Stay and Sale Incentive and Special Severance Arrangement, dated January 10,
1997, between the Executive and General Instrument Corporation.
14. Definitions.
14.1. Accrued Compensation. For purposes of this
Agreement, "Accrued Compensation" shall mean all amounts of compensation for
services rendered to the Corporation or any of its Affiliates that have been
earned or accrued through the Termination Date but that have not been paid as of
the Termination Date including (a) base salary, (b) reimbursement for reasonable
and necessary business expenses incurred by the Executive on behalf of the
Corporation or of its Affiliates of the Corporation during the period ending on
the Termination Date, (c) vacation pay and (d) bonuses and incentive
compensation; provided, however, that Accrued Compensation shall not include any
amounts described in clause (a) or clause (d) that have been deferred pursuant
to any salary reduction or deferred compensation elections made by the
Executive.
14.2. Affiliate. For purposes of this Agreement,
"Affiliate" means, with respect to any Person, any entity, directly or
indirectly, controlled by, controlling or under common control with such Person.
14.3. Base Amount. For purposes of this Agreement, "Base
Amount" shall mean the Executive's annual base salary at the rate in effect as
of the date of a Change in Control or, if greater, at any time thereafter,
determined without regard to any salary reduction or deferred compensation
elections made by the Executive.
14.4. "Beneficial Owner," "Beneficially Owned" and
"Beneficially Owning" shall have the meanings applicable under Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended.
14.5. Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the target annual bonus payable to the Executive under the
Incentive Plan in respect of the fiscal year of the Corporation immediately
prior to that in which the Termination Date occurs.
14.6. Cause. For purposes of this Agreement, a termination
of employment is for "Cause" if the Executive has been convicted of a felony or
the termination is evidenced by a resolution adopted in good faith by two-thirds
of the Board of Directors of the Corporation that the Executive:
(a) intentionally and continually failed
substantially to perform his reasonably assigned duties with the Corporation and
its Affiliates (other than a failure resulting from the Executive's incapacity
due to physical or mental illness or from the assignment to the Executive of
duties that would constitute Good Reason) which failure continued for a period
of at least thirty (30) days after a written notice of demand for substantial
performance, signed by a duly authorized officer of the Corporation, has been
delivered to the Executive specifying the manner in which the Executive has
failed substantially to perform, or
(b) intentionally engaged in conduct which is
demonstrably and materially injurious to the Corporation and its Affiliates;
provided, however, that no termination of the Executive's employment shall be
for Cause as set forth in this Section 14.6(b) until (1) there shall have been
delivered to the Executive a copy of a written notice, signed by a duly
authorized officer of the Corporation, setting forth that the Executive was
guilty of the conduct set forth in this Section 14.6(b) and specifying the
particulars thereof in detail, and (2) the Executive shall have been provided an
opportunity to be heard in person by the Board of Directors of the Corporation
(with the assistance of the Executive's counsel if the Executive so desires).
No act, nor failure to act, on the Executive's part,
shall be considered "intentional" unless the Executive has acted, or failed to
act, with a lack of good faith and with a lack of reasonable belief that the
Executive's action or failure to act was in the best interest of the Corporation
and its Affiliates. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of Termination
is given to the Corporation by the Executive shall constitute Cause for purposes
of this Agreement.
