VP Engineering and R&D - Employment Agreement

EXHIBIT 10.107


EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT dated as of the 10th day of November, 2005 (the " Agreement" ), is entered into by and between Dah Wen Tsang, an individual (the " Employee" ) and APT Acquisition Corp., a Delaware corporation (" the Corporation" ).

RECITALS

WHEREAS, Advanced Power Technology, Inc., a Delaware corporation (" APT" ), the Corporation, and Microsemi Corporation, a Delaware corporation (" Parent" ) anticipate entering into an Agreement and Plan of Merger (the " Merger Agreement" ), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, the Corporation will merge with and into APT (the " Merger" ) and the resulting entity (" Surviving Corporation" ) will become a wholly-owned subsidiary of Parent; and

WHEREAS, as of the date hereof, the Employee serves as the Vice President, Engineering and Research and Development of Switching Power Products; and


WHEREAS, the Corporation wishes to employ the Employee, and the Employee wishes to be employed by the Corporation, on the terms and conditions contained in this Agreement effective upon the consummation of the Merger; and


WHEREAS, the Corporation is only willing to enter into this Agreement on the basis that the Employee observe the restrictive covenants set out herein which have been negotiated in good faith and which the Employee acknowledges as being reasonable given the nature of the Employee' s expected position with the Corporation contemplated by this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements in this Agreement, receipt and sufficiency of which are hereby acknowledged, it is agreed by and between the Employee and the Corporation as follows:

1. EMPLOYMENT


1.1 Position


Subject to the terms and conditions of Section 6.1, during the Term of Employment (as defined in Article 2), the Corporation shall employ the Employee, and the Employee shall be employed by the Corporation, as the Vice President, Engineering and R&D of the switching power businesses of the Corporation (the " Business" ), on the terms and subject to the conditions herein contained.


1.2 Duties

During the Term of Employment (as defined in Article 2), the Employee shall:


(i) devote the whole of the Employee' s time, skills, experience and attention to the business of the Corporation, and ensure that the Employee is not at any time engaged in conduct that would interfere with the performance by the Employee of the Employee' s duties under this Agreement or which would constitute a conflict with the interests of the Corporation. During the Term of Employment, the Employee will not be employed or engaged in any other business without the prior written permission of the Corporation; and


(ii) well and faithfully serve the Corporation and carry out those responsibilities as are necessary to perform the functions associated with the Employee' s position; and


(iii) use the Employee' s best efforts while performing Employee' s responsibilities to promote the success of the business of the Corporation and act at all times in the best interests of the Corporation.


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2. TERM

Subject to the terms and conditions of Section 6.1, this Agreement and the Employee' s employment hereunder shall become effective at the Effective Time of the Merger and shall continue until the earliest of the following to occur (the " Term of Employment" ):

(a) the two (2) year anniversary of the Effective Date of the Merger,


(b) mutual agreement between Corporation and Employee;


(c) death of Employee;

(d) the good faith determination of the Corporation that Employee has become so physically or mentally disabled as to be incapable of satisfactorily performing Employee' s duties hereunder for a period of ninety (90) consecutive days, such determination based upon a certificate as to such physical or mental disability issued by a licensed physician and/or psychiatrist (as the case may be) employed by the Corporation; or


(e) any termination pursuant to Article 4 .


Sections 5 and 6 or this Agreement shall survive following the Term of Employment, and Sections 1, 2, 3 and 4 of this Agreement shall be terminated and have no further force or effect. The Corporation and the Employee understand and agree that, if Employee' s employment shall not have been terminated, Employee shall be an " at-will" employee of the Corporation after the Term of Employment.

3. REMUNERATION


3.1 Compensation


During the Term of Employment, the Corporation shall pay to the Employee as compensation for the performance of the Employee' s duties herein a salary at the rate of $160,000 per annum (the " Base Salary" ), payable in accordance with the Corporation' s normal payroll procedures and subject to Section 6.14. The Employee agrees that such salary shall be reviewed annually during the normal course of the Corporation' s focal review process or may be otherwise increased from time to time by the Corporation, and such revised annual salary shall be referred to hereinafter as the " Base Salary."

The Employee will also be eligible to participate in the Corporation' s Incentive Compensation Plan which provides for certain cash incentive compensation upon the achievement of certain individual, unit and Parent-wide performance goals. The Employee' s individual incentive target under the Incentive Compensation Plan shall be equal to thirty five percent (35%) of the Base Salary.


The Employee will also be eligible to participate in the Parent' s other incentive compensation plans for which employees of the Corporation or its subsidiaries of similar seniority participate.

3.2 Retention Bonus Payment

In connection with your commencement of employment with the Corporation, you will be eligible to receive a retention bonus payment of $90,000 (the " Retention Bonus) The Retention Bonus will be payable twenty (24) months after the Effective Time of the Merger, subject to the conditions below. You will be entitled to the Retention Bonus payment only if you are employed by the Corporation on the date specified above for the payment; provided, however, if your employment is terminated by the Corporation other than for Cause (as defined below) or if your termination qualifies as a Resignation for Good Reason (as defined below) you will be entitled to the Retention Bonus at the end of the Corporation' s standard pay period that includes the date of such termination.