14.7. Change in Control. "Change in Control" shall mean
any of the following:
(a) the acquisition by any Person, other than
Instrument Partners or Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-IV or any of their Affiliates (collectively, the
"Forstmann Little Companies") of Beneficial Ownership of Voting Securities
which, when added to the Voting Securities then Beneficially Owned by such
Person, would result in such Person Beneficially Owning (1) 33% or more of the
combined Voting Power of the Corporation's then outstanding Voting Securities
and (2) a number of Voting Securities greater than the aggregate number of
Voting Securities then Beneficially Owned by the Forstmann Little Companies;
provided, however, that for purposes of this paragraph (a), a Person shall not
be deemed to have made an acquisition of Voting Securities if such Person: (A)
acquires Voting Securities as a result of a stock split, stock dividend or other
corporate restructuring in which all stockholders of the class of such Voting
Securities are treated on a pro rata basis; (B) acquires the Voting Securities
directly from the Corporation; (C) becomes the Beneficial Owner of 33% or more
of the combined Voting Power of the Corporation's then outstanding Voting
Securities solely as a result of the acquisition of Voting Securities by the
Corporation or any Subsidiary which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
such Person, provided that if (x) a Person would own at least such percentage as
a result of the acquisition by the Corporation or any Subsidiary and (y) after
such acquisition by the Corporation or any Subsidiary, such Person acquires
Voting Securities, then an acquisition of Voting Securities shall have occurred;
(D) is the Corporation or any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned directly
or indirectly by the Corporation (a "Controlled Entity"); or (E) acquires Voting
Securities in connection with a "Non-Control Transaction" (as defined in
paragraph (c) below); or
(b) the individuals who, as of the Effective Date,
are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however, that if either
the election of any new director or the nomination for election of any new
director by the Corporation's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board prior to such election or nomination, such new
director shall be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the ▇▇▇▇ ▇▇▇) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) approval by stockholders of the Corporation of:
(1) a merger, consolidation or reorganization
involving the Corporation (a "Business Combination"), unless
(A) the stockholders of the Corporation,
immediately before the Business Combination, own, directly or indirectly
immediately following the Business Combination, at least a majority of the
combined voting power of the outstanding voting securities of the corporation
resulting from the Business Combination (the "Surviving Corporation") in
substantially the same proportion as their ownership of the Voting Securities
immediately before the Business Combination, and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for the Business Combination constitute at least a majority of the members of
the Board of Directors of the Surviving Corporation, and
(C) no Person (other than the Corporation
or any Controlled Entity, a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Corporation, the Surviving Corporation or any
Controlled Entity, or any Person who, immediately prior to the Business
Combination, had Beneficial Ownership of 33% or more of the then outstanding
Voting Securities) has Beneficial Ownership of 33% or more of the combined
voting power of the Surviving Corporation's then outstanding voting securities
(a Business Combination satisfying the conditions of clauses (A), (B) and (C) of
this subparagraph (1) shall be referred to as a "Non-Control Transaction");
(2) a complete liquidation or dissolution of the
Corporation; or
(3) the sale of other disposition of all or
substantially all of the assets of the Corporation (other than a transfer to a
Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall
not be deemed to occur solely because 33% or more of the then outstanding Voting
Securities is Beneficially Owned by (x) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Corporation or any Controlled
Entity or (y) any corporation which, immediately prior to its acquisition of
such interest, is owned directly or indirectly by the stockholders of the
Corporation in the same proportion as their ownership of stock in the
Corporation immediately prior to such acquisition.
14.8. Corporation. For purposes of this Agreement, all
references to the Corporation shall include its Successors and Assigns.
14.9. Disability. For purposes of this Agreement,
"Disability" shall mean a physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties with the Corporation for
six (6) consecutive months, and within the time period set forth in a Notice of
Termination given to the Executive (which time period shall not be less than
thirty (30) days), the Executive shall not have returned to full-time
performance of his duties; provided, however, that if the Corporation's Long
Term Disability Plan, or any successor plan (the "Disability Plan"), is then in
effect, the Executive shall not be deemed disabled for purposes of this
Agreement unless the Executive is also eligible for "Total Disability" (as
defined in the Disability Plan) benefits (or similar benefits in the event of a
successor plan) under the Disability Plan.
14.10. Good Reason. (a) For purposes of this Agreement,
"Good Reason" shall mean the occurrence after a Change in Control of any of the
following events or conditions:
(1) a change in the Executive's status, title,
position or responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, represents an adverse change from his
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Executive of any duties or responsibilities
which, in the Executive's reasonable judgment, are inconsistent with his status,
title, position or responsibilities; or any removal of the Executive from or
failure to reappoint or reelect him to any of such offices or positions, except
in connection with the termination of his employment for Disability, Cause, as a
result of his death or by the Executive other than for Good Reason;
(2) a reduction in the Executive's annual base
salary below the Base Amount;
(3) the relocation of the offices of the
Corporation at which the Executive is principally employed to a location more
than twenty-five (25) miles from the location of such offices immediately prior
to the Change in Control, or the Corporation's requiring the Executive to be
based anywhere other than such offices, except to the extent the Executive was
not previously assigned to a principal location and except for required travel
on the Corporation's business to an extent substantially consistent with the
Executive's business travel obligations at the time of the Change in Control;
(4) the failure by the Corporation to pay to the
Executive any portion of the Executive's current compensation or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred compensation program of the Corporation in which the Executive
participated, within seven (7) days of the date such compensation is due;
(5) the failure by the Corporation to (A)
continue in effect (without reduction in benefit level, and/or reward
opportunities) any material compensation or employee benefit plan in which the
Executive was participating immediately prior to the Change in Control,
including, but not limited to, any of the plans listed in Appendix A hereto,
unless a substitute or replacement plan has been implemented which provides
substantially identical compensation or benefits to the Executive or (B) provide
the Executive with compensation and benefits, in the aggregate, at least equal
(in terms of benefit levels and/or reward opportunities) to those provided for
under each other compensation or employee benefit plan, program and practice in
which the Executive was participating immediately prior to the Change in
Control;
(6) the failure of the Corporation to obtain
from its Successors or Assigns the express assumption and agreement required
under Section 10 hereof; or
(7) any purported termination of the Executive's
employment by the Corporation which is not effected pursuant to a Notice of
Termination satisfying the terms set forth in the definition of Notice of
Termination (and, if applicable, the terms set forth in the definition of
Cause).
(b) Any event or condition described in Section
14.10(a)(1) through (7) which occurs (1) within six (6) months prior to a Change
in Control or (2) at any time prior to a Change in Control but which the
Executive reasonably demonstrates (A) was at the request of a Third Party or (B)
otherwise arose in connection with, or in anticipation of a Change in Control
which has been threatened or proposed and which actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding that it
occurred prior to a Change in Control.
14.11. Incentive Plan. For purposes of this Agreement,
"Incentive Plan" shall mean the General Semiconductor, Inc. Annual Incentive
Plan, or any successor annual incentive plan, maintained by the Corporation.
14.12. Notice of Termination. For purposes of this
Agreement, following a Change in Control, "Notice of Termination" shall mean a
written notice of termination of the Executive's employment, signed by the
Executive if to the Corporation or by a duly authorized officer of the
Corporation if to the Executive, which indicates the specific termination
provision in this Agreement, if any, relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
14.13. Person. For purposes of this Agreement, "Person"
shall mean a person within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended.
14.14. Pro Rata Bonus. For purposes of this Agreement,
"Pro Rata Bonus" shall mean the Bonus Amount multiplied by a fraction of the
numerator of which is the number of days in the year in which an Executive's
Termination Date occurs through the termination date and the denominator of
which is 365.
14.15. Subsidiary. For purposes of this Agreement,
"Subsidiary" shall mean a corporation as defined in Section 424(f) (or a
successor provision to such section) of the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder, with the Corporation being
treated as the employer corporation for purposes of this definition.
14.16. Successors and Assigns. For purposes of this
Agreement, "Successors and Assigns" shall mean, with respect to the Corporation
or the Corporation, a corporation or other entity acquiring all or substantially
all the assets and business of the Corporation or the Corporation, as the case
may be (including this Agreement) whether by operation of law or otherwise.
14.17. Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death, his date
of death, (b) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period) and (c) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of Termination
(which, in the case of a termination for Cause shall not be less than thirty
(30) days, and in the case of a termination for Good Reason shall not be more
than sixty (60) days, from the date such Notice of Termination is given);
provided, however, that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination in good
faith notifies the other party that a dispute exists concerning the basis for
the termination, the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, or by the
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been taken).
Notwithstanding the pendency of any such dispute, the Corporation shall continue
to pay the Executive his Base Amount and continue the Executive as a participant
in all compensation, incentive, bonus, pension, profit sharing, medical,
hospitalization, dental, life insurance and disability benefit plans in which he
was participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Section 14.17 whether or
not the dispute is resolved in favor of the Corporation, and the Executive shall
not be obligated to repay to the Corporation any amounts paid or benefits
provided pursuant to this sentence.
14.18. Voting Power. For purposes of this Agreement,
"Voting Power" shall mean the combined voting power of the then outstanding
Voting Securities.
14.19. Voting Securities. For purposes of this Agreement,
"Voting Securities" shall mean, with respect to the Corporation or any
Subsidiary, any securities issued by the Corporation or such Subsidiary,
respectively, which generally entitle the holder thereof to vote for the
election of directors of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed by their duly authorized officers and the Executive has executed
this Agreement as of the day and year first above written.
GENERAL SEMICONDUCTOR, INC.
By:________________________
By:________________________