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3.3 New Hire Option Grant


Contingent upon your execution and delivery of a Lock-up Agreement (as defined in the Merger Agreement), within five (5) business days after the Effective Time of the Merger, the Compensation Committee of the Board of Directors will grant you an option to purchase 30,000 shares of common stock of the Parent (the " Parent Common Stock" ) under the Parent 1987 Stock Plan. The option exercise price will be the closing price of the Parent Common Stock on the Nasdaq National Market on the option grant date. You will be provided with the standard Parent form of stock option agreement at the time of grant of such option (the " Parent Option" ). The Parent Option will vest only during your continuous full-time employment over a four-year period starting from the grant date, at the rate of 25% of the option at the end of your first year of employment, and 25% at the end of each successive year until the completion of the four-year period. You will be eligible for future Parent Options in the sole discretion of the Corporation.

3.4 APT Options


On or before the Effective Date of the Merger, your outstanding APT stock options will accelerate under the existing provisions of the APT stock option plan. These options will be assumed by Parent and adjusted to reflect the terms of the Merger Agreement. Accordingly, following the Merger, your APT Options will have become options to acquire Parent Common Stock. You will receive a Stock Option Assumption Agreement (to be entered into by you) informing you of the specific adjustments to the number of shares, the exercise price and the number of shares subject to each vesting installment that have been made to your APT Options to reflect the exchange ratio in effect for the Merger.


3.5 Benefits


The Employee shall be entitled to participate in all of the benefit plans for employees of the Corporation in effect from time to time, in accordance with the terms of the formal plan documents, including medical, dental, group life and disability plans, as of and with effect from the Effective Date. Employee' s years of service with APT prior to the Effective Time shall be counted as years of service with the Corporation for purposes of eligibility and vesting (other than vesting with respect to any equity-based compensation). The Corporation reserves the right to unilaterally revise the terms of the benefit plans of general application to all employees or to eliminate any such benefit plan altogether.

3.6 Vacation


The Employee will be entitled to four (4) weeks paid vacation per year in accordance with the Corporation' s generally established policies. The Employee shall endeavor to schedule such vacation to be taken so as to not unreasonably interfere with the demands of the business of the Corporation.


3.7 Expenses

The Corporation shall reimburse the Employee for all out-of-pocket expenses and other disbursements actually and properly incurred by the Employee in connection with the Employee' s duties hereunder or otherwise properly incurred by the Employee for and on behalf of the Corporation, upon presentation of reasonably acceptable evidence of the Employee having incurred such expenses and disbursements.


4 TERMINATION OF EMPLOYMENT

4.1 Termination by Corporation for Cause

The employment of the Employee hereunder may be terminated for Cause at any time by notice in writing from the Corporation to the Employee, in which event the Employee shall not be entitled to a notice period or compensation in lieu of notice. In such case, the Employee shall not be entitled to any compensation or benefits hereunder except for payment of all amounts due and owing to the date of termination, including accrued but unpaid Base Salary, vacation, and unreimbursed expenses.


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For purposes of this Agreement, " Cause" shall mean:

(1) fraud, misappropriation, embezzlement, or other act of material misconduct against the Corporation, Parent or any of its respective directors, officers, agents or affiliates;

(2) substantial and willful failure to perform specific and lawful directives of the Parent or Corporation, including but not limited to policies of general application;


(3) willful and knowing violation of any material laws, rules or regulations of any governmental or regulatory body;

(4) willful and knowing failure to cooperate with any investigation or inquiry, formal or informal, by the Parent, the Corporation or any governmental or regulatory body; or


(5) conviction of, or plea of guilty or nolo contendere to, any felony whatsoever or any misdemeanor that involves moral turpitude.

4.2 Termination by Corporation without Cause or by Employee for Good Reason


The employment of the Employee may be terminated by the Corporation without Cause. Contingent upon the Employee' s signing and delivering to the Corporation and not revoking a full release of all claims, known or unknown, against the Corporation, the Parent, and their respective affiliates, directors, officers and agents, the Corporation will make payment to the Employee of the following: (i) a one-time lump sum combined salary and bonus payment in an amount equal to the product of $15,895.71 multiplied by the number of months between the date of termination and the second anniversary of the Effective Date of the Merger, prorated for any partial months, payable to Employee at the end of the Corporation' s standard pay period that includes the date of the termination, (ii) any accrued but unpaid Base Salary for services rendered to the date of termination, (iii) any accrued but unpaid expenses required to be reimbursed under this Agreement, and (iv) any vacation accrued to the date of termination. Additionally, in the event of the Employee' s termination by the Corporation without Cause or by the Employee for Good Reason, provided such termination occurs during the Term of Employment, and contingent upon the Employee' s signing and delivering to the Corporation and not revoking a full release of all claims, known or unknown, against the Corporation, the Parent, and their respective affiliates, directors, officers and agents, the options subject to the then outstanding Equity Awards shall vest as to that number of shares of common stock that would have become vested assuming Employee continued to perform services under this Agreement for an additional twelve (12) months. Employee shall have until the earlier of: (i) three (3) months following such termination, or (ii) the expiration date of each such Equity Award, to exercise the portion of each of the Employee' s Equity Aw ...